Medicare and Medicaid: What's the Difference?

Nolo

Learn about the different types of coverage provided by Medicare and Medicaid.

Medicare and Medicaid are very different. Medicaid is a federal program for low-income, financially needy people, set up by the federal government and administered differently in each state. (This program is called Medi-Cal in California.)

Eligibility for Medicare, also a federal program, is not tied to individual need. Rather, it is an entitlement program; you are entitled to it because you or your spouse paid for it through employment or self-employment taxes. Medicare was created in an attempt to address the fact that many older citizens have medical bills significantly higher than the rest of the population, while it is much more difficult for most seniors to continue to earn enough money to cover those bills.

Although you may qualify for and receive coverage from both Medicare and Medicaid, there are separate eligibility requirements for each program: Being eligible for one program does not necessarily mean you are eligible for the other. Also, Medicaid pays for some services for which Medicare does not. If you are eligible for Medicaid, Medicaid may pay Medicare deductibles and the Medicare premium.

The following chart summarizes the differences between the two programs.