Many people get Medicare and Medicaid confused, and it’s no wonder… the names are very similar, they are both government programs, and they both deal with health care.
Despite these similarities, these are two very different programs with different health care coverage, different costs, and different eligibility requirements.
In general, Medicare is an insurance program designed to provide health care for the elderly and disabled, while Medicaid is an assistance program created to help low income people with medical bills.
Here is a detailed breakdown of the difference between Medicare and Medicaid:
Who is Eligible?
Medicare is an insurance program that is paid for through payroll taxes. Workers pay in 1.45% of their wages to Medicare; employers must match this amount.
Taxpayers (or their spouses) who have paid into Medicare for at least 10 years can qualify for benefits at age 65, or earlier if they are disabled.
The following people may qualify for Medicare:
- People age 65 or older,
- People under age 65 with certain disabilities, and
- People with permanent kidney failure requiring dialysis or a kidney transplant.
Enrollment in Medicare is usually automatic; if you are already receiving Social Security benefits when you turn 65, or if you apply for Social Security benefits when you reach age 65, you will automatically be enrolled in Medicare.
However, if you are not already receiving Social Security when you turn 65 it is up to you to apply for Medicare. Failing to enroll on time could result in penalties unless you are still working and are covered by an employer health insurance plan.
Medicaid is an assistance program that helps low-income parents, children, seniors and people with disabilities. The eligibility qualifications for Medicaid are strict and they differ for each group. While it is a federal program, the rules vary by state.
People who are over age 65, blind or disabled may qualify for Medicaid if their monthly income is $931 or less (for a family of 1) or $1,261 (for a family of 2). In addition, your resources are limited to $2,000 for an individual and $3,000 for a couple.
Medicaid benefits for children depends on the family size and the age of the child(ren). The monthly income limit for families with one child is $1,862 if the child is under age 6, and $931 if the child is age 6 through age 18. The income limits are higher for families with more than one eligible child. The parents may also qualify for benefits in some cases, however the monthly income limit is very low.
You automatically qualify for Medicaid if you are receiving any of the following benefits:
- Supplemental Security Income (SSI)
- Work First Family Assistance
- State/County Special Assistance for the Aged or Disabled
- Special Assistance to the Blind
Medicare is made up of four main parts.
- Part A (hospital insurance) covers in-patient hospital care including an overnight stay in a hospital, skilled nursing facility or psychiatric hospital. It also covers hospice care and home health care.
- Part B covers doctor bills and other outpatient services, including lab tests, rehab or medical equipment. Other services covered under Part B include ambulance service and preventative care.
- Part C is an insurance package that covers Part A, Part B and sometimes Part D. Part C doesn’t cover different services, rather it is a different way to receive your Medicare benefits. Medicare Advantage is another term for Part C coverage.
- Part D is for prescription medicines. The only way to get prescription coverage is to enroll in a Part D drug plan or to enroll in a Medicare Advantage plan that also covers drugs.
Medicaid covers basic health care costs such as visits to the doctor and hospital stays, and may also cover things like dental and vision. The services provided vary from state to state, however, certain services are required to be covered by every Medicaid program.
Some of the doctor’s services that must be covered by every state include:
- X-Ray and lab fees,
- Inpatient and outpatient hospital services
- Health screenings for children
- Dental and vision for children
- Family planning
- Services provided in health clinics
- Nursing facility and home health care services for certain people
- Prescription drugs
Other benefits that must be provided for children, but not necessarily adults, include:
- Physical, speech or occupational therapy
- Vision and hearing
- Prosthetic devices
- Mental health services
- Case management
- Hospice services
How Much Does it Cost?
Medicare has a variety of costs, depending on the plans you are enrolled in. In addition to premiums paid for Part B and Part D (if you chose to enroll in a drug plan), you must also pay deductibles and co-pays for services that you receive. In general, you will pay co-payments for lengthy hospital stays, you will pay 20-35% of your medical bills, and you will pay for any prescription drugs unless you have Part D (even then you will pay for any prescriptions over $2,840).
Under Medicaid, there is very little cost to the patient. You may pay a small fee for certain services, but since this is an assistance based program, your costs will be minimal under Medicaid. In addition, if you are covered under Medicare, Medicaid will pay some of the deductibles and premiums you incur under Medicare.
Who Runs The Program?
Both programs are federally funded, but Medicare is a federal program with uniform rules across all states.
Under Medicaid, while it is a federally funded program, the rules vary from state to state. You should contact your state’s health services office for more information on Medicaid in your state.
It is possible to qualify for both programs at the same time, however the eligibility requirements are different for each program, so if you think you qualify you will need to enroll in both programs.
As you can see, both programs have a multitude of rules regarding who qualifies, what services are covered and what each service costs.
To learn more about Medicaid, the federally funded assistance program, please visit www.Medicaid.gov.