What Is the Difference Between Medicare and Medicaid?

Medicare is a federal health insurance program while Medicaid is a federal-state medical assistance program.

What is Medicare?

Medicare is an insurance program that provides medical care to people over 65. Seniors' medical bills are paid from funds which those covered have paid into. People of 65 are covered, regardless of their income...but it is not free. Patients pay part of the costs through deductibles for hospital stays and they are required to pay monthly premiums health care services. Because Medicare is run by the federal government, its coverage, rules and regulations are basically the same everywhere in the United States. The program is run by the Centers for Medicare & Medicaid Services.

There are several parts to Medicare. Part A covers hospital bills, Part B covers medical insurance, Part C is health maintenance organization HMO/PPO, and Part D covers prescriptions. Some of these are options that require the Medicare recipient to pay additional premiums.

Related: How much does Medicare cost? 

What is Medicaid?

Medicaid is a financial assistance program for low-income people. Medicaid is based on need and social welfare. Eligibility is based on a person's income. Medical bills are paid from federal, state and local tax funds. It serves low-income people of every age. Patients sometimes don't pay any costs for covered medical expenses, but in other instances, a co-pay is required. The only way to find out is to contact your state Medicaid office. Because Medicaid is jointly run by states and the federal government, rules and eligibility requirements vary widely depending on what state you live in.

If a person has limited income or financial resources, Medicaid covers a broader spectrum of services than Medicare does. In addition to people over age 65, it usually covers people with disabilities, children, pregnant women, and parents of eligible children. Though poverty is used to determine eligibility, a person must fall into one of the coverage groups in addition to being determined eligible due to being in poverty. Medicaid benefits are paid directly to the provider of services. In addition to covering individuals who meet financial requirements, in some states Medicaid covers individuals who cannot otherwise afford insurance.

Dual Eligibility: Having Medicare and Medicaid

Some people have both Medicare and Medicaid. Medicaid may cover services that Medicare can't, like extended long-term care. It may also pay for Medicare's out-of-pocket costs. Certain programs exist that people with Medicare may be eligible for.

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