What’s the difference between Medicare and Medicaid?

  • By
  • medicareresources.org Contributor
  • February 28, 2015

Q: What’s the difference between Medicare and Medicaid?

A: Medicare is a federal government-sponsored health care program for those 65 and over, and for others with certain disabilities. Most enrollees in Medicare have paid into an FICA tax during their working years, and realize the benefits of that tax through Medicare coverage.

Medicaid, on the other hand, is a health care program for low-income individuals who could not otherwise afford health insurance. Medicaid is funded in part by the government and the state in which the enrollee lives. The states establish their own eligibility standards and services for Medicaid, while the federal government establishes criteria for Medicare.

Prior to 2014, Medicaid coverage was generally limited to a few specific groups:

  • pregnant women in extreme poverty
  • low-income parents of a sick child 18 years of age or younger
  • low-income seniors over 65, the blind, disabled, and those who need nursing home care, and
  • any U.S. citizen that is terminally ill and needs hospice services.

But the Affordable Care Act expanded Medicaid as of January 1, 2014. Initially, this was intended to be the case in every state, but a Supreme Court ruling in 2012 made Medicaid expansion optional, and as of February 2015, there are still 22 states that have not expanded Medicaid, although 7 of them are considering it.

In the District of Columbia and the 28 states where Medicaid has been expanded under the ACA, coverage is available for anyone with an income up to 138 percent of the poverty level (about $16,104 a year for a single adult). The federal government is paying 100 percent of the cost to cover the newly-eligible population through the end of 2016, after which the states will gradually take on a small portion of the costs.

By 2020, the states will be paying 10 percent of the cost of Medicaid expansion, and it will remain at that level from that point on.

Here’s more information on Medicaid in each state, and where the states are in terms of Medicaid expansion under the ACA.