Understanding government healthcare programs like Medicaid and Medicare is essential—especially when planning for your health or the care of a loved one. While both programs are designed to improve access to medical services, they serve very different roles and populations.
Whether you're navigating the healthcare system for yourself or helping a family member, knowing the differences between these two programs can make all the difference.
What Is Medicaid?
Medicaid is a joint federal and state program that offers health insurance to individuals and families with low income. It was established in 1965 and has since become a vital safety net for millions of Americans, ensuring they receive basic and sometimes even specialized medical care.
Unlike Medicare, which is primarily age-based, Medicaid eligibility is determined by financial need, along with factors like age, disability status, and family circumstances. Each state manages its own Medicaid program within federal guidelines, meaning benefits and rules can vary depending on where you live.
How Medicaid Operates
Medicaid is funded by both the federal government and individual states. While the federal government sets minimum standards for coverage, states have flexibility to tailor their programs based on the needs of their residents.
Key Characteristics:
Shared Funding: Costs are split between state and federal governments.
Locally Administered: Each state determines its own eligibility requirements and covered services beyond federal mandates.
Means-Tested: Medicaid is designed for people with limited income and resources.
Some states expanded Medicaid under the Affordable Care Act (ACA), broadening coverage to include low-income adults who previously might not have qualified. However, eligibility can still differ from state to state.
Who Is Eligible for Medicaid?
Eligibility is largely based on income, but there are several groups that typically qualify for Medicaid coverage. These include:
Low-income adults, particularly in states that expanded Medicaid
Children and teenagers from low-income households
Pregnant women meeting income thresholds
Elderly individuals with low income and few assets
People with disabilities
Income limits are usually calculated using the Federal Poverty Level (FPL) and adjusted by household size. Many states also factor in medical need and whether the applicant requires long-term care or specialized services.
To determine eligibility, individuals can apply through their state’s Medicaid office or the federal health insurance marketplace.
What Services Does Medicaid Cover?
One of Medicaid’s biggest strengths is its comprehensive coverage. While states must offer a core set of benefits, they can also choose to include additional services.
Mandatory Medicaid Benefits Include:
Hospital stays (inpatient and outpatient)
Physician visits
Laboratory tests and diagnostic imaging
Family planning and maternity care
Preventive services like vaccinations and screenings
Nursing facility services
Home health care for eligible individuals
Optional Services That States May Provide:
Prescription drugs
Dental and vision care
Mental health and substance abuse treatment
Physical therapy and rehabilitation services
Transportation for medical appointments
Long-term care in the home or in facilities
Because Medicaid is managed by each state, the range of available services can vary widely. Some states offer expanded benefits, while others stick closer to the federally required minimum.
How Much Does Medicaid Cost?
Affordability is a central feature of Medicaid. Most enrollees pay little or nothing for their healthcare, making it an essential option for individuals who cannot afford private insurance.
Typical Costs for Medicaid Enrollees:
No premiums for most individuals (though some states charge small amounts to higher-income beneficiaries)
Minimal copayments, if any
No or very low deductibles
Spending caps that protect low-income families from excessive out-of-pocket costs (usually no more than 5% of household income annually)
While some cost-sharing may apply, Medicaid remains the most affordable coverage option for many low-income individuals and families.
What Is Medicare?
To better understand Medicaid, it’s helpful to look at Medicare, which is often confused with it. Medicare is a federal health insurance program mainly for people aged 65 and older, though it also covers younger individuals with certain disabilities or serious health conditions like End-Stage Renal Disease (ESRD) or ALS.
Medicare Is Divided Into Four Parts:
Part A (Hospital Insurance) – Covers inpatient hospital stays and limited nursing care
Part B (Medical Insurance) – Covers outpatient services and physician visits
Part C (Medicare Advantage) – Combines A and B (and often D) through private plans
Part D – Covers prescription drugs
Medicare typically involves more out-of-pocket costs than Medicaid. While many receive Part A for free, most people pay monthly premiums for Parts B and D, along with deductibles and coinsurance.
Key Differences Between Medicaid and Medicare
Although both are government programs, Medicaid and Medicare serve different populations and operate in distinct ways:
| Feature | Medicaid | Medicare |
|---|---|---|
| Eligibility | Based on income, household size, and medical need | Based on age (65+) or qualifying disability |
| Funding | Federal and state | Entirely federal |
| Administration | Managed by individual states | Managed by the federal government |
| Coverage | Includes long-term care, dental, vision, and more (varies by state) | Covers hospital and medical services, with optional prescription drug plans |
| Costs | Usually low or no cost | Premiums, deductibles, and coinsurance required |
| Enrollment | Available year-round | Specific enrollment periods annually |
Dual Eligibility: Qualifying for Both Medicaid and Medicare
Some people are eligible for both Medicaid and Medicare. These individuals, known as dual-eligible beneficiaries, receive benefits from both programs. Medicaid acts as a supplement to Medicare and can help cover costs that Medicare doesn’t, such as:
Medicare premiums
Deductibles and coinsurance
Long-term care
Additional services like dental, vision, or personal care
Dual-eligible individuals may also qualify for Special Needs Plans (SNPs) that coordinate benefits and ensure continuity of care across both programs.
Why Medicaid Is So Important
Medicaid is a cornerstone of the American healthcare system. It provides essential medical coverage to over 80 million people and helps fund critical health services nationwide.
Broader Impacts of Medicaid:
Improves access to healthcare for underserved populations
Supports children’s health, covering nearly half of all U.S. kids
Reduces emergency room reliance by encouraging preventive care
Funds nursing homes, clinics, and hospitals—especially in rural and low-income communities
Boosts local economies by creating jobs and supporting healthcare providers
Without Medicaid, many Americans would simply go without the care they need.
Final Thoughts
When comparing Medicaid and Medicare, it’s clear they both serve vital roles—but in very different ways. Medicaid is designed to support low-income individuals and families, offering broad and affordable access to healthcare. On the other hand, Medicare primarily helps seniors and those with specific health conditions by providing insurance with more out-of-pocket costs.
If you’re unsure whether you qualify for Medicaid, or you’re looking to plan for long-term healthcare needs, speaking with a knowledgeable legal or healthcare professional can provide clarity.
At Doane & Doane, located in West Palm Beach, Florida, we specialize in helping individuals understand their Medicaid options and prepare for the future. From eligibility questions to estate planning, we’re here to guide you every step of the way.
Visit our website or reach out today to schedule a consultation.
We’re committed to helping you protect your healthcare and financial well-being.
