Medicaid and Medicare are both important health-related programs in the United States. They provide financial support for many people, helping to cover medical expenses and ensure that needs are met.
However, the two programs are both complex and are often confused with each other.
This isn’t surprising, as Medicare and Medicaid can both pay for many of the same types of services, albeit in different situations and with different criteria.
So, what are the differences and similarities between the services? When might you use one over the other? We will cover the answers to these questions in this article.
Medicare is a type of insurance. People pay into it throughout their lives, then that fund is used to pay for a variety of medical expenses.
Medicare doesn’t cover everything. Instead, Medicare users still pay part of their costs, often through deductibles and premiums.
Medicare is also a federal program. As such, it is run by a federal government agency (the Centers for Medicare & Medicaid Services) and tends to be the same no matter where you are in the United States.
Importantly, Medicare isn’t income-based. Instead, people over 65 can sign up, regardless of income. The same is true for other eligible groups, including those on dialysis, those with ALS, and people who are disabled.
Medicare is also more complex than Medicare, as it has four different parts and specific enrollment periods.
Medicare has four main parts.
Original Medicare vs. Medicare Advantage
According to medicare.gov, under Original Medicare, you’re able to visit any doctor that accepts Medicare and generally don’t need a referral for specialist visits. Medicare Advantage plans are often more restrictive, which may limit the specific providers you can use and mean you need a referral to visit a specialist.
Under Original Medicare, you first pay a deductible, then pay roughly 20% of the approved amount. This is known as co-insurance. Costs vary for Medicare Advantage plans which means that some services have lower out-of-pocket costs, while others have higher ones.
Original Medicare charges Part B premiums. You sometimes pay this under Medicare Advantage plans too (often with a fee for the plan as well), but other times there is no plan premium and some of your Part B premiums may be paid too.
Medicare Advantage plans often have a yearly cap. They cover all the crucial services included in Original Medicare, and some may provide extra services not found in Original Medicare.
The differences in price and services are strongly influenced by which Medicare Advantage plan you choose.
Medicare eligibility begins three months before a person turns 65. Most people sign up for Original Medicare at this point, to avoid any penalties or gaps in service.
However, there are some situations where you might choose to delay signing up, such as if you still receive insurance from an employer.
The initial period of eligibility lasts for seven months, ending three months after the month a person turned 65. Exactly when the coverage begins depends on the month that you signed up for Medicare.
There is also a general enrollment period from January 1 to March 31 annually. People who missed signing up when they were initially eligible need to do so in this window.
Beyond this, there is a Medicare open enrollment period. This doesn’t refer to the Original Medicare. Instead, it’s the time when people can swap from their Original Medicare to a Medicare Advantage plan, can change Medicare Advantage Plans, or go back to their Original Medicare.
The enrollment period here is in the fall, starting on October 15 and ending on December 7.
This window is particularly important if your circumstances have changed and you need to adjust your coverage or if your current plan isn’t meeting your needs.
In contrast, Medicaid is run by the federal government and by state governments. Due to this, requirements, services, and other factors can vary from one state to the next.
Medicaid is also an assistance program that focuses on supporting low-income people, regardless of their age. Co-payments are sometimes required for services, but these are typically low, as Medicaid beneficiaries have limited funds.
Medicaid covers a large range of services, including routine medical care, hospital visits, some types of screenings and preventative services, and even long-term care in some situations.
While Medicare is available to anyone aged 65 and above, Medicare has strict eligibility requirements, including income thresholds. There is a comprehensive state-by-state table at medicaid.gov that highlights the different income thresholds for each state.
Other criteria influence Medicaid eligibility too, including state residency and immigration status.
Assets are relevant to Medicaid eligibility as well, but you can’t just give away assets to be eligible for Medicaid faster.
Medicaid covers many of the health care services that Medicare does and has greater support in some areas, including various types of preventative care and eyeglasses. Medicaid also provides pregnancy and family planning services, nursing facility services, home health, and more.
Some of the services are federally mandated, but there are also many optional ones. States can decide which of these to offer, which is partly why Medicaid varies so much between states.
Medicaid is also more relevant for some types of long-term care, which can include in-home care and, in some cases, nursing home care. However, facilities aren’t obliged to accept Medicaid, so you’ll need to work out which ones do.
Medicaid is also able to pay for some Medicare fees, including the 20% of service charges that Medicare does not cover, plus the Medicare premium. As such, Medicaid can help people access Medicare who normally wouldn’t be able to.
People with both full Medicaid and Medicare are considered dually eligible. Dual-eligible beneficiaries still get the regular options for Medicare coverage and are able to choose Medicare Advantage plans.
There are even specific dual-eligible Medicare Advantage plans that are designed to make things easier.
When services are paid for, Medicare pays first. Medicaid is only used after Medicare and other types of health insurance.
Despite the similar names and focus on helping with health care costs, Medicare and Medicaid are two very services.
Medicare is a health insurance program that can come with monthly premiums, while the Medicaid program focuses on supporting low-income people and comes with fewer fees.
Remember, because Medicaid is state and federally-managed, each state Medicaid program is different.
Angelica P. Herrera-Venson, DrPH is a gerontologist, public health and Medicare expert, and published researcher in family caregiving and chronic health conditions. She is the author of The Multicultural Guide to Caregiving and has held prestigious fellowships, including the Health Policy & Aging program and Geriatric Psychiatry fellowship from the National Institute of Mental Health. Angelica was an Associate Director at the National Council on Aging and has worked extensively with Medicare and Medicaid dual-eligible patients. She is currently the owner of Kapok Aging & Caregiver Resources, a hub for caregivers from around the world.
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