What is the Difference Between Medicare and Medicaid?

The Difference Between Medicare and Medicaid Medicare

Medicare is a federal entitlement program designed to provide medical coverage to enrollees sixty-five and over. The program also covers all those with End Stage Renal Disease and many disabled individuals. There are five components of Medicare. Part A (or Original Medicare) provides inpatient hospital coverage to nearly all Americans over sixty-five. Part B provides medical coverage for doctors’ visits, outpatient care, and some preventative services and costs the same low monthly premium for almost everyone. Part C refers to the Medicare Advantage plans available through private health insurance companies which provide all the benefits of Parts A & B in addition to other advantages like vision, hearing, and prescription drug coverage for an extra monthly premium. Part D refers to prescription drug plans available through private insurers which may be added on to one’s Parts A & B coverage. The fifth component of Medicare is the Medicare Supplement (or Medigap) Plan option from a private insurer which is meant to help fill in the gaps in coverage of Parts A & B like copayments, coinsurance, and deductibles for an additional monthly premium.


Medicaid is a similar entitlement program meant to address the needs of a different population: the impoverished, children, pregnant women, and the disabled. Medicaid is a state-federal cooperative effort to provide basic medical assistance to individuals who cannot afford private health insurance on the individual market or through their employer. This means that the federal government contributes a certain portion of the funds necessary to maintain the program to each state which then administers the program. Medicaid takes many names on a state-by-state basis and depending on the state makes different benefits available to its recipients. In practice, Medicaid works much like having private health insurance: enrollees are given a card to present at the doctor’s office and if the doctor participates in Medicaid the state will pay for the appointment minus the contribution of any other health insurance the individual carries. Medicaid covers the cost of most major medical expenses, like in- and outpatient hospital care, laboratory services, home health care, nursing home care, and ambulance service. There are different eligibility requirements in each state, but all states have an income ceiling which recipients must be below. Under the Medicaid umbrella, states have created different programs based on the demonstrated needs of their residents. For example, in most states Medicaid funds have established programs to benefit pregnant women, the blind, and those requiring managed care. All states have implemented the federal State Children’s Health Insurance Program within their Medicaid plan which provides basic medical insurance to all children (and sometimes their families, based on income). In some instances individuals may be eligible for both Medicare and Medicaid, particularly disabled Americans.