Medicare VS. Medicaid // What's The Difference?
Posted by Elliot Marks
Medicare and Medicaid are two terms that get thrown around frequently when discussing health care coverage. Many people seem to use them almost interchangeably although the two are completely separate and distinct programs. Medicare is an insurance program, while Medicaid is intended more as an assistance program. So, just what are the differences between the two? Some of the main differences include eligibility requirements and coverage basics. Keep reading to learn more about what each program is, what each one covers, how to qualify for either, and the key differences between the two. We'll also discuss what happens if you qualify for both programs. Let's get started.
What's The Difference Between Medicare and Medicaid
First, let's take a look at the foundation of the programs themselves. Medicare is a Federally funded program that is intended to provide health insurance coverage for individuals 65 and older, younger disabled persons, and people receiving dialysis treatment. The history behind the program shows that most people receive their health care coverage through their employment, and upon retirement, people were unable to get quality coverage on their own. Hence, Medicare was founded to help bridge this gap and provide coverage for those individuals. The same applies to people with disabilities who were no longer able to work.
Medicaid, on the other hand, is a program that is funded jointly between the Federal government and individual states. So, when people ask "How is Medicaid funded," the answer is that both the federal and state governments pay toward Medicaid funding. Individual states are able to set their own Medicaid rules, but there are some common themes across all states. Overall, Medicaid's purpose is to help provide healthcare for individuals and families who have a financial need, regardless of age. This is in contract to Medicare, which helps older individuals regardless of income level. Let's dig a little deeper into the eligibility requirements for each program.
Medicare has no income-related requirements. There are basically three ways to qualify for Medicare. First, by age alone. Individuals who are 65 and over qualify for Medicare. In addition, if you have been deemed to have a disability by the Social Security Administration, you can qualify for Medicare. There is typically a 24-month waiting period from the time your disability begins until your Medicare coverage starts. Finally, individuals with end stage renal disease (ESRD) or receiving dialysis can qualify for Medicare with no waiting period.
To qualify for Medicaid, an individual or family must have an income that is below 138% of the poverty level (roughly $14,500 for individuals and $29,700 for a family of four). Each state has individual rules about specific eligibility criteria, but low income is the main qualifying factor. Many states have recently expanded Medicaid coverage, so even if you have been turned down the past, you should consider reapplying if you think you qualify.
Another big difference between these two programs is the cost of premiums and services. Since Medicaid is a needs-based program, there is no cost for premiums. In many cases, health care services are also provided at no cost to the recipient. However, in some states, there may be small copays or deductibles required for some services.
Medicare is only provided at no cost to those 65 and older who have enough work credits to qualify. People receiving disability payments from SSDI and those over 65 who do not have enough work history are generally required to pay monthly premiums for their coverage. These Medicare premiums can range from $200 - $450 depending on the number of work credits the person has. Medicare requires a small copay or deductible for most medical services.
Finally, coverage levels between the two programs vary. Original Medicare, or Medicare Part A, is basic hospital insurance. It covers hospital stays, inpatient services, hospice care, and skilled nursing facility care. Recipients may choose to purchase optional Part B, Part C, and Part D coverage. Part B adds coverage for doctor's visits, outpatient care, medical equipment, and preventative care or wellness visits. Part C, also known as Medicare Advantage Plans, essentially combines Parts A and B into a single policy administered by private insurance companies who contract with Medicare. Lastly, Part D is optional prescription drug coverage that may be purchased. Many people on Medicare also choose to purchase a Medicare supplement, or Medigap, coverage plan which helps with out of pocket costs like copayments and deductibles.
Medicaid covers a wide range of medical services. When you are enrolled in Medicaid, you receive access to hospital coverage, doctor visits, X-rays, necessary medication, long-term care, preventative care, mental care, prenatal care, and dental and vision coverage for children. If you have questions about eligibility or coverage, then you should contact your state Medicaid office.
Can You Have Both Medicare and Medicaid?
Yes, you can qualify for coverage under both programs at the same time. When this occurs, it is called "dual eligible." This generally applies when a person is over 65 or disabled and has very limited income. You still have the choice to enroll in Original Medicare or a Medicare Advantage Plan. When a person is dual eligible, most of their medical expenses are completely covered by one or both of the programs. Medications are generally covered through a Medicare Part D prescription drug plan, although Medicaid may cover additional medications or other medical services that are not covered through Medicare.
If you are eligible for both government programs, then it is usually a good idea to enroll in each. Go ahead and sign up for Medicare and Medicaid benefits. When enrolled in both programs, a person typically has very little out of pocket expense.
What Are The Four Types of Medicare?
Complete Medicare coverage is broken down into four parts. These are Original Medicare, also called Medicare Part A. There is also Medicare Part B, Medicare Part C, and Medicare Part D. Each of these parts covers different types of health care costs, and each one has varying costs. Let's dive a little deeper into each one.
Medicare Part A
This is also referred to as Original Medicare. It is provided at no cost to those 65 and older who meet the minimum work history requirements. In a nutshell, Part A provides coverage to its enrollees for hospitalization or other long-term care. Even if your spouse has sufficient work credits, then you may be eligible for premium free coverage as well. Part A covers the following types of items:
- Inpatient care in hospitals
- Care in skilled nursing facilities
- Hospice care
- Home health care
Medicare Part B
Part B is similar to a traditional health insurance program for doctor visits and outpatient care. Part B provides optional benefits and may be purchased for a monthly premium. There is no requirement that a person enrolled in Part A must purchase Part B coverage. Part B covers things like the following:
- Doctor Visits
- Outpatient services
- Physical therapy (outpatient)
- Wellness visits
- Medical devices or durable medical equipment
Medicare Part C
Part C is really just a combination of Parts A & B. Part C coverage is provided by private insurance companies who contract with Medicare. If you are eligible for Parts A and B, then you can enroll in a Part C plan. Part C plans are also called Medicare Advantage Plans. This allows individuals to combine both their hospital coverage and traditional coverage into a single policy so that it is easier to maintain and track their coverage and expenses.
Medicare Part D
Part D offers coverage for prescription drugs. This includes recommended shots and vaccines. Like Parts B & C, Part D is administered by private insurance companies and purchased as optional coverage. This can be purchased separate from your other health plans, and it helps to keep your prescription expenses lower. If you have limited income, then you should contact the Medicare office at Medicare.gov or 1-800-MEDICARE (1-800-633-4227) to inquire about additional services that can help with health care expenses.. TTY users can call 1-877-486-2048.
Who Is Eligible?
As we have previously mentioned, the eligibility rules for Medicare and Medicaid are different. Medicare coverage is based mostly on age, while Medicaid eligibility is income-based. Let's take a look at the requirements for each.
There are basically three ways to qualify for Medicare. Income does not play a role in qualifying for Medicare services. The requirements are as follows:
- Age 65 or older
- Under age 65 with a disability
- Any age with ESRD (requiring dialysis or kidney transplant)
Qualifying for Medicaid services is a little different. Age is not really a factor in who is eligible for Medicaid. The main factor in qualification is income. Enrollment is open to U.S. citizens and legal, permanent residents who meet the income requirement. If you have very little income and resources, then you may qualify if you meet any of the following criteria:
- Age 65 and older
- Under age 19
- Person with a disability
- Adult caring for a child
- Adult with no dependent children (in certain states)
What Is Covered?
We've already touched briefly on what services are covered by Medicare and Medicaid plans. As you have already read, Medicare is broken down into 4 separate parts, and each part covers different services. For purposes of this section, we will assume that a person is enrolled in all the four parts, or all coverage offered through Medicare. So, let's dive into the details.
For someone enrolled in all parts of Medicare, the coverage is quite comprehensive. The list includes, but is not limited to, the following:
- Inpatient hospital care
- Doctor visits
- Outpatient services
- Physical therapy
- Prescription drugs
- Medical equipment
- Hospice care
- Care in skilled nursing facilities
Medicare coverage does not include dental or vision coverage. Those must be purchased outside of the Medicare system should an individual choose to enroll in those services. Some individuals may also qualify for Medicare Savings Programs which are state run programs designed to assist Medicare beneficiaries with few resources to pay their copays and deductibles.
Now that you know about Medicare, you're probably wondering, "What is Medicaid coverage like?" Medicaid coverage, like Medicare, is quite extensive. It covers most routine services and medical necessities. Some items that are covered in the program include:
- Hospital services
- Doctor visits
- Prenatal care
- Mental health care
- Preventative care
- Vaccines and Immunizations
- Prescription drugs
- Surgical dental services
Unlike Medicare, Medicaid does include routine dental and vision coverage for children in some states.
How Can I Apply?
Now that you know about the differences between the two programs, who is eligible, and what is covered, you are probably wondering how you can apply for them. Let's start with Medicare. Enrollment in Original Medicare (Part A) is automatic in many cases. Upon reaching the age of 65, you will be automatically enrolled in Medicare if you are already receiving Social Security retirement benefits. Also, you will be automatically enrolled after 24 months of receiving SSDI payments. If you do not receive retirement benefits, then you can apply for Part A coverage and start receiving coverage upon paying the premium amounts. You can apply for Medicare through the Medicare website or over the phone.
If you choose to delay enrollment, then you can enroll during the yearly Medicare open enrollment period. Waiting too long may require you to pay a late enrollment penalty to obtain coverage. In addition, if you choose to apply for Part B, C, or D coverage, then you should contact your insurance company or agent to discuss those options. Since those plans are administered by private companies, they each have their own rules about enrollment and pricing.
You can apply for Medicaid by contacting your state Medicaid office or applying through the website at Medicaid.gov. You will be assigned a caseworker to review your application and determine your eligibility status. In most cases, if you are receiving SSI benefits, then you are automatically qualified to enroll in Medicaid. The Affordable Care Act that was signed into law in 2010 expanded Medicaid coverage to more people. Therefore, even if you have been denied coverage in the past, you should consider reapplying as you might be approved with today's new rules.
Are Medicare and Medicaid the same thing?
No, these are two separate and distinct programs. Medicare is a federal program designed to assist older persons with healthcare coverage while Medicaid is funded jointly between the Federal and state governments and assists low income individuals and families.
Is Medicare A free?
If you or your spouse have enough work credits, then Medicare A coverage will be given to you at no cost. If you do not have enough work history, then you may choose to purchase this coverage.
Can you have both Medicare and Medicaid?
Yes, you can be "dual eligible" to receive benefits from both programs. Individuals enrolled in both programs typically have coverage for most medical services and incur very few, if any, out of pocket expenses.
Is there a penalty for not signing up for Medicare?
There is not a penalty for not signing up, per se, but you may incur a penalty if you decide to sign up at a later time. If you miss your automatic enrollment period, you can still choose to sign up during a later enrollment period, but you will have to pay a late enrollment fee.
How do I replace my Medicare card?
Getting a replacement Medicare card is simple. You can request one through your Medicare account at Medicare.gov, calling the Social Security Administration, or visiting your local SSA office.
Medicare and Medicaid terms can be intimidating and confusing to those who are not familiar with the programs. Many people believe that these programs are one and the same; however, they are quite different from each other. These programs have different costs, coverages, eligibility requirements, and funding. It is even possible that a person can be eligible and enrolled in both programs at the same time. Now that you are familiar with the differences between these two programs, you can make a determination about your status and whether you should apply for one or both of them. Being educated about the programs available to you is the first step toward making sure that you have adequate health care coverage and are taking advantage of the benefits to which you are entitled.