The United States government has established numerous programs to provide health coverage and other benefits to certain groups of people. Two of those programs, Medicare and Medicaid, sound very similar but vary in the individuals they assist. Below are the basics of each program.

what is the difference between medicare and medicaid


Medicare is a federal health insurance program for people who are age 65 or older, certain younger individuals with disabilities, and people with permanent kidney failure requiring dialysis or a transplant.

Different parts of Medicare help cover specific services. The following is a breakdown of Medicare’s available services:

  • Medicare Part A (Hospital insurance): Covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care.
  • Medicare Part B (Medical insurance): Covers certain doctors’ services, outpatient care, medical supplies, and preventive care.
  • Medicare Part C (Medicare Advantage): Offered by private companies that contract with Medicare to provide Part A and Part B benefits.
  • Medicare Part D (prescription drug coverage): Adds prescription drug coverage to certain Medicare plans. These plans are offered by Medicare-approved companies.

If you believe you are eligible for Medicare benefits but have not yet enrolled, click here to read more about the program and apply.


Medicaid is the largest source of health coverage in the United States, providing coverage to eligible individual adults with low income, children, pregnant women, seniors, and people with disabilities.

Medicaid is administered by each state according to federal requirements. In other words, states establish and administer their own Medicaid programs and determine how much coverage a person receives and for how long. Federal law does require certain “mandatory” benefits such as the following:

  • Inpatient and outpatient hospital services,
  • Physician services,
  • Laboratory and x-ray services,
  • Home health services, and others.

Optional benefits include services like prescription drugs, case management, and therapies.

Per the Affordable Care Act, Medicaid determines eligibility by calculating a person’s Modified Adjusted Gross Income (MAGI), which takes into account his or her taxable income and tax filing relationships. There is also “non-financial eligibility” criteria for Medicaid, including state residency, U.S. citizenship or qualified non-citizenship, and others.

Some states offer a “medically needy” program for those with health needs who have too much income to otherwise qualify for Medicaid. Individuals who are eligible for this program can “spend down” their income that is above their state’s standard. We cover the basics of spend downs here.

If you believe that you or a family member is eligible to receive Medicaid benefits, find out how to apply for coverage by clicking here.

It’s critical to know that if you are already a beneficiary of Medicare, Medicaid, SSI, or another government program and you are about to receive a personal injury settlement, you may need to take action to keep your eligibility. Feel free to contact Milestone Consulting with any questions.

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The Difference Between Medicare and Medicaid