Medicare Vs. Medicaid [What’s The Difference?]
Posted in Uncategorized last updated on March 8, 2022When you are trying to understand more about how federal programs such as Medicare and Medicaid work, it can be incredibly frustrating to navigate. Not only is the information out there full of confusing technical language, but half of the sources come from private health insurance companies looking to sell their coverage!
If you are trying to find a source for answers about the federal health care available to you, with peace of mind that you aren’t being sold anything, then you have come to the right place.
It can be hard to know where to start asking questions. I will provide a thorough explanation to all of the most pressing questions people commonly have about Medicare and Medicaid, in a straightforward way.
In this article, I will be giving an in-depth overview of both Medicaid and Medicare. You will learn about the differences between each program, if you are entitled to one or both of these programs, and the types of benefits you should expect after enrolling.
By the last line, you will have all the knowledge needed to make the most informed decisions about your health and take action right away.
Quick Navigation Links
- Both Programs in a Nutshell
- Further Explanation of Medicare
- Further Explanation of Medicaid
- Explanation of Dual Enrollment
- Some Final Thoughts
Both Programs in a Nutshell
Both of these programs were created by the federal government to provide healthcare to the elderly, disabled, and families with financial needs. This means that the US government is responsible for providing protections and regulations for these programs.
Medicaid is entirely financed through the federal government. The state governments have no role in Medicare but do have a large amount of discretion with Medicaid.
Medicare is based on age, social security, and time you have been in the workforce. Medicaid, on the other hand, is an assistance-based program that takes your income and assets into account to determine eligibility.
Now that you have a broad idea of the differences between the two, let’s get into some more detailed explanations of each program.
Further Explanation of Medicare
Medicare is health insurance providing coverage for the elderly, those with certain disabilities, and particular ailments such as ALS or kidney failure. It is administered entirely at the federal level, so it goes by the same name and provides the same benefits in all 50 states.
Medicare is comprised of four separate parts: Medicare Part A, Medicare Part B, Medicare Part C, and Medicare Part D. All of these distinct plans provide various elements of your total health care.
In the following section, I’ll explain in further detail what each part is responsible for and how they work together to form full health coverage so that you can determine how you want to structure your health care.
Parts of Medicare
Since they were the first parts to be introduced, Medicare A and B are often called “Original Medicare”. Medicaid A is responsible for going towards hospital services such as surgeries, emergency room visits, and long-term care in nursing homes. Other medical services such as check-ups, laboratory testing, various types of medical equipment, and home health care would be covered under Medicaid B.
Some private insurances offer plans that have been approved to replace Medicaid A and B. Any of these plans will fall under Medicaid C. Finally, Medicaid D is coverage for the cost of prescriptions.
Who is Eligible for Medicare?
Everyone, regardless of income status, is eligible to enroll in Medicare once you meet the age requirement. Unless you had prior eligibility due to illness or disability, then you become eligible for Medicare on the day you turn 65.
The only exception to this is if there haven’t been at least 10 years of taxed income prior or legal residence in the United States is under 5 years.
Medicare primarily provides health insurance for elderly Americans, but there are other eligible groups. Those requiring dialysis due to kidney disease, suffer from ALS, or have certain disabilities are eligible before the age of 65.
I’m Eligible. How Do I Enroll?
The initial window to enroll in Medicare begins three months before the day you turn 65 and continues for the three months after the month of your birthday. In total, this enrollment period spans 7 months.
However, you might have a reason to delay enrolling. Sometimes people have more comprehensive coverage through their employment or spouse, so they don’t want to replace it with a Medicare plan. If this is the case, enrollment is open to you for the 8 months after your retirement.
If you haven’t enrolled for a reason not discussed above, there are still lots of opportunities to get insured with Medicare. There is an annual open enrollment beginning every January until March, so you don’t need to go without!
Benefits of Medicare
Once enrolled in Medicare, there are a vast array of medical visits and procedures available to you with partial to full coverage.
When you first enroll, you can book a “Welcome to Medicare” visit with your doctor, where you can make a plan for any future needs, identify any needed preventative care, discuss your personal risk factors, and establish a full health history.
Afterward, there are annual doctor visits available to you to maintain your health and update any changes that need to be made. This is also when you will be screened for any new risks that you may need to be aware of.
Both of these types of visits are fully covered, except in special circumstances. If you require care that is not fully covered, Medicaid typically covers up to 80% of the cost.
How is Medicare Funded?
There are a few different avenues for funding Medicare. Most of the funding comes from each of our income taxes and payroll taxes.
This is why everyone is eligible once they are 65 — you have been paying into it for your entire employment history!
Other funding comes from the yearly deductible, which has historically been very low, and from those procedures that Medicare pays up to 80% of the cost. Your portion of the cost is a small portion of the funds that support Medicare.
All of these different sources contribute to Medicare’s funding, and support the program in providing health insurance to over 58 million people across America!
Further Explanation of Medicaid
By now, you have learned a great deal about the ins and outs of Medicare. However, this might not be all the federal coverage that is available to you.
Medicaid is the other government program that assists Americans with their health care. There are over 70 million people who are receiving assistance through Medicaid, and it may also be an option that is open to you.
Whereas Medicare is administered entirely by the federal government, it is both the federal and state governments that are responsible for financing Medicaid.
The federal government puts regulations in place for the minimum coverage required in Medicaid programs, but state governments make the call on how much above the minimum their program will provide for their residents.
Medicaid can be especially confusing to understand since it goes by a lot of different names and benefits differ depending on the state. For purposes of clarity, I will just use “Medicaid” to talk about each of the state’s programs. The name and full scope of benefits for your state’s Medicare program will depend on the state of your residence.
Who is Eligible for Medicaid?
Unlike Medicare, the eligibility for Medicaid is not based on age. Instead, those who are eligible for Medicaid assistance will fall under a set income limit. Some states will also set a limit to the number of assets or resources you can own in order to be eligible.
The income limit for eligibility does fluctuate very slightly from year to year. This is because it is calculated in part by the annual poverty guidelines put forth by the Office of the Assistant Secretary for Planning and Evaluation or ASPE. If the poverty guidelines change, the calculation will have a different result for the appropriate financial requirements.
Most states will have the same poverty guidelines, with the exception of Alaska and Hawaii. So, if you are trying to calculate your eligibility, be aware of which guidelines apply to you.
I’m Eligible. How Do I Enroll?
The process for enrolling is going to depend on your state of residence. There are resources to find your enrollment process here and here.
Benefits of Medicaid
Just like with the eligibility requirements, Medicaid benefits will also vary from state to state.
There are some mandatory benefits that all states are required by federal law to comply with, and then it is up to each state to decide what other benefits, if any, their particular Medicaid will provide over and above the mandatory ones.
Some of the mandatory benefits include:
- Visits to the doctor
- Necessary inpatient hospital stays
- Laboratory testing
- Imaging clinic scans, such as x-rays
- Long term nursing care and home care
- Obstetrician and pregnancy care
You can expect these benefits, regardless of where you reside.
Depending on which state is your home, you may have access to other benefits such as dentistry, prescriptions, vision care, counseling and psychiatric care, prosthetics, and other services by medical specialists.
For a comprehensive overview of Medicaid coverage by state, follow this link to read more about the benefits of each state!
How is Medicaid Funded?
The funding for Medicaid comes from both federal and state governments. When your state spends funds on Medicaid, that amount is matched or exceeded at the federal level. The average is somewhere between $1.57-$1.60 per dollar the state spends on its Medicaid program.
States are also incentivized to spend more on Medicaid. This is, in part, because of overwhelming evidence showing a strong correlation between states with more comprehensive Medicaid assistance and their residents reporting much higher health, wellness, and quality of life.
Explanation of Dual Enrollment
There is no way to apply for both of these programs at the same time; so, if you think you might be eligible for both, then you would need to be approved separately for both Medicaid and Medicare.
There are upwards of 12.2 million citizens or legal residents in the United States that are enrolled in both programs. If you are over 65 and have income that falls under your state’s Medicaid requirement, then it is very likely you would also be a good candidate for dual enrollment!
To be considered as having dual coverage, you would need to be enrolled in Medicare Part A and Part B (or replace these with Medicare Part C) and then additionally be enrolled in your state’s Medicaid program.
Benefits of Having Dual Enrollment
Having both programs available to you is going to ensure that you have the most comprehensive coverage possible.
Where Medicare might lack, Medicaid can fill in. This is the case in certain long-term nursing or home care as well as transportation services.
There is also some peace of mind with being enrolled in both. If you were to suddenly have an increase in income or assets, you could possibly lose Medicaid benefits. This is going to be much less of a crisis if you have Medicare as well.
Medicare often does not pay for the full amount of a procedure or medical visit. If you are also enrolled in Medicaid, you will pay a lot less out of pocket and maybe nothing at all.
Life is also unpredictable. Some circumstances could come up suddenly and you are much more likely to have the necessary coverage when you are dually enrolled.
Some Final Thoughts
There are a lot of moving parts when it comes to health insurance and government. When the two are combined, it can be incredibly hard to get a clear picture of what is out there and available to you.
All of the information presented in this article is intended to shed some light on this process, with the hope of giving you the tools necessary to get your healthcare in order, so you can spend the time saved on research doing the things you actually enjoy.
