In the maze of U.S. healthcare, Medicare and Medicaid stand out as two of the most essential programs. However, despite their significance, they’re frequently confused for each other or even misunderstood entirely.
If you are new to family caregiving or recently turned 65 and need to navigate the perplexing world of senior health insurance, this article will help you grasp the distinctions between Medicare and Medicaid. Afterwards, you’ll be able to see which options better fits your family’s needs and make more informed health decisions for yourself or a loved one.
What’s The Difference Between Medicare and Medicaid?
Despite sharing a similar name, Medicare and Medicaid are two separate, government-run programs designed to primarily serve two different groups of people. The key differences between the two programs are:
- Medicare is a federal program designed to provide health coverage to those over 65 years of age or to those who have a disability. This program does not have any income restrictions. This program consists of four different parts that applicants need to be aware of when they apply.
- Medicaid is a state and federal program providing health coverage to low-income individuals and families. There is not an age requirement for this program.
- Both Programs cover hospitalizations, doctors visits, labs, x-rays, and medications, which is one of the few commonalities Medicare and Medicaid share.
It is possible to qualify for both programs, becoming dually eligible. If this is the case for you or your loved one, you can be enrolled in both programs at the same time, which will provide greater health coverage and much lower costs.
Common Misconceptions About Medicare and Medicaid
Before we delve into what Medicare and Medicaid are all about, let’s first discuss what they are not. Here are some common myths about the two health programs.
“Medicare and Medicaid Are The Same Thing”
Since the two programs are often discussed together, it’s easy to think they are the same thing. However, while both provide health coverage, sometimes even the same type of coverage, each program serves a different group of people.
As a result, qualifying factors and how you apply are quite different.
“Only Seniors Can Use Medicare”
Another misconception out there is that only seniors qualify for Medicare. It is true that the program is designed for those over 65 years of age; however, it also provides coverage for individuals with specific conditions regardless of age.
For example, those with End-Stage Renal Disease (ESRD), Amyotrophic Lateral Sclerosis (ALS), or other conditions like Multiple Sclerosis and Parkinson’s Disease, can qualify for Medicare, too. Individuals with these conditions do not have to wait until they hit a certain age to qualify.
“Medicaid Is Available To All Low-Income Individuals”
It is true that Medicaid is designed for low-income individuals. What some people are unaware of is that the program is also funded and operated on the state level. That means that each state has its own eligibility criteria, which could include family size or other factors, like disability status.
Some states also offer multiple Medicaid programs that have their own requirements. For example, some states offer programs for pregnant individuals or children.
What is Medicare?
Established in 1965, Medicare was designed to provide health insurance to people aged 65 and over, irrespective of income. Since then, there have been significant additions to the program, resulting in four distinct parts, or sub-programs, that applicants can enroll into.
Eligibility Criteria for Medicare:
- To qualify for Medicare, you must be 65 years of age or older and have worked 10+ years, paying into the Medicare system from your paychecks.
- If you are under 65, you could also qualify for Medicare if you have been disabled for two years or have certain conditions, including Amyotrophic Lateral Sclerosis (ALS) and End-Stage Renal Disease (ESRD).
Other Key Information About Medicare:
- Income is not a factor for eligibility. As long as you have paid into the program for at least 10 years, you can gain access to the program.
- Because this program is federally funded and operated, you get the exact same benefits regardless of what state you live in.
- Medicare will not cover long-term nursing home care. For those looking for insurance that will cover long-term nursing home care, Medicaid will be the program to look into.
The 4 Parts of Medicare
Medicare has four different parts, Part A, B, C, and D, which help cover specific medical services to those who qualify.
Original Medicare, made up of Parts A and B, is the traditional program where benefits are offered directly through the federal government. Under Part C, or Medicare Advantage Plan, benefits are offered through a private insurance company, which may offer additional benefits than Original Medicare.
Medicare is by far the more complicated program to understand, so let’s discuss the four parts of the program in more depth.
Medicare Part A: Hospital Insurance
Medicare Part A covers in-patient hospitalizations, both at an acute hospital or at a nursing home. Most people don’t have to pay a premium for Part A as long as they’ve worked at least 10 years and have paid into the Medicare system.
It’s important to note that there are still deductibles with Medicare Part A. During a hospitalization, there will be a deductible of $1,408 and daily charges for the stay itself. For a longer hospitalization, for example, you may be required to pay between $350-700 for each day you or your loved one is in the hospital.
Medicare Part B: Medical Insurance
Medicare Part B covers out-patient services, like office visits, labs, tests, or medications given in the doctor’s office. Things like home health nursing, physical therapy, occupational therapy, and some in-home medical equipment would also be covered by Part B.
Most Medicare beneficiaries choose to receive Part A and Part B together, otherwise known as Original Medicare. With Original Medicare, you do not need prior authorization or permission for care; you’re able to go directly to the doctor or hospital when you need care. You’re also covered for nearly all doctors and hospitals across the country.
However, Original Medicare does require a monthly premium, and you typically pay a percentage of medical costs after you’ve met your deductible.
Medicare Part C: Medicare Advantage Plan
The Medicare Advantage Plan, also called Medicare Private Health Plan or simply Part C, is healthcare provided through private insurance companies. Part C will cover everything that Part A and Part B provides, but sometimes may include additional coverage, like routine dental or eye care.
Medicare Advantage Plan generally offers significantly lower premiums and co-payments than Part A and Part B; however, you may also be subject to different rules and restrictions than Original Medicare. For example, many of these insurance companies have network restrictions or require prior authorization for certain tests or procedures.
If you decide to opt for Medicare Part C, you’ll also have to actively sign up for insurance each year during open enrollment each October.
Medicare Part D: Prescription Drug Coverage
Medicare Part D covers medication costs filled at your local pharmacy or through the mail. It doesn’t cover medications given during a hospital stay or during a doctor’s visit, which are covered by Parts A and B respectively.
Medicare Part D is typically bundled with the Medicare Advantage Plan, or you can choose to add it on to an Original Medicare plan. It’s also of note that there are other government programs available to help reduce health care and prescription drug costs if you meet the eligibility requirements.
What is Medicaid?
Compared to Medicare, Medicaid is a much simpler program to understand. Medicaid was also initiated in 1965, and was designed to offer health coverage to certain low-income individuals, especially children, pregnant individuals, and the elderly.
Unlike Medicare, Medicaid is funded and operated on the state-level. As a result, specific qualifying factors will vary from state to state.
Eligibility Criteria for Medicaid:
- The qualifications for Medicaid are income-based, meaning you’ll need to make less than a certain amount of money each year to qualify. The income requirements vary depending on the state.
Some other factors may determine whether you qualify for Medicaid. This, too, depends on the state you live in. Family size, disability-status, pregnancy-status, and age could be factors depending on your state. For example, Maryland has different income limits depending on how many adults, children, and pregnant women are in the household.
Other Key Information About Medicaid:
- No premiums are required for this program. You might have some co-pays, but they are generally small amounts.
- Some states allow those with higher incomes to be enrolled in the program, but with higher out-of-pocket costs. If you or your loved ones made more money than the eligibility criteria allows, that doesn’t automatically count you out.
- Each state could have multiple Medicaid programs, or call the program by different names. (For instance, Maryland refers to the program as HealthChoice.)
Medicaid does cover long-term nursing home care, along with hospitalizations, doctor visits, prenatal care, and vaccinations.
Dual Eligibility: Opting For Both Medicare and Medicaid
It’s possible for you or your loved one to qualify and benefit from both Medicare and Medicaid. These “dual eligible” beneficiaries often require a higher level of care or have significant healthcare needs, so enrolling in both programs allows them to receive the care they need at a lower cost.
If you or your loved one qualifies for both programs, those large co-insurances and premiums required by Original Medicare are usually entirely covered by Medicaid. Other individuals opt for a Medicare Advantage Plan and Medicaid to receive additional benefits like transportation to doctors visits at very affordable costs.
Taking Care of Your Loved Ones Through Medicare and Medicaid
Understanding the nuances between Medicare and Medicaid is crucial in navigating the U.S. healthcare system effectively. Whether for personal knowledge or assisting a family member, having a clear grasp on these programs ensures that everyone gets the care they deserve.
If you are investigating these programs because you or your loved one might need long-term care, Birmingham Green can help you find additional resources as well.