Medicare vs. Medicaid: What’s the Difference?

Health insurance terms can feel overwhelming, and the confusion often grows as you approach age 65 and start hearing more about Medicare. Two programs that are frequently mixed up are Medicare and Medicaid. They’re both government programs, but they serve different purposes, have different eligibility rules, and cover different types of care.

What Medicare Is

Medicare is a federal health insurance program primarily for people age 65 and older (and for some younger people with qualifying disabilities). It’s administered through the Centers for Medicare & Medicaid Services (CMS). Medicare is split into parts, each covering different categories of services.

• Part A (Hospital Insurance): Covers inpatient hospital care and, in limited situations, skilled nursing facility care, hospice, and some home health care. For skilled nursing facility coverage, Medicare generally requires a qualifying 3-day inpatient hospital stay, admission to the facility within 30 days of discharge, and a need for skilled care.
• Part B (Medical Insurance): Helps pay for doctor’s office visits, durable medical equipment, and preventive services. It can provide limited outpatient prescription drug coverage in specific circumstances.
• Part C (Medicare Advantage): A private plan option that bundles Part A and Part B coverage. Many plans also include prescription coverage (often Part D). Medicare Advantage plans often feel most similar to the employer or individual plans people are used to.
• Part D (Prescription Drug Coverage): Helps cover medications on the plan’s formulary when prescribed for an approved use. If a drug is prescribed off-label, coverage may still be possible, but additional requirements can apply.

What Medicaid Is (Medical Assistance in Minnesota)

Medicaid is a needs-based program that helps pay for health coverage for eligible individuals of all ages. For many older adults, Medicaid becomes especially important when help is needed to pay for long-term care after personal resources have been used. In Minnesota, Medicaid is called Medical Assistance. Within Medical Assistance, two common programs for people age 65+ are Elderly Waiver (EW) and Long-Term Care (LTC). Both have financial eligibility rules (income and assets) plus non-financial requirements.

• Asset limits for many married applicants (age 65+): Couples may be required to spend down assets to approximately $162,660 for the spouse not receiving Medical Assistance and $3,000 for the spouse receiving Medical Assistance (plus additional non-exempt asset rules).
• Common exemptions: The spouse living in the community may typically keep a home and one vehicle. Minnesota also applies a home equity limit (noted in this overview as $752,000).

Gifts and the 5-year lookback: If a family applies for Medical Assistance to help pay for long-term care, certain gifts/transfers made within the prior five years can trigger a penalty period. In general terms, the penalty period is calculated by dividing the value of the gift by the Statewide Average Payment for Skilled Nursing Services. As of May 2026, the figure referenced here is $11,653.

How Henningson & Snoxell Can Help

At Henningson & Snoxell, our elder law attorneys help families navigate the complexities of paying for long-term care. We assist with Medicare coverage issues (including appealing denials for covered services) and with Medical Assistance planning and applications when additional support is needed.