If you’re a senior deciding between Medicare and Medicaid, you may find it difficult to wade through the differences. Aside from having similar names, both government-run and created at the same time to help those in need, they do operate differently.
Eligibility, benefits/services, enrollment, and costs differ according to each government-run program and are based on your particular circumstances. Some qualifying individuals may be “dual eligible” with healthcare costs covered by both programs.
Understanding what each program has to offer is key to obtaining the best healthcare coverage for you. This simple guide will provide basic information to start navigating what you need to know.
BASIC FACTS
In addition to private and employer-sponsored health insurance coverages, Medicare and Medicaid are two healthcare options funded by taxpayers and run by the U.S. government. These health programs provide healthcare benefits to over 150 million people, playing a key role in American healthcare. Specific groups of Americans—seniors, those with disabilities, and low-income people—are helped by these two health programs.
What is Medicare? Medicare is a federally funded and managed government insurance program that is determined by age or disability/medical conditions. It provides health insurance to reduce healthcare costs for those over the age of 65, and those under 65 with disabilities, regardless of income.
What is Medicaid? Medicaid is a joint federal and state public health program that assists low-income people, regardless of age. Seniors and those with disabilities make up 25% of enrollees. The program is means based and helps to pay healthcare costs for those with limited resources and who meet certain income levels. (One of the ways to meet those income levels is to setup a pooled income trust.) Medicaid programs are managed by each state following federal guidelines.
SNAPSHOT OF KEY DIFFERENCES
Simply put, both Medicare and Medicaid are healthcare programs that were created and run by the U.S. government to provide affordable health insurance and assistance to certain populations. Medicare provides insurance coverage for seniors and disabled individuals, while Medicaid assists low-income individuals and families.
| Medicare versus Medicaid Chart | ||
| Medicare | Medicaid | |
| Program type | Insurance | Assistance |
| Funding source | Federal government | Federal and State government |
| Eligibility criteria | People over 65 and others with disability at any age/income level. | Those at any age with qualifying low income and resources. |
| Enrollment | Enroll through Social Security | Enroll through local state agency |
| Coverages | Government: Hospital – Inpatient (Part A) Medical – Outpatient (Part B) Private Insurers: Voluntary plans – (Part C) Prescription drugs – (Part D) | Federally mandated: Hospital Medical Medications Some additional benefits |
| Program costs | Plan costs may include premiums, deductibles, co-pays, and coinsurance. Typically, your Part B premium will be deducted from your monthly Social Security benefit. | All or some of your costs may be covered based on income and state eligibility rules. Those costs can include premiums, deductibles, copays, and coinsurance. |
Eligibility
- Medicare provides health insurance primarily to seniors 65 years and older, regardless of income. It also covers those 62+ years old with an eligible spouse already enrolled in the program. In addition to servicing the elderly, the program is also available to others with qualifying disabilities and medical conditions. You must also be a U.S. citizen or permanent resident.
- Medicaid provides healthcare benefits to individuals and families (including seniors) with limited income and assets, and those with disabilities, without age restrictions. Household size is also considered. Medicaid Eligibility is primarily determined by income levels but will vary according to the state where you apply and reside. Qualifying also requires you be a U.S. citizen or permanent resident.
Some states allow what’s called a “spend down” by paying non-covered medical bills, premiums, and deductibles. This reduces excess income above your state’s Medicaid limit to help you become eligible for benefits. Other strategies like joining a pooled trust can also help you qualify.
In addition, some states like New York extend coverage to those receiving community-based and homecare services, which is more than what’s required by federal law. Find more information at your state’s Medicaid agency.
Enrollment
- Enrollment in Medicare is managed by the Social Security Administration and initially begins three months before you turn 65 years old and ends three months after your birth month. You must initially enroll within this time to avoid late enrollment penalties and higher premiums. If your initial enrollment is missed, you would need to wait until the general enrollment period, which runs from Jan 1st to Mar 31st annually with coverage beginning July 1st in the same year.
After your initial enrollment into Medicare, an annual enrollment period takes place from Oct. 15th to Dec. 7th when you are allowed to switch, join, or drop plans. Because of potential changes in plans and benefits in the coming year, it’s a good idea to check your coverage at this time annually. To apply, visit Medicare.gov.
If you are 65 years and older, still working, and covered by your (or your spouse’s) employer group health insurance, you can enroll in the Medicare program during your “special enrollment period.” This time period includes enrolling anytime you are still covered by your employer’s group plan until eight months following the end of your employer’s coverage.
Note: If you begin to receive Social Security or Railroad Retirement Board benefits at a minimum of four months prior to turning 65 years old, you will automatically receive Original Medicare (Part A and Part B).
- Enrollment in Medicaid is not dictated by birthdates or other deadlines. However, to receive benefits, you will need to take the initiative to sign up. You will also have to qualify based on income limits, which vary from one state to another, in order to receive benefits.
To enroll in the Medicaid program, you must contact your state’s Medicaid office where you reside.
Program Benefits and Coverages
Seniors depend primarily on Medicare for their healthcare but this program does not cover all costs. For example, if you are a senior in need of long-term care at home or personal care for daily activities, it’s important to know that Medicare does not pay for these benefits. Medicaid, on the other hand, does pay for home healthcare and personal care services for seniors.
Medicare
A less comprehensive health insurance policy, Medicare consists of four parts. Many people combine multiple parts and add private plans to Original Medicare to broaden coverage. Here are the four parts and what Medicare helps pay for:
- Part A: Hospital care (inpatient), hospice care, skilled nursing facilities, and certain home health care.
- Part B: Doctor care (outpatient), lab tests, X-rays, preventive care, mental health care, emergency transportation, and medical equipment.
- Part C: Private insurance plan (Medicare Advantage) that is an alternative option that combines services found in Part A, Part B, and usually Part D. May cover hearing tests, dental, and medication.
- Part D: Private plan prescription drug coverage, shots, and vaccines are usually included. Be sure to review what drugs are covered to meet your needs.
Note: Parts C and D coverage varies depending on the plan, insurance company, and your location.
Medicaid
This single state-run plan provides comprehensive coverage and is the only plan covering long-term home health care (Community Medicaid), nursing home care, and home personal care (daily living activities). Plans follow federal guidelines, but benefits and eligibility requirements vary from state to state.
- Covers doctor care, hospital care (inpatient and outpatient), lab tests and X-rays, and prescription medications, and home health care and nursing facility services.
- Depending on the states, Medicaid could also provide dental (adult) and vision services.
- Optional benefits will vary depending on your state and include prescriptions, chiropractic services, optometry, dental care, and physical therapy.
Your Costs
Americans pay into Medicare as a paycheck deduction via Social Security payroll taxes making them eligible for benefits. The program coverage and costs are the same regardless of what state you live in. Enrollees can expect to pay monthly premiums, deductibles, coinsurance, and co-payments. What you owe for Medicare depends on when you enroll, your coverage options, and services used.
Although Medicaid is cheaper and doesn’t require most recipients to pay out-of-pocket payments for covered health care. There may, however, be small copayments required by enrollees for some services. Your income will dictate what you may have to pay according to your state’s rules. States vary on what to charge, which may include some out-of-pocket costs like deductibles, co-pays, premiums, and coinsurance. Many people are exempt from the out-of-pocket costs which vary from one person to another. Those who are above the federal poverty level may pay higher amounts.
Can seniors enroll in both programs?
Yes, any adult 65 years of age or older who meets program qualifications and income levels can be covered by both Medicare and Medicaid. In fact, according to Medicaid, 12 million “dually eligible” people, 15% of Medicaid enrollees, are enrolled in both programs. So, If you are over 65 and on Medicare with limited income and resources that meets your state’s criteria, you may also qualify for Medicaid. In addition, individuals with a disability can also be dual eligible at any age.
Being enrolled in both programs can reduce your healthcare costs and help pay for long-term care expenses. Costs like Medicare monthly premiums, co-pays, deductibles, and coinsurance may be paid by Medicaid depending on your state and level of Medicaid. When coverage is met by both programs, Medicare pays out first. Medicaid pays the rest based on each state’s limits.
WHICH PROGRAM IS RIGHT FOR YOU?
If you are a senior deciding your best options, consider what is required to qualify as each program’s eligibility criteria differ. Medicare is for seniors and others with a disability. Medicaid eligibility is based on income and resource limits according to your state.
You should also review your healthcare needs and if you require long-term care services, nursing home care, or personal care (daily living activities). In these cases, Medicaid will serve you better since such care is not typically covered by Medicare. If you are a senior in need of long-term care but don’t feel you qualify for Medicaid due to excess income, there are strategies to help you qualify without spending down your income.
Finally, take a look at costs for each program and your financial situation to determine which one you can afford. If you find that you have excess income and are unable to qualify for Medicaid unless you “spend down” this income, consult with KTS Pooled Trust to explore other ways to qualify.
