Learn How Medi-Cal and Medicare Work Together

Understanding the Basics: What Medi-Cal and Medicare Are

Medi-Cal and Medicare are two separate government health insurance programs that serve different groups of people, but they can work together to cover medical costs. Understanding how each program operates independently helps explain how they function when someone has both.

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Medicare is a federal health insurance program run by the Centers for Medicare & Medicaid Services (CMS). It primarily serves people age 65 and older, regardless of income. Medicare also covers certain younger people with disabilities and those with end-stage renal disease. The program has been in place since 1965 and covers approximately 66 million people as of 2023. Medicare is funded through payroll taxes that workers and employers pay during working years.

Medi-Cal is California's version of Medicaid, a joint federal and state program that provides health coverage to low-income individuals and families. Unlike Medicare, Medi-Cal is need-based, meaning your income and assets matter for coverage. Medi-Cal covers children, pregnant people, parents, seniors, people with disabilities, and other groups. As of 2023, Medi-Cal served approximately 15 million Californians—roughly one-third of the state's population.

The key difference is this: Medicare is based on age or disability status, while Medi-Cal is based on income and family situation. A person can have one, the other, or both programs covering them at the same time. When someone has both programs, they're often called "dual eligible" beneficiaries. California has approximately 1.2 million dual eligible individuals.

Practical Takeaway: Know which program you might be part of based on age, disability status, income, and state of residence. Medicare serves primarily older Americans, while Medi-Cal serves low-income Californians. Understanding this distinction helps you know which program's rules apply to your situation.

How Medicare Coverage Works: Parts A, B, D, and Supplemental Plans

Medicare is divided into different parts, each covering different types of medical services. Learning about these parts helps you understand what each covers and what you might pay.

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Medicare Part A covers hospital insurance. This includes inpatient hospital stays, skilled nursing facility care after a hospital stay, some home health services, and hospice care. In 2024, if you need to stay in a hospital, you pay a deductible of $1,632 for the first 60 days. After 60 days, you pay coinsurance amounts. Most people age 65 and older don't pay a monthly premium for Part A because they or their spouse paid Medicare taxes for at least 10 years while working.

Medicare Part B covers medical insurance for outpatient services. This includes doctor visits, preventive care, laboratory tests, X-rays, ambulance services, and durable medical equipment like wheelchairs and oxygen. The standard Part B premium in 2024 is $164.90 per month for most beneficiaries, though higher-income individuals pay more. Part B also has an annual deductible of $240 in 2024, and you typically pay 20% of approved amounts after meeting the deductible.

Medicare Part D covers prescription drug costs. This is optional but important because if you don't enroll when first eligible, you may pay a permanent penalty. Part D premiums vary by plan but average around $34 per month in 2024. Part D has a coverage gap sometimes called the "donut hole," where you pay more out-of-pocket for drugs between $5,850 and $8,550 in annual drug costs (2024 figures).

Many people also purchase Medigap (supplemental insurance) or enroll in Medicare Advantage plans. Medigap plans help pay for costs that Original Medicare doesn't cover, like coinsurance and deductibles. Medicare Advantage (Part C) is an alternative way to receive Medicare benefits through private insurance companies. About 42% of Medicare beneficiaries nationwide choose Medicare Advantage plans instead of Original Medicare.

Practical Takeaway: Familiarize yourself with what each Medicare part covers. Part A covers hospital stays, Part B covers doctor visits and outpatient care, and Part D covers prescription drugs. Understanding these divisions helps you know what services are covered and what you might owe out-of-pocket.

How Medi-Cal Coverage Works: Services and Income Limits

Medi-Cal provides broader coverage than many people expect, covering many services that Medicare does not. Understanding what Medi-Cal covers helps you plan for medical expenses, especially if you're low-income.

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Medi-Cal covers doctor visits, hospital stays, emergency services, prescription drugs, mental health services, dental care, vision care, hearing aids, and long-term care services like nursing facility care and home and community-based services. In 2024, Medi-Cal also covers many preventive services at no cost to the patient. Importantly, Medi-Cal often has no or low copayments—many services are completely free for members, and copayments rarely exceed a few dollars per service.

Income limits for Medi-Cal vary based on family size and circumstances. For 2024, a single adult with no dependent children can have a monthly income up to approximately $1,903 to remain within standard Medi-Cal income limits. A family of four can have a monthly income up to approximately $3,919. However, there are special rules for seniors and people with disabilities. Some people over 65 or with disabilities can have higher incomes and still qualify for Medi-Cal. Additionally, pregnant people and children have different income limits, often higher than adults.

Asset limits also apply to some Medi-Cal categories. For most adults, the resource limit is $2,750 for an individual and $4,250 for a couple in 2024. However, certain assets don't count toward the limit, including a home you live in, one vehicle, household furnishings, and personal items. Money in a retirement account that you cannot access without penalty generally doesn't count either.

Medi-Cal offers managed care plans in most counties, where members choose a plan and primary care doctor. These managed care organizations coordinate care and can help reduce out-of-pocket costs. In 2023, approximately 80% of Medi-Cal members were enrolled in managed care plans.

Practical Takeaway: Review what Medi-Cal covers in your area and understand the income and asset limits that apply to your household. Medi-Cal offers comprehensive medical, dental, vision, and mental health coverage with minimal out-of-pocket costs for eligible individuals and families.

When Someone Has Both Programs: Understanding Dual Eligible Benefits

When a person has both Medicare and Medi-Cal, the programs work together in a coordinated way, with Medicare as the primary payer and Medi-Cal as the secondary payer. This coordination affects how medical bills are paid and what the patient owes.

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For dual eligible individuals, Medicare pays first for covered services. If Medicare doesn't cover the full cost or doesn't cover a service at all, Medi-Cal may cover what Medicare doesn't pay. This arrangement can significantly reduce out-of-pocket costs. For example, if a dual eligible person receives a doctor's visit that costs $100, Medicare might cover $80 (after deductible), and then Medi-Cal can cover the remaining $20 copayment that Medicare would otherwise require.

Dual eligible individuals often have access to more comprehensive coverage than people with either program alone. Medi-Cal covers many services that Medicare doesn't, like dental care, vision care, and long-term services and supports. A dual eligible senior might receive dental work, eye exams, and hearing aids through Medi-Cal when Medicare doesn't cover these services. In California, approximately 1.2 million people are dual eligible, making up about 18% of all Medicare beneficiaries in the state.

There are different types of dual eligible programs in California. Some people are in traditional Medi-Cal managed care while also having Original Medicare or a Medicare Advantage plan. Others are in special programs designed specifically for dual eligible individuals, such as Department of Health Care Services (DHCS) coordinated care programs or managed long-term services and supports (MLTSS) programs. These programs coordinate all aspects of care—medical, behavioral health, and long-term services—through one organization.

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