Medicaid and Medicare FAQ: What do these plans offer? What are the differences?

Steve Chapoton

| 3 min read

Medicare, Medicaid – two programs that sound similar and are easy to confuse. Despite plenty of conversation about both, it can be difficult to understand the differences between Medicare and Medicaid.
Have no fear! We’ll walk you through the major points of these government health insurance programs so you can better understand the health care options that may be available to you.
What are the differences?
The biggest areas of difference between the two programs are:
  • Who is eligible to receive coverage
  • How the programs are funded
  • Who oversees the programs
Medicare is for people over the age of 65 and people of any age who are disabled or have permanent kidney failure. Medicare is financed by a portion of payroll taxes, and by monthly premiums deducted from Social Security checks. It’s administered by the Centers for Medicare and Medicaid Services, a federal agency.
There are two “parts” of Medicare, Parts A and B. Medicare Part A helps pay for inpatient hospital care and certain follow-up services. Medicare Part B helps pay for doctors’ services, outpatient hospital care and other medical services.
Together, Parts A and B are often referred to as Original Medicare. Beneficiaries pay a premium toward their Medicare Part B coverage, and may pay additional costs, such as a copayment for a doctor’s visit, or annual deductible.
As an alternative to Part A and B, beneficiaries can select a Part C plan, which is also referred to as a Medicare Advantage plan. Private companies contract with the federal government to offer these plans, which pay for everything covered by Original Medicare and often provide additional services. Such as dental, hearing, vision benefits and maybe even a gym membership. Beneficiaries usually pay a monthly premium and some other fees, such as copayments and deductibles.
Those eligible for Medicare can also purchase Part D prescription drug coverage through private insurance companies that contract with the federal government. For this coverage, beneficiaries pay a monthly premium and may also have copayments and deductibles when they get a prescription filled.
Medicaid assists low-income children, pregnant women, adults with disabilities and seniors. Medicaid is jointly financed by federal and state governments, with the federal government matching the amount each state spends on the program.
Each state works with the Centers for Medicare and Medicaid Services to administer its own program. Because states can extend coverage beyond federal requirements, eligibility and coverage varies from state to state.
Beneficiaries aren’t required to pay a monthly premium and usually pay nothing or only a small amount for medical care.
To learn more about Medicaid in Michigan, visit
Want to learn more about Medicare and Medicaid? Ask questions, see answers and learn about health insurance on Health Insurance Central.

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