The names are similar, both are government health programmes, and that is where the resemblance ends.
Medicare is a federal programme based primarily on age. You qualify at 65 regardless of income, and it works essentially the same way in every state.
Medicaid is a joint federal-state programme based on income and circumstances. Eligibility, benefits and even the programme’s name differ from state to state, and there is no age requirement at all.
One is an entitlement you have paid for through payroll taxes. The other is a means-tested safety net. Millions of Americans qualify for both.
Side by side
| Medicare | Medicaid | |
|---|---|---|
| Run by | Federal government | States, within federal rules |
| Based on | Age 65+, or disability, or ESRD/ALS | Income and circumstances |
| Varies by state | Barely | Enormously |
| Costs to you | Premiums, deductibles, coinsurance | Little or nothing |
| Enrolment window | Yes, with penalties for late enrolment | None — apply any time |
| Long-term care | Very limited | The main payer in the U.S. |
Who qualifies for Medicare
Three routes in. You are 65 or older and you or your spouse paid Medicare taxes for at least 40 quarters — ten years of work. You are under 65 and have received Social Security disability benefits for 24 months. Or you have end-stage renal disease or ALS, which qualify without the waiting period.
With 40 quarters of work history, Part A costs nothing in premium. With fewer, you can still enrol by paying a premium — $565 a month in 2026 for those with fewer than 30 quarters of coverage.
The four parts
| Part | Covers |
|---|---|
| A — Hospital | Inpatient hospital stays, skilled nursing after a qualifying stay, hospice, some home health |
| B — Medical | Doctor visits, outpatient care, preventive services, durable medical equipment |
| C — Medicare Advantage | A private plan that replaces A and B, usually bundling D |
| D — Prescription drugs | Outpatient prescriptions, through private plans |
Parts A and B together are called Original Medicare. It is administered by the federal government, accepted by any provider who takes Medicare — which is most of them nationwide — and has no network.
What Medicare costs in 2026
The figures below are the amounts CMS announced for 2026.
| Item | 2026 | 2025 |
|---|---|---|
| Part B standard monthly premium | $202.90 | $185.00 |
| Part B annual deductible | $283 | $257 |
| Part A inpatient deductible per benefit period | $1,736 | $1,676 |
| Part A coinsurance, days 61–90 | $434/day | — |
| Part A lifetime reserve days | $868/day | — |
| Skilled nursing, days 21–100 | $217/day | — |
| Part A premium (fewer than 30 quarters) | $565/month | $518 |
The Part B increase of nearly 10 percent is larger than recent years, and it matters because the premium is normally deducted directly from your Social Security payment.
Higher earners pay more through IRMAA — an income-related adjustment applied to both Part B and Part D, assessed on your tax return from two years earlier. If your income has since fallen because of retirement, divorce or the death of a spouse, you can request a reconsideration using Form SSA-44 rather than simply paying the surcharge.
Note what the Part A deductible is: it applies per benefit period, not per year. A benefit period ends after 60 consecutive days out of hospital, so two separate hospitalisations in one year can mean paying it twice.
What Medicare does not cover
This list surprises people, often at a bad moment.
Two of those exclusions have their own markets. Custodial care is addressed in our guide to long-term care insurance, and coverage while travelling abroad in travel insurance for US residents.
- Long-term custodial care. Medicare covers skilled nursing only after a qualifying hospital stay and only for a limited period. It does not pay for a nursing home or in-home help with daily living. This is the single largest gap.
- Routine dental care, including cleanings, fillings, extractions and dentures.
- Routine vision care and eyeglasses.
- Hearing exams and hearing aids.
- Most care outside the United States.
- Cosmetic procedures and most alternative medicine.
Critically, Original Medicare has no out-of-pocket maximum. A catastrophic year is genuinely open-ended, which is the reason most enrolees hold either a Medigap policy or a Medicare Advantage plan.
Original Medicare or Medicare Advantage
This is the central decision, and reasonable people choose differently.
Original Medicare plus a Medigap policy plus a Part D plan costs more in monthly premiums and gives you nationwide access to any provider accepting Medicare, no referrals, and — depending on the Medigap plan — predictable costs with very little left to pay.
Medicare Advantage is a private plan replacing A and B. Premiums are frequently low or zero, drug coverage is usually bundled, and extra benefits such as dental, vision, hearing and gym membership are common. In exchange you accept a provider network, frequently need referrals and prior authorisation, and are limited to the plan’s service area. Advantage plans do carry an annual out-of-pocket maximum, which Original Medicare lacks.
The decision tends to turn on three questions: do you travel or split time between states, do you have specific specialists you want to keep, and would a network restriction cause you problems if your health changed.
The Medigap timing trap
Medigap — also called Medicare Supplement — pays the deductibles and coinsurance Original Medicare leaves behind. Plans are standardised by letter, so Plan G from one insurer offers identical benefits to Plan G from another, and only price and service differ.
Here is the part that catches people. You have a six-month Medigap open enrolment period beginning the month you are 65 and enrolled in Part B. During it, insurers must sell you any policy they offer at the standard price regardless of your health.
After that window closes, in most states insurers may medically underwrite you — meaning they can charge more or decline you altogether. Someone who chooses Medicare Advantage at 65 and tries to switch to Original Medicare with Medigap at 72 may find no insurer willing to sell them a policy. A few states have rules requiring guaranteed issue beyond the federal window; most do not.
This makes the choice at 65 more consequential than it appears, and it is worth understanding before the birthday rather than after.
Who qualifies for Medicaid
Medicaid eligibility depends on income, household size and which category you fall into — and it varies more between states than almost any other American benefit.
The largest divide is expansion. States that adopted the ACA’s Medicaid expansion cover most adults under 138 percent of the federal poverty level. States that did not generally cover only specific categories — children, pregnant women, parents with very low incomes, people with disabilities, and older adults — leaving some low-income adults in a coverage gap where they earn too little for marketplace subsidies and too much for their state’s Medicaid.
Names differ too. Medicaid is Medi-Cal in California, MassHealth in Massachusetts, TennCare in Tennessee, SoonerCare in Oklahoma and Husky Health in Connecticut, among others. If you were told you do not qualify years ago, rules change and it is worth reapplying.
There is no enrolment window. You can apply any day of the year through your state agency or through HealthCare.gov, which forwards the application. CHIP covers children in households earning too much for Medicaid, with thresholds well above the poverty level in many states.
What Medicaid covers that Medicare does not
Mandatory federal benefits include inpatient and outpatient hospital care, physician services, laboratory and x-ray, home health, and comprehensive screening and treatment for children. States may add prescription drugs, dental, vision, physical therapy and more, and most do.
The decisive difference is long-term care. Medicaid is the largest payer for nursing home and home-based long-term care in the United States, and Medicare is not a realistic substitute. This is why many middle-income families encounter Medicaid for the first time not through poverty but through a parent’s dementia diagnosis.
Qualifying for long-term care Medicaid involves strict asset limits and a five-year look-back period, during which transfers of assets for less than fair value can trigger a penalty delaying eligibility. Estate recovery rules also allow states to recoup certain costs from an estate afterwards. These rules are complex, state-specific and genuinely consequential — an elder law attorney licensed in your state is the right person to ask, and asking early matters far more than asking thoroughly.
What a year on Original Medicare actually costs
Adding the 2026 figures together makes the shape of the gap clearer. Consider a hypothetical enrolee with no supplemental coverage who has one hospital admission and ordinary outpatient care during the year.
| Cost | Amount |
|---|---|
| Part B premiums, 12 months at $202.90 | $2,435 |
| Part B annual deductible | $283 |
| Part A hospital deductible, one benefit period | $1,736 |
| 20% coinsurance on $12,000 of outpatient care | $2,400 |
| Part D premium and drug cost sharing (varies) | varies |
| Running total before Part D | $6,854 |
And there the arithmetic stops being reassuring, because that 20 percent coinsurance has no ceiling. Double the outpatient care and the coinsurance doubles. A serious illness requiring sustained treatment produces a bill with no upper bound at all.
That single fact is the argument for supplemental coverage. A Medigap policy converts the open-ended exposure into a predictable premium; a Medicare Advantage plan caps it with an annual out-of-pocket maximum. Going without either is a bet that most people should not take, and it is the most consequential of all the decisions described here.
A second hospitalisation more than 60 days after the first also starts a new benefit period, meaning the $1,736 deductible applies again. Medicare’s cost structure is not annual in the way commercial insurance is, and that catches people out.
Having both
People who qualify for both are called dual eligible. Medicare pays first and Medicaid fills in behind it, covering premiums, deductibles, coinsurance and services Medicare excludes.
Several partial programmes also exist for people whose income is too high for full Medicaid. The Medicare Savings Programs — QMB, SLMB and QI — pay Part B premiums and sometimes cost sharing, and Extra Help reduces Part D drug costs substantially. These are significantly underclaimed: a large number of eligible people simply never apply. Your State Health Insurance Assistance Program offers free, unbiased counselling and can check whether you qualify.
Enrolment timing and the penalties
Medicare has deadlines and they carry lifetime consequences.
- Initial enrolment period: seven months spanning the three months before your 65th birthday month, the month itself, and the three months after.
- General enrolment: January 1 to March 31 if you missed the initial window.
- Special enrolment: available if you were covered by an employer plan through active employment past 65, which lets you delay Part B without penalty.
- Annual open enrolment: October 15 to December 7 for changing Advantage and Part D plans.
- Medicare Advantage open enrolment: January 1 to March 31, for those already in an Advantage plan.
The Part B late enrolment penalty adds 10 percent to your premium for each full 12-month period you could have enrolled and did not — and it is permanent, not a one-off. The Part D penalty works similarly and also lasts for life.
One trap worth naming: COBRA and retiree coverage do not count as active employer coverage for delaying Part B. People on COBRA at 65 regularly assume they are protected and are not. The broader enrolment calendar, including how this interacts with marketplace coverage, is covered in our guide to health insurance open enrollment.
Mistakes that cost the most
- Missing the initial enrolment period and accepting a lifetime penalty.
- Relying on COBRA or retiree coverage to delay Part B.
- Letting the Medigap window close without understanding you may never get another guaranteed-issue opportunity.
- Choosing an Advantage plan on premium alone without checking the network, the drug formulary and the out-of-pocket maximum.
- Assuming Medicare pays for a nursing home.
- Not reviewing Part D annually. Formularies and premiums change every January, and the plan that was cheapest last year often is not.
- Contributing to an HSA after enrolling in Medicare, which creates excess contributions — the timing rules are in our guide to how HSAs work.
- Never checking Medicaid or the Medicare Savings Programs because of an assumption about income.
Frequently asked questions
Is Medicare free?
No. Part A is usually premium-free with 40 quarters of work history, but Part B costs $202.90 a month in 2026 and both parts carry deductibles and coinsurance. Most people also pay for Part D and either Medigap or an Advantage plan.
Can I keep working and delay Medicare?
Generally yes, if you are covered by a group plan through active employment at an employer of 20 or more. You then get a special enrolment period when that coverage ends. At smaller employers Medicare usually becomes primary at 65, so enrolling is normally necessary. Confirm with your HR department before delaying.
Does Medicaid look at my home?
For most Medicaid categories, assets are not counted at all. For long-term care Medicaid they are, though a primary residence is often exempt up to an equity limit while you or a spouse live there. Estate recovery may apply afterwards. This is state-specific and worth professional advice.
What if I move to another state?
Medicare travels with you, though an Advantage plan’s network generally does not — moving usually triggers a special enrolment period to change plans. Medicaid does not travel: you must close the old case and apply in your new state, where eligibility rules may be entirely different.
Where do I get unbiased help?
Every state operates a State Health Insurance Assistance Program offering free counselling with no commission attached. Medicare.gov’s Plan Finder compares Part D and Advantage plans against your own prescriptions. Both are free and materially better than acting on a mailed advertisement.
The short version
Medicare is about age, works the same everywhere, and has deadlines with permanent penalties attached. Medicaid is about income, differs enormously by state, has no deadline, and is the programme that actually pays for long-term care.
If you are approaching 65, put the initial enrolment window and the six-month Medigap window in your calendar now. If your income is low or a parent needs long-term care, apply for Medicaid rather than assuming the answer — the categories are broader than most people expect.
This article is general information for U.S. readers and is not insurance, legal, medical or tax advice. Medicaid eligibility, benefits and estate recovery rules vary substantially by state; Medicare figures cited are the amounts announced by CMS for 2026. Confirm your own situation at Medicare.gov, with your state Medicaid agency, or with your free State Health Insurance Assistance Program.
