Medicare vs Medicaid: Key Differences for 2026

Most people know that Medicare and Medicaid exist. Very few people know how they actually work when it comes to paying for home care, and that gap in knowledge costs families time, money, and a lot of stress.

The two programs sound almost identical, but they are built for different people and cover very different things. If you’re trying to figure out how to pay for a loved one’s in-home care, the details matter enormously. 

A majority of the public — 62% — are either unsure or flat-out incorrect when asked which program pays for nursing home care and extended long-term care services. Medicaid is the answer, but most people still point to Medicare. That single misconception leads families to delay planning, exhaust their personal savings, and miss out on benefits they were entitled to all along.

This article breaks down what each program covers, how much it costs, and what that means for families seeking home care in New York.  

Key takeaways

• Medicare is a federal program for people 65 and older, but it only covers short-term, skilled home care, not long-term custodial care.
• Medicaid covers long-term home care for low-income individuals, making it the more relevant program for ongoing in-home support.
• In New York, the cost for Medicare vs Medicaid differs significantly: Medicare involves premiums, deductibles, and coinsurance, while Medicaid typically has little to no out-of-pocket cost for qualifying individuals.
• The Medicare rate vs Medicaid rate gap means government spending is 13% higher per person under Medicare, yet families often get less long-term coverage than they expect.
• You can qualify for both programs simultaneously, a status known as “dual eligibility,” which can dramatically expand your access to home care.

What is Medicare, and What Does it Actually Cover?

Medicare is a federal health insurance program. It was created in 1965 alongside Medicaid, and while both programs have been intertwined in public perception ever since, they serve fundamentally different roles. Medicare provides health coverage to those older than 65 and to some younger individuals with certain disabilities, regardless of income level.

The program is divided into four parts, each covering a different category of healthcare. Understanding which part covers what is where most families get confused.

Medicare Part	What it covers	What it does NOT cover
Part A	Hospital stays, skilled nursing, short-term home health	Long-term custodial home care
Part B	Doctor visits, outpatient care, medically necessary home health	Daily personal care without skilled oversight
Part C (Advantage)	Parts A + B + D, possible supplemental benefits	Varies by plan; long-term home care is usually excluded
Part D	Prescription drugs	Non-drug expenses
All Parts Combined	Short-term, medically necessary care	Ongoing help with daily living activities

Medicare Part A: Hospital and Limited Home Care

Part A covers inpatient hospital stays, skilled nursing facility stays, hospice care, and some home health services. The word “some” is doing a lot of heavy lifting in that sentence.

Medicare only covers short-term home health or skilled nursing facility services, such as rehabilitation following a hospital stay. To qualify for home care under Part A, you must be considered “homebound”, meaning leaving home requires considerable effort, and you must need skilled care like nursing or physical therapy, not just help with daily tasks.

The coverage window under Part A for skilled nursing is limited. After 60 days in a hospital, out-of-pocket costs begin to rise significantly, and the program is not designed to fund the ongoing, daily personal care most seniors and their families actually need.

Medicare Part B: Outpatient Services and Ongoing Medical Care

Part B covers doctor visits, outpatient care, lab tests, preventive services, and medically necessary home health visits. Once the annual deductible is met, Original Medicare covers 80% of the cost for outpatient physical and mental health services, leaving beneficiaries responsible for the remaining 20%.

Part B can cover home health aide visits, but only when they accompany skilled care: a nurse or therapist must already be involved. The moment skilled care ends, Part B’s home care coverage ends with it.

Medicare Part C and Part D

Part C, better known as Medicare Advantage, is offered through private insurers and bundles Part A, Part B, and usually Part D (prescription drugs) into one plan. Some Medicare Advantage plans offer supplemental benefits that can help fill coverage gaps, including allowances for personal care services, transportation assistance, or home safety modifications.

Part D covers prescription drugs. The out-of-pocket maximum on covered drugs is $2,000 in 2025, and in 2026, it will be $2,100.

What Medicare Does Not Cover

This is the part families most often learn too late. Because Medicare does not cover custodial services or 24-hour home care, families needing this level of support must explore other options such as private pay, Medicaid, or long-term care insurance.

Custodial care includes help with bathing, dressing, grooming, meal preparation, and mobility: the exact services most aging adults rely on every day. Medicare simply does not pay for this, regardless of how long someone has been in the system or how much they have paid into it. 

If you’re weighing private pay vs insurance for home care, our breakdown covers what each option actually costs and who each one makes sense for.

What is Medicaid and how is it Different?

Medicaid serves a different population and operates under a different philosophy. Medicaid provides health coverage for people with low incomes. Unlike Medicare, which is a federal-only program, Medicaid is a joint federal-state partnership, which means what it covers, who qualifies, and how it works can vary significantly from state to state.

New York has one of the more generous Medicaid programs in the country, but it also has income and asset requirements that families need to plan around carefully.

Who Qualifies for Medicaid in New York

To receive Medicaid in New York, applicants must meet financial eligibility requirements. Monthly income must not exceed $1,732 for an individual or $2,351 for a couple, with a personal needs allowance of $50 per month excluded from income calculations. Asset limits require countable assets not to exceed $30,182 for an individual.

For seniors who own property or have savings beyond these thresholds, there are legal pathways to qualify, including Medicaid Asset Protection Trusts and the Medically Needy Spenddown Program. These require planning ahead, ideally with an elder law attorney, well before care is urgently needed.

What Medicaid actually covers for home care in New York

This is where Medicaid becomes significantly more valuable than Medicare for families managing long-term care needs. New York’s Managed Long-Term Care (MLTC) program provides personal care, home health aides, and adult day care for individuals needing a nursing facility level of care. The Community First Choice Option offers home and community-based services for eligible participants, including personal care and assistive technology.

In practice, this means Medicaid can fund ongoing, daily home care for as many hours as assessed necessary — including help with bathing, dressing, meals, and mobility. Medicare’s short-term model is not designed for this. Medicaid is.

Cost for Medicare vs Medicaid in 2026

Cost factor	Medicare	Medicaid
Monthly premium	$202.90 (Part B, 2026)	$0 for most qualifying individuals
Annual deductible	$283 (Part B, 2026)	$0 for most qualifying individuals
Coinsurance	20% on Part B services	Little to none
Long-term home care costs	Not covered	Covered under MLTC and waivers
Government cost per beneficiary	13% higher than Medicaid	Lower provider payment rates
Out-of-pocket risk	Moderate to high	Minimal for eligible individuals

The costs of Medicare vs. Medicaid look very different from both a family’s and the government’s perspective.

Contact All Heart Care today for a free consultation and find out exactly what your loved one qualifies for.

The standard monthly premium for Medicare Part B in 2026 will rise to $202.90, up from $185.00 in 2025, while the annual deductible will increase to $283. In addition to premiums and deductibles, Medicare beneficiaries are typically responsible for 20% coinsurance on Part B services.

Medicaid, by contrast, typically has little to no out-of-pocket cost for qualifying individuals. For a family supporting a senior on a fixed income, this difference often determines how care is structured.

From the government’s perspective, the Medicare-Medicaid rate gap tells a different story. Providing coverage through Medicare costs the government 13% more than through Medicaid when comparing the same disabled beneficiaries, with most of the difference stemming from higher payment rates to providers rather than increased healthcare utilization.

Dual Eligibility: Having Both Medicare and Medicaid

Some individuals qualify for both programs. Medicaid provides health coverage to 7.2 million low-income seniors who are also enrolled in Medicare, and in total 12 million people are “dual eligible,” composing more than 15% of all Medicaid enrollees.

In 2025, 11.9 million people had both Medicare and Medicaid coverage, a status known as dual eligibility, representing roughly 1 in 6 Medicare enrollees.

Dual eligibility can dramatically expand access to home care. Medicaid can cover premiums, deductibles, and coinsurance that Medicare would otherwise leave to the individual, and also pay for long-term custodial care that Medicare doesn’t cover. For families who qualify, this combination is one of the most powerful ways to afford ongoing home care without depleting personal savings.

How Home Care Coverage Actually Works In Practice

There is a significant gap between what most families expect and what they find out once a loved one comes home from the hospital. Medicare is often misunderstood as a comprehensive coverage program. It is not.

Most NYC families believe Medicare coverage includes long-term home care services. It does not. Medicare is designed for short-term, post-acute care following a hospital or skilled nursing facility stay. Once your condition stabilizes or you no longer need skilled care, Medicare coverage ends, often within weeks, leaving families scrambling for alternative ways to pay for home health care.

What happens after Medicare coverage ends

When Medicare’s short-term home health coverage ends, families have three main options: private pay, long-term care insurance, or Medicaid. For many NYC households, private pay home care is not a realistic long-term solution. In 2023, the median annual cost for home health aides was $75,500, a number that climbs even higher in New York City.

Families who have not planned ahead often face this gap suddenly, without time to navigate the Medicaid application process. In New York, that process can take weeks and requires documentation of income, assets, medical need, and residency.

What To Do If a Loved One Needs Ongoing Home Care

The key insight is to start planning before a crisis. Here is what that generally looks like:

• Assess the type of care needed: Is care short-term recovery care (skilled nursing, therapy)? That may be Medicare-eligible. Is care ongoing, daily personal assistance? That falls outside Medicare’s scope.
• Check Medicaid eligibility: Review income and asset figures against New York’s current thresholds. If you are close to being eligible, begin the process now.
• Ask about dual eligibility: If a loved one is 65+ and has limited income, they may qualify for both programs simultaneously.
• Consider private pay for bridging gaps: When Medicaid approval is pending or care needs exceed what programs cover, private pay home care provides immediate access with no restrictions.

Special Programs Covered Under Medicaid in New York

One of the advantages of New York’s Medicaid system is the range of specialized programs it funds. Most families are unaware of how many specific circumstances are addressed — and how different the care model can look depending on a person’s diagnosis or history.

NHTD: Staying Home Instead of Going to a Nursing Facility

The Nursing Home Transition and Diversion (NHTD) waiver is a Medicaid-funded program designed specifically to help people avoid or leave nursing home placement. It provides home- and community-based services to people with physical disabilities or seniors who require a nursing-facility-level of care but want to remain in the community.

For families weighing the cost-versus-quality-of-life trade-offs between a nursing home and staying at home, NHTD is worth understanding. It can fund services that go beyond what standard Medicaid home care covers, including assistive technology, home modifications, and community integration support.

TBI: Specialized In-Home Care for Brain Injury Survivors

The Traumatic Brain Injury (TBI) waiver is another Medicaid-funded program that provides comprehensive in-home support for individuals with acquired brain injuries. TBI survivors often have complex, evolving care needs that standard Medicare or basic Medicaid home care is not designed to address. This waiver fills that gap with specialized services delivered at home.

Workers’ Compensation: A Separate Funding Channel

For individuals who are injured or become ill as a result of workplace conditions, workers’ compensation home care is a distinct funding source entirely separate from Medicare and Medicaid. Workers’ comp can cover in-home aide services, nursing visits, and other medical support for qualifying individuals, often with faster approval timelines than government benefit programs.

Holocaust Survivors Program

New York has a dedicated program providing culturally sensitive home care for Holocaust survivors in Brooklyn. 

This program recognizes the specific psychological and social needs of this population and provides care that goes beyond basic assistance, pairing survivors with caregivers who understand their history and language.

Program	Who it serves	Funding source	Key benefit
Standard Medicaid Home Care	Low-income individuals 65+ or with disabilities	Medicaid	Ongoing daily personal care
NHTD Waiver	At-risk of nursing home placement	Medicaid	Home and community alternatives to nursing homes
TBI Waiver	Brain injury survivors	Medicaid	Specialized, ongoing in-home care
CDPAP	Medicaid-eligible with preference for family caregivers	Medicaid	Family member becomes paid caregiver
Workers’ Compensation Home Care	Workplace injury or illness	Workers’ comp insurance	Immediate post-injury in-home support
Holocaust Survivors Program	Holocaust survivors in Brooklyn	Program-specific	Culturally tailored care

Why All Heart Care is The Right Partner for Home Care in NYC

Choosing the right home care agency is not just about finding available aides. It’s about finding a team that understands how the funding works, knows what programs families qualify for, and can move quickly when care is urgent.

All Heart Homecare Agency brings over 13 years of experience serving all five New York City boroughs from offices in Brooklyn and Manhattan. The agency is Better Business Bureau accredited, has received the Dime’s Best of Brooklyn award, and has earned Crain’s Best Places to Work recognition. With more than 1,000 active clients and 500+ verified reviews, the track record speaks for itself.

All Heart’s team navigates Medicaid, Medicare, NHTD, TBI, workers’ compensation, and private pay so families don’t have to figure out the system alone. Free transportation to medical appointments, 24/7 on-call support, and multilingual caregivers in English, Spanish, and Russian make care accessible regardless of background.

If your family is trying to decide how to pay for home care, you don’t have to do it alone. 

Contact All Heart Care today for a free consultation and find out exactly what your loved one qualifies for.

Frequently asked questions about Medicare vs Medicaid for home care

Does Medicare pay for long-term home care?

No. Medicare is designed for short-term, medically necessary home care, typically following a hospital stay and ends once a patient’s condition stabilizes or skilled care is no longer required. It does not cover ongoing daily personal assistance, such as bathing, dressing, or meal preparation. Families who need long-term in-home support must look to Medicaid, private pay, or long-term care insurance.

What is the income limit to qualify for Medicaid home care in New York?

For 2026, a single individual in New York must have a monthly income no greater than $1,732 and countable assets no greater than $30,182 to qualify for Medicaid long-term home care. Couples have slightly higher thresholds. Those who exceed these limits may still qualify through the Medically Needy Spenddown program or Medicaid planning strategies such as asset protection trusts.

Can someone have both Medicare and Medicaid at the same time?

Yes. Individuals who qualify for both are called “dual eligible.” In this arrangement, Medicaid can cover costs that Medicare leaves to the patient; including premiums, deductibles, and coinsurance, while also funding long-term custodial care that Medicare does not cover at all. Dual eligibility is one of the most comprehensive ways to access home care with minimal out-of-pocket cost.

What does Medicaid cover for home care that Medicare does not?

Medicaid covers ongoing daily personal assistance including help with bathing, dressing, grooming, and meal preparation, services Medicare explicitly excludes. In New York, Medicaid also funds specialized programs like NHTD, TBI, CDPAP, and around-the-clock home care for those with intensive needs. These programs allow individuals to remain at home even with serious medical or disability-related needs.

What is the difference between Medicare Advantage and original Medicare for home care?

Original Medicare covers home care only in limited circumstances related to skilled care. Some Medicare Advantage plans offer supplemental benefits beyond what original Medicare provides — such as allowances for personal care, transportation, or home safety modifications — but this varies significantly by plan. Medicare Advantage does not replace Medicaid for families needing long-term custodial care. Reviewing the specific plan’s home care benefits before enrolling is always recommended.

How does New York’s Medicaid look-back period affect home care eligibility?

New York implemented a 30-month look-back period for Community Medicaid, which covers home care. This means Medicaid reviewers can examine asset transfers made within the prior 30 months before an application. Transfers made to reduce countable assets below the eligibility threshold during this window can result in a penalty period during which Medicaid coverage is delayed. Planning ahead with an elder law attorney before transferring any assets is strongly recommended.