Although Medicare and Medicaid were both launched in 1965, they are not the same thing. Many people still confuse these two very different government health insurance programs.
Both Medicare and Medicaid offer health care coverage, but they do so in very different ways, with different policies and regulations, and in most cases to different constituencies.
Medicare is a federal health insurance program designed primarily for those over age 65. It pays medical bills from federal trust funds supported by workers with money taken from their paycheck.
Original Medicare (Medicare Part A and Part B) includes basically the same coverage and costs throughout the United States and is managed by the Centers for Medicare & Medicaid Services (CMS), a federal agency under the Department of Health and Human Services.
Medicare also supports some younger people who have a qualifying disability and dialysis patients who are diagnosed with End Stage Renal Disease (ESRD, permanent kidney failure requiring dialysis or transplant).
Medicaid is also a government-run health insurance program, but it is jointly administered by both the federal government and state governments. For that reason, the rules of Medicaid coverage and costs vary from state to state.
Medicaid serves low-income individuals, families and children, pregnant women, low-income seniors and those with disabilities of any age. Income levels are based on the Federal Poverty Level, but each state can determine who qualifies for its Medicaid program and who doesn’t. Because Medicaid is jointly run by federal and state governments, some states cover all low-income adults below a certain income level.
The Affordable Care Act allows states to expand their Medicaid programs to cover everyone with household incomes below a certain level. Some states have chosen to expand coverage, but others have not.
In some cases, individuals may be eligible for both Medicare and Medicaid. This is known as dual eligibility.
The two programs work together to cover healthcare needs, based on the differences in the services they cover and how costs are distributed.
There are also Special Needs Plans for dual eligible beneficiaries. A Special Needs Plan is a type of Medicare Advantage plan that is designed for someone with a specific health condition. Some Special Needs Plans are designed for dual eligible beneficiaries.
Medicare members pay a portion of their medical costs through deductibles or copayments for hospital and other services, just as with private insurance. They also pay small monthly premiums for non-hospital coverage of preventive care, doctor’s visits and other services.
Prescription drugs are covered by Medicare Part D drug plans and by Medicare Advantage plans (Medicare Part C) that offer Part D drug coverage. Medicare drug coverage typically includes some deductible or copay requirements.
People who have Medicaid typically pay nothing for covered medical expenses, though some services may require a small copayment.
To be eligible for Medicare, the individual must be 65 years old or older and a citizen or permanent resident of the United States for at least 5 continuous years. Some younger people with disabilities or serious kidney disease may also qualify.
To be eligible for Medicaid, the individual must meet state-set income levels based on family size. For adults under age of 65, income must be lower than 133% of the federal poverty level (FPL). According to Healthcare.gov, this equates to about $14,500 for an individual and $29,700 for a family of four.
Original Medicare has two main parts:
You are eligible for premium-free Part A if you or your spouse worked and paid Medicare taxes for at least 10 years.
You can get Part A at age 65:
If you are under age 65, you can get Part A without having to pay premiums if:
Most individuals do not have to pay a premium for Part A, but everyone has a premium requirement for Part B. This premium payment can be deducted monthly from your Social Security, Railroad Retirement or Civil Service Retirement check. If you do not receive any of these payments, you are billed every three months for your Part B premium.
Prescription drugs are covered under Medicare Part D. Part D plans also require a monthly premium payment.
Parts A and B are managed by the federal government and are sometimes called Original Medicare. But there are also plans offered through private insurance companies that cover the same befits as Part A and Part B but may also offer additional benefits that Parts A and B don’t cover.
Officially known as Part C, these plans are also known as Medicare Advantage plans. Many Medicare Advantage plans include Part D prescription drug coverage, but some do not. Depending on where you live, there may be Medicare Advantage plans available that offer dental, hearing and vision benefits, at-home meal delivery or transportation to your doctor’s office.
Medicare Advantage plans aren’t available in every county, and plan benefits, costs and coverage vary based on the plans that are available where you live.
Medicaid benefits vary from state to state, but the following benefits are mandatory, according to CMS:
Optional benefits include services including prescription drugs, physical and occupational therapy, dental care and others.
Both Medicare and Medicaid programs can be confusing and challenging to understand. With
Medicare Advantage plans, there may be dozens of options to choose from in your location, each offering different coverage, different doctor networks and different payment requirements.
Experts recommend talking to a consultant who specializes in Medicare or Medicaid coverage, or to a representative of your State Health Insurance Assistance Program, known as SHIP, for guidance and support.
If you have more questions about Medicare and the Medicare coverage options available in your area, you can also call to speak with a licensed insurance agent who can help answer your questions.
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