Medicare and Medicaid Aren’t the Same—And Mixing Them Up Could Cost You

Key Takeaways

• Medicare and Medicaid serve different groups, have different eligibility rules, and offer distinct types of coverage. Confusing them can lead to costly enrollment mistakes or missed benefits.

• In 2025, dual eligibility—being enrolled in both programs—is possible but comes with specific requirements, coordination challenges, and potential financial protections if managed correctly.

Understanding the Basics of Each Program

Medicare: National, Age-Based, and Federally Managed

Medicare is a federal health insurance program primarily for people aged 65 and older. It also covers some younger individuals with disabilities or end-stage renal disease (ESRD). It is not income-based, and eligibility is tied to work history and age.

Medicare is divided into different parts:

• Part A covers hospital care, skilled nursing facility stays, hospice, and some home health care.

• Part B includes outpatient services, preventive care, doctor visits, and durable medical equipment.

• Part D offers prescription drug coverage.

• Part C (Medicare Advantage) is a private alternative that combines Parts A and B and usually includes Part D and extra benefits.

In 2025, the standard monthly premium for Part B is $185, and the annual deductible is $257. Part A remains premium-free for most people who worked 40 quarters or more.

Medicaid: State-Run, Income-Based, and Varies Widely

Medicaid is a joint federal and state program that helps cover medical costs for individuals with limited income and resources. Unlike Medicare, Medicaid is not age-restricted.

Each state administers its own Medicaid program, so eligibility requirements, benefits, and application processes vary. Common groups covered include:

• Low-income adults

• Children

• Pregnant women

• People with disabilities

• Seniors with limited income (some of whom may also qualify for Medicare)

In many states, Medicaid pays for services that Medicare does not, such as long-term care in nursing homes and home-based personal care services.

Eligibility: Who Qualifies for What in 2025?

Medicare Eligibility in 2025

You qualify for Medicare if:

• You’re 65 or older and a U.S. citizen or permanent resident

• You’re under 65 with certain disabilities and have received Social Security Disability Insurance (SSDI) for at least 24 months

• You have ESRD or ALS

Eligibility is not tied to income, but high-income individuals may pay more in premiums through Income-Related Monthly Adjustment Amounts (IRMAA).

Medicaid Eligibility in 2025

Eligibility for Medicaid depends on your state of residence and your income and asset levels. For example:

• In most states, income limits are tied to the Federal Poverty Level (FPL), which adjusts annually

• Some states have expanded Medicaid under the Affordable Care Act to cover all adults with incomes up to 138% of the FPL

• Asset limits apply to specific groups, especially those seeking long-term care coverage

To determine if you qualify for Medicaid, you need to apply through your state’s Medicaid office.

Can You Have Both? Yes—But It’s Complicated

Some individuals are “dual eligible,” meaning they qualify for both Medicare and Medicaid. If this applies to you, Medicaid may help cover costs Medicare does not, such as:

• Medicare premiums (e.g., Part B)

• Deductibles and coinsurance

• Prescription drugs beyond Medicare’s limits

• Long-term care and nursing facility expenses

There are two main types of dual-eligible individuals:

• Full duals get full Medicaid benefits in addition to Medicare

• Partial duals receive limited help, such as assistance with premiums only

Dual eligibility requires active coordination between federal and state systems, which can lead to delays, confusion, and missed services if not managed properly.

Financial Implications of Confusing the Two

Mixing up Medicare and Medicaid can have significant financial consequences:

• Missing Enrollment Periods: Medicare has strict enrollment windows. Missing them could result in lifetime penalties or delayed coverage. Medicaid enrollment is open year-round, but delays can mean unpaid bills.

• Billing Errors: Using the wrong card or misunderstanding your primary payer can lead to denied claims.

• Long-Term Care Planning: Assuming Medicare pays for nursing home care may leave you unprepared. Medicaid is the primary payer for long-term custodial care, not Medicare.

• Coverage Assumptions: Believing Medicaid covers what Medicare does—or vice versa—may leave you without essential coverage, especially for prescription drugs, dental care, or vision services.

How the Programs Work Together in 2025

When someone is dual eligible, Medicare pays first. Medicaid picks up remaining costs if services are covered under both. This coordination is known as “payer of last resort” for Medicaid.

Here’s how that generally works:

• You see a doctor who accepts Medicare and Medicaid

• Medicare processes the claim and pays its share

• Medicaid receives the remaining balance and pays the difference, depending on your eligibility

In many cases, Medicaid also provides extra benefits such as transportation, personal care assistance, and long-term services that Medicare does not offer.

Coverage Differences That Matter

Long-Term Care

• Medicare covers only short-term skilled nursing care (up to 100 days in limited cases).

• Medicaid covers custodial care and long-term stays in nursing homes if you meet eligibility requirements.

Dental, Vision, and Hearing

• Medicare typically does not cover routine dental, vision, or hearing care.

• Medicaid often does, depending on your state.

Prescription Drugs

• Medicare Part D covers most outpatient prescription drugs, with a $2,000 out-of-pocket cap in 2025.

• Medicaid may cover additional drugs not on a Part D plan’s formulary.

Premiums and Cost-Sharing

• Medicare comes with monthly premiums, deductibles, and coinsurance.

• Medicaid can reduce or eliminate these costs for those who qualify, especially for dual-eligible individuals.

Enrollment: Where and When

Medicare Enrollment

You can enroll:

• During your Initial Enrollment Period (IEP): 7 months around your 65th birthday

• During the General Enrollment Period (GEP): January 1 to March 31 each year

• During Special Enrollment Periods (SEPs) triggered by life events

Medicaid Enrollment

You can apply for Medicaid any time of year through your state’s Medicaid office or online portal. Eligibility is reviewed annually.

If you become eligible for both programs, you may also qualify for a Special Enrollment Period to choose or change your Medicare plan.

Common Mistakes to Avoid in 2025

• Assuming they’re interchangeable: They serve different groups. Medicare is not based on income. Medicaid is.

• Failing to check state-specific Medicaid rules: Benefits and coverage vary widely by state.

• Relying on Medicare for long-term care: Medicare doesn’t cover custodial nursing home care beyond short-term rehab.

• Not applying for both if eligible: Dual eligibility can offer important financial relief.

• Misunderstanding who pays first: Medicare is the primary payer, Medicaid follows.

Why It’s More Confusing in 2025

Several updates to Medicare and Medicaid rules in 2025 have added to the confusion:

• The $2,000 out-of-pocket cap for prescription drugs under Medicare Part D now changes how drug costs are split.

• State Medicaid programs have introduced new waivers or expanded services, creating variation in what’s covered.

• Enrollment platforms continue to evolve, and more individuals are navigating eligibility using online tools, sometimes with incomplete information.

These changes mean staying informed is more important than ever. Small mistakes can lead to missed coverage or higher costs.

Staying Informed Means Staying Protected

To avoid mistakes and protect your health and finances:

• Review your plan annually—even if nothing seems to have changed

• Consult your state’s Medicaid office for updated eligibility and coverage details

• Track your Medicare notices and changes during the Open Enrollment period

• Ask questions if you’re unsure about billing, coverage, or eligibility status

• Speak with a licensed agent for personalized help comparing coverage and ensuring you’re fully protected

Separate Programs—But a Shared Responsibility

In 2025, Medicare and Medicaid remain distinct programs, each with its own rules, coverage scope, and purpose. But for the millions of people who rely on one or both, understanding the differences is essential to avoid costly errors.

If you’re unsure about what your plan covers—or whether you qualify for help from either program—get in touch with a licensed agent listed on this website. They can help you make the right decision for your health and financial situation.