Medcaid v. Medicare: What’s The Difference?

When planning for healthcare—especially long-term care—two programs come up often: Medicare and Medicaid. They sound similar, but they operate very differently. Understanding the distinction helps families make better decisions and avoid costly surprises.

Medicare: Federal Health Insurance

Medicare is a federal program that mainly covers adults 65+ and certain younger individuals with disabilities.

What it covers

• Hospital care (Part A)

• Doctor visits and outpatient care (Part B)

• Prescription drugs (Part D)

• Optional Medicare Advantage plans (Part C)

What it does not cover

Medicare offers only short-term skilled care, such as rehab after an illness or surgery. It does not cover long-term custodial care, including:

• Assisted living

• Memory care

• Most nursing home stays

• Help with daily activities like bathing or dressing

This is one of the biggest misconceptions families face.

Medicaid: Health Coverage Based on Need

Medicaid is a state–federal program that provides healthcare for people with limited income and assets.

What it covers

Unlike Medicare, Medicaid is the primary payer for long-term care in the U.S. It can cover:

• Nursing homes

• Home- and community-based services

• Adult day care

• Certain assisted-living or home-care programs (depending on the state)

Eligibility depends on meeting financial limits and demonstrating medical need.

If you’re faced with the prospect of needing long term care, you will not be able to rely on Medicare. And in order to qualify for Medicaid, you will need to be under certain asset and income limits. Your family needs to have a plan for how to deal with extended long term care needs.