Because of the similarity in their names, Medicare and Medicaid are often confused. But these two government health insurance programs are very different.
Medicare is a federal government program that covers medical expenses for more than 63 million Americans 65 and older as well as younger people who qualify because of a disability. Medicare eligibility is not based on your income or assets, and you can’t be denied coverage or charged more because of your existing medical conditions.
Medicaid, which federal and state governments run jointly, provides health care and long-term care coverage for more than 72.5 million Americans, including children, parents, low-income adults, older adults and people with disabilities. The government sets general standards for Medicaid, but specific eligibility requirements and coverage details vary by state. Your income and assets must fall below certain levels to qualify.
The Medicare and Medicaid programs were both established July 30, 1965, when President Lyndon Johnson signed the Medicare and Medicaid Act — also known as the Social Security Amendments of 1965 — into law. Medicare was created as a health insurance program for older Americans, while Medicaid provides health insurance for people with limited incomes. Eligibility and coverage for both programs have expanded since they began.
What does Medicare cover?
Medicare recipients can use any doctor or hospital in the United States that participates in the Medicare program, which covers a vast majority of providers. Original Medicare includes Part A and Part B:
- Medicare Part A helps pay for inpatient stays in hospitals and skilled nursing facilities, some home care and end-of-life hospice care.
- Medicare Part B covers doctors’ services, diagnostic screenings, lab tests, preventive care, outpatient care, plus some medical equipment and transportation.
But Medicare doesn’t cover everything. You’ll have to pay deductibles and copayments for Part A and Part B. The program also doesn’t cover most dental, hearing and vision care expenses. And it won’t cover long-term care, other than short-term stays in a skilled nursing facility for rehabilitation after an eligible hospital stay.
Many people with original Medicare buy a private Medicare supplement policy, also known as Medigap, to cover out-of-pocket expenses beyond what Medicare covers.
You can add drug coverage. Medicare doesn’t automatically cover medications, but you can buy a Part D prescription policy from a private insurance company to help cover those costs.
Another coverage option: Some people choose to get coverage from a private Medicare Advantage plan rather than original Medicare. These plans, which insurers also sell, must provide the same coverage as Medicare Part A and Part B, but they may have different deductibles and copayments.
Most Medicare Advantage plans also cover prescription drugs and provide some dental, hearing and vision care. You must enroll in Medicare Part A and Part B, and pay required premiums, even if you choose to buy an Advantage plan. Some plans have monthly premiums on top of Part A and B premiums.
Who is eligible for Medicare?
You can qualify for Medicare coverage in two ways:
If you’re age 65 or older. You can qualify for Medicare at age 65 if you’re a U.S. citizen or permanent legal resident who has lived in the United States for at least five years.
If you’re younger than 65. You can qualify for Medicare before age 65 if you’re disabled or meet certain conditions, such as:
- You’ve been entitled to Social Security Disability Insurance (SSDI) benefits for at least 24 months.