Each year millions of US citizens get medical funding and assistance through either Medicare or Medicaid. But how many of us actually know the difference between Medicare and Medicaid? Our guide will help you to discover the ins and outs of health insurance and medical coverage.
Medicare vs Medicaid explained
For some people, the lines between Medicare and Medicaid may not be clear. With similar names and the same basic purpose, it is easy to confuse what each program has to offer and how it works. While there are many differences, the government runs both programs in order to help citizens pay for their health care.
What is the Difference Between Medicare and Medicaid?
The federal government primarily funds Medicare for a majority of United States citizens and permanent legal residents who meet the necessary qualifications. To compare, both the state and federal government fund Medicaid. Medicaid is supportive of low-income families and people who meet all of the requirements of the program.
Medicare Benefits vs Medicaid Benefits
Medicare and Medicaid have similar benefits and coverages but some people might have dual eligibility. This means that they qualify for both programs. If you are dually eligible, it is beneficial to coordinate the two programs. This way, they will cover your medical bills and hospital stays.
Medicaid Covered Services
From state to state different services might or might not be included since each state runs their own program. Although each Medicaid program is different, all programs must offer certain coverage for specific services. Medicaid.gov states that mandatory coverages include:
- Lab & X-ray services
- Nursing Facility services
- Inpatient and Outpatient hospital services
- Nurse Midwife services
- Medical care transportation
- Rural health clinic services
- and more!
Your individual state's Medicare program might also include benefits like prescription drugs, dental services, long-term care, and hospice.
Medicare Covered Services
The Medicare program comes in parts A through D which all cover different services.
Medicare Part A
Medicare part A covers any home health care, inpatient hospital care, hospice, skilled nursing facilities, lab tests and surgery.
Medicare Part B
Part B of the Medicare program (medical insurance) covers outpatient hospital care, select preventative services, medical equipment, doctor services, home health care and other health care providers' services.
Medicare Part C
Medicare Part C is supplemental plans that can be privately purchased to cover additional services that Medicare part A and B might not cover.
Medicare Part D
Prescription drugs are covered through Part D of the Medicare program. Each prescription drug plan has a different list of the drugs that are covered under each tier of the prescription drug.
What is Original Medicare?
Original Medicare is the standard Medicare program that the federal government offers. The government will directly pay for any health care services you receive. You can see any doctor or hospital that accepts Medicare. Here's how it works:
- Visit your doctor or hospital when you are in need of care.
- There is no need to get prior authorization from your primary care physician.
- Pay a coinsurance for each visit.
- There is a cap on your payment. You will not have to pay an amount larger than what your Medicare plan states.
Original Medicare consists of two parts: Part A which is inpatient/hospital coverage and part B which is outpatient/medical coverage. If you are seeking prescription drug coverage, you will need to join a Medicare private drug plan (PDP).
Medicare Advantage Plan
Remember that unless you decide otherwise, you will have Original Medicare. In addition to that, you can choose to receive your Medicare benefits from a Medicare Advantage Plan. Medicare private health plan is another term for this plan.
Medicare Advantage Plans are similar to Original Medicare except they offer different rules, costs, and coverage restrictions. These plans might also come with a monthly premium in addition to your Original Medicare Part B premium.
Who is Eligible for Medicare?
Medicare is a program that is connected with Social Security. Medicare is available to any US citizen or permanent legal resident who has been in the US for at least 5 years and is at least 65 years old. In certain situations, it also may cover people with disabilities.
For those who are younger than 65 to be eligible for Medicare you must:
- have received 2 years of SS disability benefits or a disability pension from the RRB (Railroad Retirement Board).
- live with Lou Gehrig’s disease
- Incur permanent kidney failure and need regular dialysis or a kidney transplant
If you or your spouse have worked for at least 10 years and have paid Medicare taxes you could qualify for a premium-free Part A plan. To qualify for Medicare parts C and D, you must first enroll in Parts A and B.
Medicaid eligibility is available to low-income families, pregnant women, children, the elderly, people with disabilities, and those who receive Supplemental Security Income (SSI). Because this program has firm income eligibility requirements, laws for eligibility vary depending upon the state in which you live. Typically, eligibility follows the following criteria:
- Applicants must meet federal and state requirements including residency, immigration status, and proof of citizenship
- Applicants must meet financial need requirements on both federal and state levels
Federal Poverty Level
Generally speaking, the Department of Health and Human Services (HHS) uses the federal poverty level as a way to measure income every year. This measurement helps determine who is eligible for certain programs and benefits.
The federal poverty level plays a role in eligibility and Medicaid services. GAs states continue to expand their Medicaid programs, anyone with an income that is 138 percent of the federal poverty level will qualify for Medicaid. This percent is not the same for every state as some states offer Medicaid and health insurance to those with a higher income.
Who Pays for Medicare and Medicaid?
Payroll taxes and SS income deductions fund Medicare parts A and B. Participants in the Medicare program pay out-of-pocket for parts C and D. As for Medicaid each individual state has the option to charge a monthly Medicaid premium and to have out-of-pocket requirements. However since Medicaid is a form of public aid that is paid for by tax dollars, recipients usually pay next to nothing for healthcare.
How do I Enroll?
Whether you are about to turn 65, you are ready to retire or need help to get health coverage you should know about all of your options and how to apply.
Enrollment for Medicare is only open during certain times. In some cases, folks automatically enroll in Medicare when they turn 65. Some people are even automatically enrolled in Medicare when they turn 65. The 7 Month Initial Enrollment Period starts 3 months before turning 65, includes your birthday month, and ends 3 months after turning 65. It is important to know about all of your options so that when the time comes you know just what you want before applying for Medicare through Social Security.
If you are wondering how to sign up for Medicaid, all you have to do is fill out an application according to your residency. Call your state’s Medicaid office to learn more details about applying and what you need to know to fill out the application. If you are accepted or even if you are not, you should fill out an application every year to renew your plan or to see if your eligibility has changed.
FAQs About Medicare and Medicaid
My Medicare card is lost. How can I get a new Medicare card?
If your card is stolen, lost or incurs damage, you can request a card replacement from the Social Security Administration. You can do this on the website, by phone number or at your local social security office. If you have received your card through the Railroad Retirement Board, you have to go through them to get your replacement card.
What happens if I miss my enrollment window for Medicare?
If you happen to miss your 7 months initial enrollment period you will be able to enroll during the general enrollment period which is from January 1 to March 31 every year. There is a late enrollment penalty for Medicare Part B and for those who have to pay a premium with Medicare Part A.
I can’t afford Medicare’s premiums. Is there help for me?
The Medicare Savings Program pays Part A and Part B coinsurance, premiums, copays, and deductibles for those with limited income. For MSP assistance qualification one must earn less than $1,245 and a couple, $1,813.
How can I find a dentist that is covered by Medicaid?
To find an office that accepts Medicaid you can use the Medicaid dental locator.
Will Medicaid pay for my Medicare deductibles and premiums?
Medicaid will pay for the coinsurance, premiums, and deductibles for Medicare Parts A and B for people with low income. These people are QMBs (Qualified Medicare Beneficiaries).
What is Medicaid Planning and how does it affect eligibility?
Medicaid planning is any assistance that a prospective Medicaid applicant receives in preparation for the application. Medicaid planning is essential when the monthly income of an individual is close to the financial eligibility limit. Legal professionals can help rearrange assets so that individuals become eligible for Medicaid.
Do I need both Medicare and another insurance?
No, you do not necessarily need both Medicare and another insurance. If you do have both, each one is a “payer”. Rules like the “coordination of benefits” determine which payer is responsible for medical coverage in the event that two or more health insurance plans are responsible for paying the same medical claim. The primary payer pays for your medical bills and then sends the remaining amount to the second payer.
Does Medicare cover nursing homes?
Medicare Part A might cover care for a skilled nursing facility, but not custodial care. In order to stay in a skilled nursing facility, you must have a medical condition that requires you to be there. In this case, your conditions require specialized care. On the other hand, Medicare will not cover custodial care which is help with basic activities like eating, bathing, or dressing.
Is Medicaid covered out of state?
Medicaid is a joint program between the state and the federal government. This means that each state can make its own rules for out-of-state Medicaid coverage and use. Benefits vary according to the state, so before you seek help in another state or if you are planning a vacation out-of-state, consult a professional beforehand. This way, you'll know where you can seek help without incurring medical bills.