What is the Difference Between Medicare and Medicaid?
Learn about Medicare and Medicaid, how they are different, who is eligible, and how to apply for either.
When searching for medical coverage and funding assistance, you or your loved one may want to consider researching and learning about Medicare and Medicaid. Both are options for health benefits and coverage, but eligibility and how to apply can be quite different depending on several factors. The main difference between Medicare and Medicaid is how they are managed and whether eligibility is based on income.
While Medicare provides medical insurance coverage for seniors over 65 or anyone with a disability, income level does not affect it. Medicaid, however, is an assistance program managed by individual states, and will be offered based on income level.
This article will discuss what Medicare and Medicaid are, how they are different, who is eligible, and how to apply if you or your loved one is interested in doing so.
What is Medicare and Medicaid?
Medicare is an insurance plan that helps seniors fund their healthcare needs. Its coverage has two main parts: Part A (Hospital Insurance) and Part B (Doctor Coverage). In addition to these, Medicare has other components as well. Let’s look more closely at all of them.
- Part A is the most common among seniors and is funded through the Hospital Insurance Trust Fund. Employees have been paying via payroll taxes, known as Federal Insurance Contributions Act tax (FICA), their entire careers. The benefits of Part A coverage include inpatient hospital care, doctor visits, medications, qualifying stays at a Skilled Nursing Facility (SNF) for rehab (not long-term care or custodial care), qualifying home health care, and hospice care.
- Part B coverage is focused on doctor visits for illness and preventative services such as flu shots, screenings for colon cancer, breast cancer, glaucoma tests, diabetes tests, and more. It covers the cost of medical equipment like blood sugar meters, canes, wheelchairs, hospital beds, oxygen equipment, and more. Part B coverage also pays for ambulance services and mental health hospitalizations.
- Part C is known as a Medicare Advantage Plan and covers everything Part A and Part B provide. But it may also offer services like vision, dental, and wellness programs. Part C acts more like an HMO or PPO plan, and its out-of-pocket premiums may be higher because of the various coverage programs offered. Plus, there may be different rules for services. Part C plans are administered by private insurance companies.
- Part D is prescription drug coverage.
- Part F or Supplemental Plan funds the gap between Medicare A or B coverage and what your out-of-pocket costs for deductibles or copayments might be. For example, if you experience a qualifying three-day hospital stay that requires rehab, Medicare will cover the first 20 days (about 3 weeks) at 100% and 80% for days 21 through 100. Part F or Supplemental Plan would cover the 20% you owe, assuming that coverage is included.
Medicaid is a government-funded program administered and managed by the state. It provides healthcare coverage to low-income adults and those with disabilities. For seniors who do not have the financial means or assets to pay for shelter and care, Medicaid will cover the cost of long-term housing or custodial care in a qualifying facility. Qualifying facilities include Skilled Nursing Facilities (SNF), which accept Medicaid. Although, some states like Arizona (ALTCS), California (MediCal), and others will accept Medicaid in a Managed Care Organization and not necessarily in a Skilled Nursing Facility.
Who is Eligible for Medicare?
Here’s how to determine if you are eligible for Medicare’s health insurance program. Medicare is available for people aged 65 or older, younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or transplant).
If you do not qualify, but are a U.S. citizen or have been a legal resident for at least five years, you can still get full Medicare benefits at age 65 or older. To do so, you’ll have to buy into it by either:
- Paying premiums for Part A (but you also must enroll in Part B).
- Paying the same monthly premiums for Part B.
- Paying the same monthly premium for Part D (if you’re enrolled in either A or B).
How to Apply for Medicare?
The good news is you or your loved one can sign up for Medicare three months before you turn 65 if you’re eligible. According to Medicare.gov, most people get Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) when first eligible (usually when turning 65).
If you’re unsure if you’re automatically signed up or not, or want to sign up now, go to their website. You’ll be prompted to answer a few questions to check when and how to sign up based on your situation.
You can learn more about Medicare, the sign-up periods, and when coverage starts for Part A and Part B.
Who is Eligible for Medicaid?
According to Medicaid.gov, the federal law requires states to cover certain groups of individuals such as low-income families, qualified pregnant women and children, and individuals receiving Supplemental Security Income (SSI). States can decide to give coverage to other groups of individuals, and many have expanded Medicaid coverage to low-income adults based on medical need and financial eligibility. And if you live in a state with expanded Medicaid coverage, you can qualify based on your income alone.
Below is a quick look at some of the qualifying factors for Medicaid eligibility:
- Low-Income level
- Number of people in your family, children
- If you are pregnant or have a disability
How to Apply for Medicaid?
If you would like to apply for Medicaid, you should contact your state Medicaid agency. You must be a resident of the state where you are applying for benefits. Another way to apply is to fill out an application through the Health Insurance Marketplace.
Additionally, if you are a caregiver or applying on behalf of a loved one, you may want to read our next article, “What Legal Documents Do I Need for Aging Parents?” To further put your family in a position to care for your loved one properly.
How to Qualify for both Medicare and Medicaid
While it is not always the case, many seniors can become eligible for both Medicare and Medicaid coverage. These individuals are classified as “dual eligible,” and must meet state income requirements for Medicaid and qualify for Medicare due to age or disability. This means the senior would be enrolled in Medicare Part A or B or opt for Medicare Part C to receive Part A, B, or D coverage (often this selection for prescription drugs). People can also benefit from both programs when Medicare recipients under 65 support themselves through Social Security Disability Insurance (SSDI).
If you qualify as a dual eligible individual, your healthcare coverage can cost you less out of pocket. A Part C plan may also cover some of the costs of long-term care, however, the amount and type often vary by state.
For more information on long-term care insurance and figuing out the right time to purchase this type of insurance, review our article “When Should I Get Long-Term Care Insurance?”
Find Senior Care Near You
Navigating healthcare coverage may seem like an arduous task. Still, you or your loved one can take care of your physical, mental, and emotional needs by carefully reviewing all plans and eligibility.
Referah works directly with seniors, their families, and (by extension) medical advisors to identify which type of care and support is best. Talk to one of our experts about finding professional care and exploring senior living communities today.