Medicare vs. Medicaid

Medicare and Medicaid are not the same. Many Americans:

1. Think Medicare is the same program as Medicaid
2. Confuse whether the programs are federally or state funded
3. Don’t know about the programs at all

Medicare and Medicaid are two forms of healthcare assistance that can either work separately or together. Although most people know Medicaid and Medicare as healthcare options, many could use a clear explanation about the two programs. Here is a guide to help you understand the ins and outs of Medicaid and Medicare.

What is Medicare?

Medicare is a federal health insurance program. It typically serves anyone 65 and over, regardless of income, and younger people with certain disabilities and/or if they have End-Stage Renal Disease (ESRD). Original Medicare usually works the same everywhere in the United States. Benefits and eligibility are regulated by the Centers for Medicare & Medicaid Services (CMS), an agency of the federal government.

How much does it cost you?

The exact amount of your medical expenses covered by Medicare and the amount you may have to pay out of pocket depends on which of the four “parts,” or types, of Medicare insurance you enroll in.

Medicare Part A (hospital) and Medicare Part B (medical) are the “original” types of Medicare coverage provided by the government. That’s why they’re commonly called Original Medicare. Most people choose to enroll in both Part A and Part B. Here is the costs breakdown for Original Medicare:

1. Part A coverage typically has no monthly premium as long as you or your current or former spouse has paid Medicare taxes while working for 10 years. Part B has a monthly premium that will vary based on the income you report to the IRS. For 2026, the premium most people will pay is $202.90 per month and the amount is typically deducted from your Social Security benefit.
2. Part A has $1,736 deductible for each benefit period (in 2026). Part B has a $283 deductible per benefit period.
3. Part A has coinsurance and copay costs ranging from $0, $434, or $868+ per day, depending on the length of your hospital stay. Part B typically pays 80% of approved medical expenses after you meet your deductible, and you pay the remaining 20%.
4. Both Part A and Part B have no limits on the amount you may have to pay out of pocket each year.

Reference: https://www.medicare.gov/publications/11579-medicare-costs.pdf?mod=article_inline

Medicare Part C, better known as Medicare Advantage, has all the benefits of Original Medicare, plus may include additional benefits. Medicare Advantage plans are offered through private insurance companies and have a different cost structure. You must continue paying your Part B premium while on a Medicare Advantage plan. Depending on which plan you choose, Medicare Advantage plans:

1. May or may not have a monthly premium
2. Have variable deductibles for health coverage
3. May include prescription drug coverage
4. Put a firm limit on the amount you pay out of pocket each year for covered expenses

Medicare Part D is prescription drug coverage that can be added to Original Medicare. Because Part D plans are offered by private insurers, monthly premiums and what you pay for your drugs can vary. Take some time to review the Part D plan’s covered drug lists, network pharmacies and costs before signing up.

What services does Medicare cover?

Original Medicare provides financial benefits to cover most inpatient hospital services and outpatient medical services. The services covered under Part A include:

1. Hospital visits
2. Hospice care
3. At-home healthcare
4. Some skilled nursing facility care

The services covered under Part B include:

1. Preventive care (checkups, mammograms, etc.)
2. Diagnostic visits
3. Outpatient hospital care
4. Some medical equipment (diabetic supplies, nebulizers, oxygen, etc.)

Medicare Advantage (Part C) includes all the benefits of Original Medicare and is offered by private insurers. For many people, Medicare Advantage is a convenient way to get all the Medicare coverage and benefits they need. In addition to including all the benefits of Parts A and B, some Medicare Advantage plans also come with Part D prescription drug coverage and may include other benefits and services that support your greater health and wellness needs.

Also offered by private insurers, Medicare Part D plans provide coverage for a wide range of the prescription drugs used most often by people on Medicare. The list of covered drugs (called the formulary) can change during the year as new drugs are released, brand names are replaced with generics or new medical information becomes available. It’s important to enroll in a Part D plan as soon as you’re eligible to avoid paying a late enrollment penalty. If you have a limited income, you may be able to get Extra Help to pay your Part D plan premiums and other drug costs.

What is Medicaid?

Medicaid is a joint federal and state assistance program. It typically serves low-income families, regardless of age. Regulations for Medicaid vary from state to state. Therefore, it’s distributed by both state and local governments within federal guidelines.

Who gets Medicaid?

The primary recipients of Medicaid benefits are normally determined by your income level and family size. In all states, Medicaid health coverage provides financial assistance for:

1. Children
2. Pregnant women
3. The elderly
4. People with disabilities

However, some states cover any adult living below certain income levels. Due to the changing and expanding qualifications for Medicaid, it is best to check your state’s Medicaid website to understand your Medicaid coverage.

How much does it cost you?

If you qualify for Medicaid, you often won’t have to pay anything for the services it covers. However, Medicaid sometimes requires small copays. Some states charge premiums and fees for enrollment, but these fees only apply to certain groups.

What services does Medicaid cover?

Medicaid benefits differ state by state, but some of the mandatory benefits included in each state’s program include:

• Lab and X-ray services
• Inpatient and outpatient hospital services
• Family planning services
• Nursing facility services
• Transportation to medical care
• Home health services

While Medicaid and Medicare are not the same, they do provide complementary services — and it is possible for someone to be enrolled in both government programs at the same time. If you’d like to learn more about how these programs work, we have a team of licensed insurance agents ready to answer your questions. Reach out to us today to speak with a licensed insurance agent.

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