What’s the difference between Medicare and Medicaid, you ask? That’s a tough question for many people. Medicare and Medicaid are both government health care programs and they have similar names, but they actually function very differently.
What is Medicare?
Medicare is a federally funded government health care program that serves a very specific population. Medicare is only available to people who are either disabled or at least 65 years old. It only covers people individually, never as families or households.
Medicare is broken up into four major parts.
- Part A is for inpatient coverage.
- Part B is for medical coverage, outpatient procedures, and office visits
- Part C is for Medicare Advantage Plans, which are private plans approved by Medicare but administered by a third party provider.
- Part D is a prescription drug plan that is supplemental to Parts A and B
At 65 years old, you become eligible for premium-free Part A Medicare coverage as long as either you or your spouse worked and paid Medicare taxes for at least 10 years. Medicare operates as a sort of trust fund, with payments made from funds that workers have paid into over the course of their careers.
You have to wait for an open enrollment period to apply for Medicare, or you may be penalized.
What is Medicaid?
Medicaid is a federal and state program that provides health care for low income individuals and families. Many people covered by Medicaid are pregnant women, families with young children, and disabled people of any age.
Federal rules mandate that Medicaid must cover these services in every state:
- Laboratory services
- Doctor visits
- Family planning
- Nursing services
- Nursing facilities
- Home health care (for those who are eligible)
- Family Nurse Practitioners
- Midwife Services
In some states, Medicaid may also cover prescriptions, optometry, eyeglasses, physical therapy, prosthetic devices, dental coverage and even transportation to and from medical appointments.
If you are eligible, Medicaid may cover your entire household. If you make too much money for the program but cannot afford private health insurance, a type of Medicaid called “Children’s Health Insurance Program” (CHIP) may cover children up to the age of 19.
In order to receive Medicaid, you must certify your eligibility every twelve months. You will be required to report any adjustments to your income while you are receiving these benefits.
You can apply for Medicaid at any time through your local state agency.
What are the similarities between Medicare and Medicaid?
Obviously, both Medicare and Medicaid are government-funded health care programs with similar sounding names. They both offer hospitalization coverage and medical insurance. Both were established in 1965 as part of an amendment to the Social Security Act.
What are the differences between Medicare and Medicaid?
Medicare requires copays, deductibles and other out-of-pocket expenses. Generally, Medicaid services are completely covered with no out-of-pocket costs to the recipient. States can choose to assess out-of-pocket fees to Medicaid recipients, but most do not.
Medicaid has stricter eligibility requirements than Medicare. For example, you don’t have to meet income limits for Medicare but you do have to meet income limits for Medicaid.
Medicare does not cover long term care, but Medicaid does. Some reports indicate that Medicaid is the single largest source of of long-term care funding in the United States.
Medicaid is operated at the state level, but Medicare is managed at the federal level. This means that there are 50+ individual Medicaid programs with differing requirements and bureaucracies, but there is one centralized service for Medicare.
Medicare only covers individuals, whereas Medicaid covers entire households.
You may apply for Medicaid at any time, but you may be penalized if you apply for Medicare outside of the open enrollment period.
What if I’m eligible for Medicare and Medicaid?
It is possible to be eligible for both programs at the same time. This is called “dual coverage.” If you are eligible for dual coverage, your Medicaid will be secondary to your Medicare. Medicare will pay first, and Medicaid will pay the remainder. Medicaid can help cover your deductibles, copay s and other out-of-pocket expenses.