A Simple Guide to Medicare vs Medicaid

medicare vs medicaid

“What’s the difference between Medicare vs Medicaid?” is one of the most commonly asked questions. A lot of confusion stems from those two letters at the end of both words–is medicaRE for the poor or medicaID for the elderly? In this article, we’ll discuss the difference between these two government health insurance programs, what each is, and who is eligible to receive either program.

Medicare vs Medicaid: what are the differences?

Medicare vs Medicaid are two different, government-run programs. Both are operated and funded by separate parts of the government and usually serve different demographics. If you can’t remember the demographics for each program, remember this common mnemonic device, “Care for the elderly, aid the poor.”

Medicare

Medicare is a national health insurance program in the United States that primarily covers individuals ages 65 and older as well as qualified young persons with certain disabilities. 

Medicare is divided into four parts: A, B, C, and D. Parts A and B comprise Original Medicare. 

Original Medicare is a fee-for-service plan wherein you pay a deductible for Medicare-covered services, Medicare pays its share of the approved amount, and then you pay the remaining portion (coinsurance and deductibles).

After an enrollee pays a deductible, Medicare pays its share of the Medicare-approved amount, and the enrollee pays their share (coinsurance and deductibles).

When signing up for Medicare Part A and Part B, the SSA (social security administration) automatically enrolls you in Original Medicare. 

  • Part A (hospital insurance) covers inpatient and formally admitted only (hospital), skilled nursing facility care (after being formally admitted to a hospital for at least three days and not for custodial care), hospice care, and home health care.
  • Part B (medical insurance) covers 2 types of services:
    • Necessary medical services (necessary services or supplies needed to diagnose or treat you medical condition that meet federally acceptable standards of medical practice)
    • Preventive services (health care to prevent illness like a flu shot, or detect the illness at an early stage when treatment likely works best)
  • It covers things like:
    • Clinical research
    • Ambulance services 
    • DMC (durable medical equipment)
    • Mental health 
      • Inpatient 
      • Outpatient 
      • Partial hospitalization
    • Limited prescription drugs (outpatient only)
  • Part C is called Medicare Advantage or MA Plans. Offered by Medicare-approved private companies that follow Medicare rules, this plan is another way to get Medicare Part A and Part B coverage. Patients choose health plans with at least the same coverage as Parts A and B (sometimes more), the benefits of Part D, and an annual out-of-pocket expense which Parts A and B lack.
    If you join a Medicare Advantage Plan, you’ll still have Medicare but you’ll get most of your Part A and Part B coverage from your Medicare Advantage Plan, not Original Medicare.
  • Part D covers prescription drugs (think Part D for Drugs), including most drugs in protected classes like drugs treating HIV/AIDS or cancer. A plan’s list of covered drugs is called a “formulary” with each plan having its own. For each plan, drugs are placed into tiers with their own respective costs. Lower-tiered drugs cost less than a higher-tiered drug.

what does medicare cover

 

Medicaid

Medicaid is a fee-for-service state and federal health insurance program in the United States that provides healthcare for individuals with limited income and resources. Medicaid is jointly funded by states and the federal government and administered by the states, according to the federal guidelines. 

Enrollees may need to pay a copay, but don’t pay the full cost of covered services. Individuals ages 21 and older may have to pay a copay for services in the copay chart. 

Medicaid covers services like:

  • Ambulatory care
  • Chiropractic 
  • Dental
  • Doctor visits 
  • Emergency services
  • Family planning
  • Hearing and speech
  • Home healthcare 
  • Hospice 
  • Inpatient and outpatient hospital
  • Lab
  • Medical supplies 
  • Medicine prescribed 
  • Mental health
  • Non-emergency medical transportation 
  • Nursing home care
  • Personal care 
  • Physical and occupational therapy
  • Podiatry 
  • Pregnancy
  • Private duty nursing
  • Immunizations 
  • Substance use disorder
  • Surgery
  • Vision
  • X-ray

 

what does medicaid cover

Can you get Medicare and Medicaid at the same time?

Yes, individuals eligible for both Medicare and Medicaid are called “dual eligibles,” or “Medicare-Medicaid enrollees.” Both programs offer a variety of benefits like visits to a medical practitioner, hospitalization, but only Medicaid provides long-term nursing care. Medicaid also supports in-home and community-based settings (adult foster care home or assisted living).

In 2019, Medicare Advantage plans (Medicare Part C) started offering certain long-term home care and community-based services.

How can I get Medicaid? 

Not everyone qualifies for Medicaid. If your income falls below the poverty line (this is determined by the state you reside in), you may qualify. There are also other mandatory eligibility groups including some pregnant women, children, and individuals receiving Supplemental Security Income.

What is the CARES Act?

Signed into law by former President Donald Trump on March 27, 2020, the CARES Act expands coverage. The $2 trillion stimulus package ensures Medicare coverage for Americans impacted by COVID-19. It covers more telehealth services, and overall increased healthcare flexibility. The CARES Act allows Medicaid programs in non-expansion states to cover uninsured individuals impacted by COVID-19.

How is Medicare funded?

You and your employer provide the majority of the money. Employees and employers each pay 1.45% of a worker’s wages into the Medicare system, or 2.9% total. Self-employed workers pay 2.9% of their income. Employers must withhold an additional 0.9% on an employee’s wages paid in excess of $200,000 in a single calendar year, without regard to filing status.

Other sources include:

  • Income taxes paid on Social Security benefits
  • Interest earned on trust fund investments 
  • Medicare Part A premiums from individuals who aren’t eligible for premium-free Part A

How is Medicaid funded?

Medicaid is jointly funded by federal and state governments. The federal government pays states for a specific percentage of the program, called the Federal Medical Assistance Percentage (FMAP). States must remember to allocate funds for Medicaid expenditures.

How do I enroll in Medicare?

Contact the Social Security Administration at 1-800-722-1213 for more information or to check eligibility. Also visit their website here. 

The Medicare.gov website has a tool to determine eligibility and when you can enroll. You can find it here. 

How do I enroll in Medicaid? 

Every state has different eligibility requirements for Medicaid. Call your State Medical Assistance (Medicaid) office for more information and to check eligibility. Also call 1-800-MEDICARE (1-800-633-4227) to get your state’s Medicaid office number. Toll-free users can call 1-877-486-2048.

More on this topic:

  1. How Do I Find Out My Medicaid Application Status?
  2. Does Medicaid Take Life Insurance Benefits to Pay for the Policyholder’s Nursing Home Costs?
  3. Can I Apply for Medicaid If We Already Have Private Health Insurance?
  4. Why Do States Have an Hours-Worked Minimum for Health Insurance Eligibility?
  5. If You Can’t Afford Health Insurance, Are You Required to Buy It?
  6. Which Health Insurance Plan Has the Shortest Waiting Period for Maternity Coverage?
  7. How Can I Get Health Insurance for My Parents?
  8. Does Insurance Cover Stair Lift Purchases?
  9. How Many Americans Go Bankrupt Due to Medical Purposes Each Year?
  10. How Do I Get Health Insurance for Senior-Age Parents Who Have Green Card Status?

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