Medicare vs. Medicaid: Determining The Differences
Medicare and Medicaid are essential government entities that serve different roles in healthcare coverage. What are the differences between Medicare and Medicaid you might ask? Despite the words appearing similar and the programs beginning the same year (1965), further examination of the two highlights the discrepancies between them and how you may qualify for each.
Medicare:
- Is funded and operated by the federal government
- U.S. citizens aged 65 and older are typically eligible
- Basic coverage covers hospital/doctor car and medication
- Coverage is determined by the plans you purchase
- Cost includes copays, deductibles, and premiums
- Applications are processed through the Social Security Administration
Medicaid:
- Is funded by the federal and state governments, but operated by the state
- Low-income people and families are eligible
- Basic coverage covers hospital/doctor car and medication
- Coverage is determined by income and state guidelines
- Cost includes low out-of-pocket costs
- Applications are processed by Healthcare.gov or a state-sponsored Medicaid website
- Applications are processed through the Social Security Administration
How is Medicare and Medicaid operated and funded?
The differences between Medicare and Medicaid begin with the level of government they are operated by.
Medicare is a federal health insurance program run by the Centers for Medicare & Medicaid Services (CMS). It is funded by taxpayer dollars and premiums are paid by beneficiaries.
Medicaid is a low-income assistance program with guidelines made by CMS, but it is operated at the state and local level.
Who is eligible for Medicare and Medicare coverage?
Another difference between Medicare and Medicaid is the type of people eligible for each program.
Medicare primarily serves people ages 65 and up, though younger people with certain disabilities, like end stage renal disease (kidney failure) and Lou Gehrig’s disease (ALS), can also qualify. Although your spouse or ex-spouse is eligible for coverage, Medicare typically does not cover dependents, including children. There are exceptions to this, such as dependents with end stage renal disease and Lou Gehrig’s disease. Income is not a factor in whether or not you are eligible for Medicare coverage, which is in stark contrast to Medicaid.
Medicaid was created to help with health care costs for people who lack financial resources and it aids low-income people, families, and children of all ages. Your eligibility is determined by income, not age, and it is available to you in any state as long as your income is below the federal poverty line. Due to the Affordable Care Act that was signed into law in 2010, there is also wiggle room for people slightly above the poverty line to apply for coverage. To qualify for Medicaid, a person has to make less than 133 percent of the federal poverty line, which is about $16,000 for an individual or about $32,000 for a family of four. Medicaid does cover dependents such as children.
Elderly low-income people are “dual eligible” to qualify for Medicare and Medicaid. With dual eligibility, Medicare operates as the primary form of your coverage and Medicaid fills in the gaps after Medicare, employer group health plans, and/or Medicare Supplement insurance (Medigap) has been used.
What does Medicare and Medicaid cover and how is coverage determined?
Medicare coverage and the benefits you receive is based on the type of plan you choose. Medicare has different plans referred to as Parts A, B, C, D, and supplement plans. Medicare Part A covers inpatient services and procedures like:
- Hospital visits
- Skilled nursing needs
- Home health
- Hospice care
Medicare Part B covers your outpatient medical needs, helping with things like:
- Doctor’s visits
- Therapy visits
- Diagnostic test, and more
Choosing alternative plans could affect coverage. Medicare Advantage plans, which are private alternatives to Medicare Part A and Part B, cover additional things such as:
- Vision
- Dental
- Hearing
- Prescription drug coverage; and more
A Medicare Supplement insurance plan helps pay off the out-of-pocket health care costs that Original Medicare does not, such as:
- Copays
- Coinsurance
- Deductibles
Medicaid provides coverage against major medical expenses, but specific Medicaid services and drug coverage is different by state. Medicaid is different from Medicare in the area of long-term healthcare services and support, as it covers the cost of nursing homes, assisted living facilities, and more. States are required by law to provide the following mandatory Medicaid benefits:
- Inpatient and outpatient hospital services
- Early and Periodic Screening, Diagnostic and Treatment Services (EPSDT)
- Nursing facility care
- Home health services
- Physician care
- Rural health clinic services
- Federally qualified health center services
- Laboratory and X-rays
- Family planning services
- Nurse midwife services
- Certified pediatric and nurse practitioner services
- Freestanding birth center services (when licensed or otherwise recognized by the state)
- Transportation to medical care
- Tobacco cessation counseling for pregnant women
There are also a number of optional services Medicaid covers, depending on the state you live in. Those include:
- Prescription drugs
- Clinic services
- Physical therapy
- Occupational therapy
- Speech, hearing and language disorder services
- Respiratory care
- Other diagnostic, screening and rehabilitative care
- Podiatry services
- Optometry care
- Medicaid dental care
- Dentures
- Prosthetics
- Eyeglasses
- Chiropractic care
- Private duty nursing care; and more
What is the cost of Medicare and Medicaid?
The cost of Medicare coverage can vary. People with larger incomes pay higher premiums for certain parts of Medicare. If you have logged 10 years at a job and paid Medicare taxes, you (along with your spouse or eligible ex-spouse) don’t have to pay premiums for Medicare Part A. However, out-of-pocket expenses, like deductibles and copays, are usually expected. Your doctor’s visits, which fall under Medicare Part B, and your drug prescriptions, which is covered under Medicare Part D, requires paying premiums.
Medicaid is typically free, but states can require beneficiaries to pay small, capped out-of-pocket premiums, deductibles, and copays for specific services and prescription drugs. Among the people who do not have to pay out of pocket for these costs are:
- Pregnant women
- Children
- Terminally ill individuals
- Patients in a health care institution
How to apply for Medicare and Medicaid?
You are automatically enrolled in Medicare if:
- If you are 65 and older and receiving Social Security benefits or Railroad Retirement Board benefits
- If you are younger than 65 and receiving federal disability benefits, such as Social Security Disability Insurance (SSDI)
If you are not automatically enrolled, you must apply through the Social Security Administration. There are different enrollment periods depending on the type of Medicare you’re applying for and the health coverage you already have. There are several ways you can apply, such as:
Visiting your local Social Security Office
- Calling the Social Security Administration at 1-800-772-1213. The hours are 7 a.m.-7 p.m. Monday through Friday
- Calling the Railroad Retirement Board at 1-877-772-5772 if you worked for a railroad
- Applying through the Social Security Administration website at ssa.gov
The Medicaid application process is straightforward. If you qualify, you can:
- Apply online at Healthcare.gov year-round
- Contact your state Medicaid agency and apply as long as you are a resident of that state
