It is likely that you’ve heard of Medicaid and Medicare, the government healthcare programs for low-income and disabled individuals, and seniors. However, the eligibility requirements, details of coverage, and application processes can be confusing and complex. We’ve created a comprehensive guide for navigating Medicaid and Medicare to help you and your family obtain the healthcare coverage you deserve.
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Medicaid vs. Medicare: What’s the difference?
Medicaid and Medicare are similar, in that they are government-run, government-funded healthcare programs. Both were founded in 1965 as part of President Lyndon Johnson’s War on Poverty. The differences between the two programs are mostly to do with eligibility requirements. Here is a breakdown of the basics of the two programs.
Medicaid provides free, or nearly free health coverage to low-income individuals and families through joint state and federal programs. Because Medicaid is administered by the states, coverage varies widely from state to state. For the most part, Medicaid eligibility hinges on income level, but in many cases, coverage is extended to others with immediate need, like pregnant women and those receiving SSI. Patients usually don’t have to pay any of the costs associated with their healthcare under Medicaid.
Medicare provides health coverage to individuals over 65 years of age and those who have a severe disability, regardless of income. Everyone pays a tax on their income throughout their lives to cover the cost of this federal program.
Medicare is broken down into four parts: Medicare Parts A, B, C, and D. Medicare Parts A & B are sometimes referred to as “Original Medicare”, and include basic inpatient and outpatient medical coverage. Medicare Part C, also known as Medicare Advantage, is essentially Medicare benefits that are administered through private healthcare companies. Medicare Advantage Plans often include Medicare Part D as well, which is prescription drug coverage.
Medicaid vs. Medicare: Eligibility
All U.S. citizens and permanent residents (green card holders) over the age of 65 are eligible to receive Medicare. As long as you are age 65 or older, and you or your spouse have worked and paid Medicare taxes for at least 10 years, you do not have to pay a premium on Medicare part A.
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People with end-stage renal disease and ALS (Lou Gherig’s Disease), as well as anyone who has received Social Security Disability for 24 months, is eligible. One important thing to note is that Medicare does not cover long-term care (i.e. nursing home stays and home care). However, you may be able to obtain coverage for long-term care by qualifying for Medicaid.
Unlike Medicaid, Medicare eligibility is the same in every state across the U.S. To find out whether your particular circumstances qualify you for Medicare coverage, visit Medicaid.gov and use their Eligibility & Premium Calculator.
As mentioned above, Medicaid eligibility is mostly determined by an individual’s or family’s income, but there are other circumstances that could qualify you for Medicaid coverage. Standards of eligibility also vary by state. Some states determine eligibility based on income alone, while others may also extend eligibility to those who are enrolled in another program, such as SSI or the breast and cervical cancer treatment and prevention program. Adults under the age of 26 who are former foster care recipients may also be eligible at any income level.
The Affordable Care Act (aka. Obamacare) allowed for the expansion of coverage to more Americans, but the decision to actually expand eligibility was left up to the states. In other words, while most states took advantage of the option to extend Medicaid eligibility to any adult at or below 138% of the poverty line ($17,774 for an individual; $30,305 for a family of four), 12 states have not yet done so. In states without Medicaid expansion, many adults remain
ineligible for coverage because of additional requirements placed on eligibility.
These states have yet to expand Medicaid, making it more difficult to obtain coverage:
Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, Wyoming
To find out whether you’re eligible for Medicaid in your state, try searching “Am I eligible for Medicaid [your state]”.
How to Maximize Coverage
Whether you are eligible for Medicaid, Medicare, or both, there are a few ways to maximize your medical coverage under these plans.
An important thing to know about maximizing Medicare and Medicaid coverage is that, depending on your circumstances, it is possible to qualify for both types of coverage. Medicare will always be the plan to pay medical expenses first, and Medicaid can step in to help pay what Medicare doesn’t cover.
Remember, Medicare is administered at the federal level, and Medicaid is administered separately at the state level, so it may take some maneuvering to make sure you obtain both types of coverage. The best way to find out if you are dually eligible for Medicare and Medicaid is to contact your state’s Medicaid office.
Medicaid Spend Down
Medicare does not cover long-term care (i.e. nursing homes), but Medicaid does. A common scenario for families is that a Medicare recipient cannot afford the long-term care they need, but has income or assets above the threshold to qualify for Medicaid.
When this occurs, many families opt to do a Medicaid “spend down”. This means that some of the individual’s income and countable assets are spent in order to meet the income threshold that would qualify them for Medicaid. If you find yourself in this situation, it is advisable to work with a Medicaid planner. The American Council on Aging has a great resource for finding affordable Medicaid planners.
Reduce Your MAGI
Medicaid eligibility is based on MAGI, or Modified Adjusted Gross Income. In other words, eligibility is based on your taxable income – not your gross income. At first glance, it may appear that you make too much money to qualify for Medicaid in your state, but if you subtract your qualified deductions, your taxable income will go down. Here’s an example:
You’re an individual who makes $20,000 working at a local retailer that does not offer employer-sponsored health insurance. The income threshold to qualify for Medicaid in your state is $17,774 in Modified Adjusted Gross Income, or 138% of the poverty level. Also assume that you paid $500 in student loan interest and contributed $2,400 to an IRA this year. Your adjusted gross income is $17,100, and you do qualify for Medicaid. Your income may appear to be too high to qualify, but don’t just assume that is the case.
Your Adjusted Gross Income (AGI) is lower than your gross income because everyone is allowed certain deductions that lower our tax bill. Deductions that can lower your AGI include:
- Alimony paid
- Some moving expenses
- Student loan interest paid
- IRA deductions.
- Money contributed to a flex spending plan
If you find that your income is just a little bit too high to qualify for Medicaid, contributing a bit more to a traditional IRA (not a Roth IRA) retirement account can reduce your MAGI. This could save you money on healthcare in the short term, and boost your retirement savings in the long-term.
It’s important for all of us to advocate for policies that lift people out of poverty and improve quality of life. If you are eligible to vote, make sure to vote for local, state, and federal officials who will fight for policies like Medicaid expansion, especially if you live in one of the 12 states that have not expanded access. If you’re unable to vote, there are also ways to fight for change, whether it’s starting a petition, campaigning for candidates you believe in, or educating friends and family about the issues that are important to you.