What is the difference between Medicare and Medicaid?

Medicare is federal health insurance for people 65 and older (and certain younger people with disabilities or ESRD), funded primarily through payroll taxes. Medicaid is a joint federal-state program for people with low income and limited assets — eligibility, coverage, and costs vary by state. Some people qualify for both, making them 'dual eligible.'

Educational content — not insurance advice

ClearValue Lending is not affiliated with, endorsed by, or connected to Medicare, CMS, or any government agency. This page is general financial education, not insurance advice. For questions about your specific eligibility or coverage options, visit Medicare.gov, call 1-800-MEDICARE (1-800-633-4227), or contact your State Health Insurance Assistance Program (SHIP) at shiphelp.org.

Medicare and Medicaid are both government health programs administered by the Centers for Medicare & Medicaid Services (CMS), but they serve different populations, have different funding structures, and offer different benefits. Confusion between the two is common — and consequential, because eligibility rules, coverage, and costs differ substantially.

Medicare: age-based and disability-based federal insurance

Medicare is a federal program. Eligibility is based primarily on age (65+) or on specific disability status, not on income. You become eligible at 65 if you or your spouse paid Medicare taxes for at least 10 years while working. Younger people may qualify if they have received Social Security Disability Insurance (SSDI) for 24 months, or if they have end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS). Medicare has four parts (A, B, C, D); most beneficiaries pay Part B and Part D premiums regardless of income, though high earners pay more through the IRMAA surcharges. Medicare.gov's eligibility guide covers all qualifying criteria.

Medicaid: income- and asset-based state-federal coverage

Medicaid is a joint federal-state program. Eligibility is based on income and, in many cases, assets — not age. The federal government sets minimum requirements; each state determines its own eligibility rules, covered services, and administration, which is why Medicaid coverage varies significantly from state to state. Under the ACA, states had the option to expand Medicaid to cover adults with incomes up to 138% of the federal poverty level (FPL); as of 2026, most states have done so. Key Medicaid coverage that Medicare does not provide: long-term custodial care (nursing home coverage for those who qualify financially). Medicaid.gov has current state-by-state eligibility information.

Side-by-side comparison

Who qualifies: Medicare = age 65+ or qualifying disability/ESRD/ALS. Medicaid = low-income individuals and families (rules vary by state).
Funding: Medicare = primarily federal, funded through payroll taxes and premiums. Medicaid = joint federal-state funding, with states receiving federal matching funds.
Premiums: Medicare Part B and D have monthly premiums. Medicaid typically has no or very low premiums for most enrollees.
Long-term care: Medicare covers only short-term skilled nursing facility care (after a qualifying hospital stay). Medicaid covers long-term custodial care for those who meet financial eligibility.
Geographic variation: Medicare is uniform across states (same rules, same parts). Medicaid varies substantially by state.

Dual eligibility — when you qualify for both

Some people qualify for both Medicare and Medicaid — they are called 'dual eligible.' This typically applies to low-income Medicare beneficiaries who also meet their state's Medicaid income and asset limits. Dual eligible individuals may have Medicaid help pay their Medicare premiums, deductibles, and cost-sharing — a significant financial benefit. KFF's dual eligibility overview estimates that about 12 million people are dual eligible. If you think you may qualify for both, contact your state's Medicaid office or Medicare's Extra Help program for low-income individuals.

CMS, Medicare.gov, and KFF sources

Medicare is federal health insurance for people who are 65 or older, certain younger people with disabilities, and people with end-stage renal disease (ESRD). Eligibility is not income-based. — Medicare.gov — What's Medicare?
Medicaid is a joint federal and state program that provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities. Rules and eligibility vary by state. — Medicaid.gov — Eligibility
As of 2025, approximately 12 million people are enrolled in both Medicare and Medicaid — known as 'dual eligible' beneficiaries. Medicaid can help cover Medicare premiums, deductibles, and cost-sharing for those who qualify. — KFF — Medicare and Medicaid Dual Eligibility
Medicaid is the largest payer of long-term care services in the United States. Medicare covers only short-term skilled nursing facility care, not long-term custodial care. — CMS.gov — Medicaid Long-Term Services and Supports

Key takeaways

Medicare = federal, age/disability-based. Medicaid = state-federal, income/asset-based. Different programs, different rules.
Medicare does not cover long-term custodial care; Medicaid does — for those who financially qualify.
Medicaid rules vary by state; what's covered in one state may differ significantly in another.
About 12 million people qualify for both — dual eligibility can reduce Medicare cost-sharing substantially.
For state-specific Medicaid eligibility, visit Medicaid.gov or your state's Medicaid office.

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