Medicare vs. Medicaid - Budget Seniors

10 Key Takeaways (Short Answers First)

Medicare = age-based; Medicaid = income-based. Medicare kicks in at 65 regardless of wealth. Medicaid requires proving financial need.

The 2026 Medicaid income cap for nursing home care rose to $2,982/month — up from $2,901 in 2025, based on the updated Federal Benefit Rate.

Medicare Part B premiums jumped to $202.90/month in 2026 — a painful increase from $185 in 2025.

Yes, you can have both simultaneously. Nearly 1 in 5 Medicare enrollees are also on Medicaid — they’re called “dual eligibles.”

Medicaid covers long-term nursing home care; Medicare does not. This is the single biggest coverage gap that catches families off guard.

10 prescription drugs now have federally negotiated lower prices under Medicare as of January 1, 2026, with discounts ranging from 38% to 79% off list prices.

The 2026 Medicare Part D out-of-pocket cap is $2,100 — once you hit that, your plan pays 100% for the rest of the year.

Medicaid expansion states cover adults earning up to ~$22,025/year (138% of the Federal Poverty Level for a single person).

10 states still have not expanded Medicaid, creating a “coverage gap” where some low-income adults qualify for neither Medicaid nor marketplace subsidies.

Medicaid is essentially free; Medicare is not. Medicaid caps total out-of-pocket costs at 5% of household income, while Medicare has premiums, deductibles, and coinsurance stacking up fast.

💡 What Exactly Is Medicare? (It’s Not What Most People Think)

Here’s the misconception: people assume Medicare is “free government healthcare for seniors.” It’s not free. Not even close.

Medicare is federal health insurance for anyone ages 65 years and older, as well as for younger people with certain disabilities and conditions. Nearly 68 million people were enrolled in Medicare as of August 2024.

Medicare is a federal insurance program — meaning you’ve been paying into it through payroll taxes your entire working life. Think of it as a forced savings account that unlocks at 65, but still charges you premiums, deductibles, and copays when you actually use it.

The four parts of Medicare:

Part	What It Covers	2026 Cost to You
🏨 Part A (Hospital)	Inpatient stays, skilled nursing (up to 100 days), hospice, some home health	Free for most (paid via work taxes). Full premium: $565/month if you never worked
🩺 Part B (Medical)	Doctor visits, outpatient care, preventive screenings, medical equipment	$202.90/month premium + $283 annual deductible
🔄 Part C (Advantage)	Private plans bundling A + B, often with extras like dental/vision	Varies by plan (~$14/month average on top of Part B)
💊 Part D (Drugs)	Prescription drug coverage through private insurers	Up to $615 deductible + copays until $2,100 out-of-pocket cap

The insider detail nobody highlights: Medicare will only cover up to 100 days of skilled nursing facility care, and only when medically necessary, and unlike Medicaid, will not cover long-term nursing home care. That 100-day limit is the financial cliff that bankrupts families who assumed Medicare would cover Mom’s long-term dementia care. It won’t.

💚 What Exactly Is Medicaid? (The State-by-State Wild Card)

Medicaid is the program most people desperately need but feel embarrassed to ask about. Let’s kill that stigma right now.

Discover 12 Best Free Vet Care for Seniors Near Me

Medicaid is a joint federal and state program that helps cover medical costs for some people with limited income and resources. Unlike Medicare’s uniform federal structure, every state writes its own Medicaid playbook within federal guardrails.

Who qualifies? It depends dramatically on where you live:

Category	2026 Income Threshold	Notes
👨‍👩‍👧 Adults in expansion states	~$22,025/year (138% FPL) for single person	40+ states + D.C. have expanded
🤰 Pregnant women	Varies, often 200%+ FPL	All but 4 states extended coverage above minimum
👶 Children	Up to 200%+ FPL (state-dependent)	CHIP fills gaps above Medicaid limits
🧓 Seniors/disabled (nursing home)	$2,982/month income cap	Asset limit typically $2,000 in most states
♿ Aged, Blind, Disabled (ABD)	$994–$1,845/month (varies wildly)	SSI-linked eligibility

The critical detail: the 2026 FPL is $15,960/year for one person, up from $15,650. That seemingly tiny $310 increase can mean the difference between qualifying and being denied. And here’s the kicker — states typically don’t start to use the new numbers for Medicaid eligibility determination until March or April, so there’s a bureaucratic lag period where you might be evaluated under last year’s outdated thresholds.

What Medicaid covers that Medicare doesn’t:

✅ Long-term nursing home care (indefinitely, not just 100 days)
✅ Personal care services and home-based attendants
✅ Transportation to medical appointments
✅ Dental, vision, and hearing (varies by state but far more generous than Medicare)
✅ Adult day care and community-based support programs

🔥 The Biggest Difference Between Medicare and Medicaid (One Chart That Says It All)

This is what every confused Google searcher actually needs:

Feature	🔵 Medicare	🟢 Medicaid
Who runs it?	Federal government only	Federal + state governments jointly
Who qualifies?	Age 65+ or disabled (any income)	Low-income individuals (any age)
Based on…	Age/disability/work history	Income and financial resources
Monthly premium?	$202.90 for Part B (2026)	Usually $0
Deductibles?	$283 (Part B), $1,736 (Part A) in 2026	Little to none
Out-of-pocket max?	$2,100 for drugs only (Part D)	Capped at 5% of household income
Long-term care?	❌ No (max 100 days skilled nursing)	✅ Yes (nursing home + home-based)
Dental/Vision/Hearing?	Very limited (some Advantage plans)	Often included, especially for children
Prescription drugs?	Part D required (separate enrollment)	Included in coverage
Coverage consistency?	Same in all 50 states	Varies dramatically state to state
Enrollment	~68 million	~80+ million

👴 Medicare vs. Medicaid for the Elderly: Where Families Get Blindsided

This is where the rubber meets the road for most families — and where the system’s cruelest gaps live.

The nursing home trap: Your 78-year-old parent needs full-time memory care. Medicare covers the first 100 days of skilled nursing only after a qualifying hospital stay. Day 101? You’re on your own. A semi-private room averages $8,000–$10,000/month nationally. Within 18 months, most families have burned through their savings.

Medicaid is the only realistic path to long-term care coverage for most Americans. But qualifying means your parent must essentially become financially impoverished first. in most states, the asset limit for a single applicant is $2,000. That’s not a typo. Two thousand dollars in total countable assets.

Discover Verizon Senior Discounts Exposed

The spousal protection nobody tells you about: a spouse living at home can now retain up to $162,660 in assets in 2026 without disqualifying their partner from care. This is called the Community Spouse Resource Allowance (CSRA), and it prevents the nightmare scenario where one spouse’s nursing home need completely impoverishes the other.

For elderly Americans specifically, here’s how the two programs interact:

Scenario	What Happens
🧓 Senior on Medicare only	Pays premiums, deductibles, copays; NO long-term care coverage
🧓 Senior on Medicaid only	Full coverage including nursing home; must meet strict income/asset limits
🧓 Senior with both (dual eligible)	Medicare pays first for medical; Medicaid covers gaps + long-term care + premiums
🧓 Senior over income for Medicaid	May qualify for Medicare Savings Programs (QMB, SLMB, QI) for premium help

🤝 Can You Have Medicare and Medicaid at the Same Time? (Yes — and Here’s Why It Matters Enormously)

Approximately 12.3 million Americans are “dual eligibles” — enrolled in both programs simultaneously. Nearly 1 in 5 people with Medicare are also enrolled in Medicaid.

Here’s how dual eligibility actually works in practice: Medicare pays first when you’re a dual eligible and you get Medicare-covered services. Medicaid pays last, after Medicare and any other health insurance you have.

What dual eligibles get that single-program enrollees don’t:

Medicaid typically pays your Medicare Part A and Part B premiums (saving you $202.90+/month)
Medicaid covers your Medicare deductibles and copays
You get automatic “Extra Help” with Part D prescription drug costs
Access to long-term care services that Medicare alone doesn’t provide
Eligibility for Dual-Eligible Special Needs Plans (D-SNPs) that coordinate all care under one roof

The 2026 Medicare Savings Program thresholds for partial dual eligibility:

Program	Monthly Income Limit (Individual)	Monthly Income Limit (Couple)	What It Pays
🟢 QMB	$1,350	$1,824	Part A + B premiums, deductibles, copays
🟡 SLMB	$1,616	$2,184	Part B premiums only
🟠 QI	$1,816	$2,455	Part B premiums only

Asset limits for all three programs: $9,950 (individual) / $14,910 (couple) in 2026.

The hidden problem with dual eligibility: Medicare and Medicaid often fail to work properly together, leaving dually eligible individuals with double the delays and a frustrating lack of clarity about how to access help and care. You’re navigating two separate bureaucracies, two sets of rules, and often getting bounced between agencies that each say the other one handles your issue.

💊 The 2026 Game-Changers You Need to Know About

For Medicare beneficiaries — drug price revolution:

For the first time in the program’s history, Medicare has the ability to directly negotiate the prices of certain high expenditure, single source drugs without generic or biosimilar competition.

Ten drugs now have negotiated prices effective January 1, 2026, including Eliquis (blood clots), Jardiance (diabetes), Xarelto (blood clots), Entresto (heart failure), and Stelara (autoimmune conditions). The new lower prices range from 38 to 79 percent discounts off of list prices.

Enrollees who take medications with newly negotiated prices might find that they pay lower copays or coinsurance when they fill those prescriptions in 2026. Another 15 drugs — including Ozempic and Wegovy — will have negotiated prices starting in 2027.

Discover Free Legal Services

For Medicaid beneficiaries — potential upheaval ahead:

The “One Big Beautiful Bill” signed in July 2025 introduced significant changes to Medicaid that are still being phased in. Starting 2026–2027, work requirements of 80 hours per month for adults 19–64 and immigrant restrictions may reduce Medicaid eligibility for 11.8 million people. This includes more frequent eligibility verification — shifting from annual to every six months in some states.

🏥 Medicaid vs. Medical (Yes, People Actually Search This)

If you’re in California, “Medical” isn’t a typo — it’s Medi-Cal, which is California’s specific name for its Medicaid program. Every state runs Medicaid under its own branding. Oregon calls theirs the “Oregon Health Plan.” Tennessee uses “TennCare.” Massachusetts has “MassHealth.”

They’re all Medicaid. Same federal funding structure. Same basic requirements. Different state-level names, income thresholds, and optional benefits.

Quick state branding decoder:

State	Medicaid Goes By…
🌴 California	Medi-Cal
🎵 Tennessee	TennCare
🦞 Massachusetts	MassHealth
🌲 Oregon	Oregon Health Plan
🏔️ Minnesota	Medical Assistance
🌻 Hawaii	Med-Quest

❓ Frequently Asked Questions

Q: What is the highest income to qualify for Medicaid in 2026?

It depends on the program. For regular adult coverage in expansion states, the ceiling is approximately $22,025/year (138% FPL) for a single person. For nursing home Medicaid, the income cap is $2,982/month. Some states allow a “spend-down” where medical expenses reduce your countable income below the threshold.

Q: I’m 66 and broke — which program do I apply for first?

Both, simultaneously. At 66, you’re automatically eligible for Medicare based on age. If your income falls below your state’s Medicaid threshold, you qualify for dual eligibility. Apply for Medicare through Social Security (ideally 3 months before turning 65) and Medicaid through your state’s Medicaid office or HealthCare.gov.

Q: Does Medicare ever cover nursing home care?

Only up to 100 days of skilled nursing following a qualifying 3-day hospital stay, and only when medically necessary for rehabilitation — not for custodial or long-term care. After that, you need Medicaid, long-term care insurance, or private payment.

Q: My parent makes $3,200/month — are they over the Medicaid income limit?

Likely yes for most states’ nursing home Medicaid ($2,982/month cap), but they may still qualify through a Qualified Income Trust (also called a “Miller Trust”) in income-cap states. This legal tool channels excess income into a trust, bringing countable income below the threshold. An elder law attorney can set this up.

Q: What happens to my spouse’s assets if I go on Medicaid for nursing home care?

Your spouse can keep up to $162,660 in countable assets (2026 CSRA) plus the family home, one vehicle, and personal belongings. The applicant spouse is limited to $2,000 in most states. Strategic advance planning with an elder law attorney can protect significantly more.

Q: Are the new Medicare drug prices actually lower, or is this political theater?

The data supports real savings. Enrollees in Medicare Part D prescription drug plans may see their out-of-pocket costs for the negotiated drugs fall by an average of more than 50% in 2026, according to AARP’s analysis. The program is expanding — 15 more drugs are being negotiated for 2027, and up to 20 drugs per year after that.

Q: Can an undocumented immigrant get Medicaid or Medicare?

Medicare requires legal residency of at least 5 years plus qualifying work history (or disability). Medicaid rules vary by state, but federal law generally limits full Medicaid to lawfully present individuals. Some states provide emergency Medicaid regardless of immigration status, and a few states use their own funds to cover undocumented residents for broader services.

Q: I’m on disability — do I get Medicare immediately?

No. You may qualify for Medicare before age 65 if you have received Social Security or Railroad Retirement Board disability benefits for at least 2 years. There’s a 24-month waiting period from when you first receive SSDI payments. The exceptions: ALS (amyotrophic lateral sclerosis) and end-stage renal disease qualify you immediately.

Q: My state didn’t expand Medicaid — what are my options?

10 states have not expanded Medicaid as of 2026. If you’re in one of those states, you may fall into the “coverage gap” — earning too much for traditional Medicaid but too little for marketplace premium subsidies. Your options include charitable care programs, community health centers (which charge on a sliding fee scale), and short-term health plans.

Q: Where do I actually go to apply?

For Medicare: Call 1-800-MEDICARE (1-800-633-4227) or visit Social Security online 3 months before turning 65. For Medicaid: Apply through your state Medicaid website or HealthCare.gov. Processing takes 30–45 days. For help understanding both: Contact your State Health Insurance Assistance Program (SHIP) — free, unbiased counselors who don’t sell anything.

🔎 Bottom line: Medicare and Medicaid aren’t competing programs — they’re complementary ones designed for different populations that sometimes overlap. The system rewards people who understand the rules and punishes those who don’t with coverage gaps, missed deadlines, and permanent premium penalties. The single most valuable thing you can do? Apply for everything you might qualify for, because the worst they can say is no — and the best they can say might save your family from financial catastrophe.

Blog