Medicare vs. Medicaid – 8 Differences in Coverage, Cost, Insurance
It’s easy to get Medicaid and Medicare mixed up as both are government-sponsored health insurance programs that help cover healthcare costs. The primary difference between Medicare vs. Medicaid is Medicare is designed to give seniors long-term care coverage. In the meantime, Medicaid is designed for low-income people.
All American seniors and those with certain disabilities can qualify for Medicare. However, Medicaid has strict income guidelines that vary depending on the state. Here’s what you need to know about the big differences between these two vital health programs.
#1. States Run Medicaid Programs
Medicare is a federal program, yet Medicaid is a joint federal-state program. Each state is in charge of administering its own Medicaid program and creating guidelines. This can make qualifying for Medicaid a bit confusing.
All states offer health coverage for many low-income families, children, and individuals as well as pregnant women, people with disabilities, and the elderly. Income levels, assets, family size, and other qualifications do vary.
#2. Medicaid Is Designed for the Poor
Most states have strict income and asset guidelines that determine who qualifies. In many states, recipients can have no more than a few thousand in liquid assets like a savings account to participate. Just meeting the income guideline may not be enough.
There may as well be other requirements to make sure the Medicaid program serves groups like families, children, pregnant women, and the elderly. This Medicare vs. Medicaid difference is important as most seniors qualify for Medicare regardless of assets and income.
#3. Medicare Is Designed for Seniors
Medicare eligibility is fairly straightforward. The most common way to qualify is turning 65 after earning at least 40 work credits. To earn 40 credits, you will need to have worked for about 10 years and contributed to the Medicare program through payroll taxes.
You can also qualify for Medicare under age 65 if you have been receiving SSDI benefits for at least 2 years. Some disabilities can qualify automatically for Medicare, specifically Lou Gehrig’s disease (ALS) and kidney failure. It’s also possible to qualify for Medicare benefits on a spouse’s work record, even after divorce or the death of a spouse.
#4. Medicare Does Not Cover Long-Term Care
Medicare will not cover long-term care such as assistance with daily activities and nursing home care. This federal program will cover costs like a stay in a long-term care hospital, hospice, skilled nursing care in a facility, and some types of home health services.
Medicaid, on the other hand, funds long-term care. Medicaid is the largest public payer of long-term care in the United States. Along with paying for a nursing home, Medicaid can also pay for long-term care services that are provided in the recipient’s home.
#5. Medicare Coverage Comes in Several Parts
When you compare Medicare vs. Medicaid, don’t overlook the types of coverage each offers. There are several forms of Medicare options. When you become eligible to enroll, you can choose the types of coverage you want.
Medicare Part A offers hospital insurance which usually doesn’t have a premium. Part B is medical insurance that covers outpatient services, preventative care, medical equipment, and more. Medicare Part D is a prescription drug plan. You can also purchase Medigap or supplemental insurance to help cover expenses Medicare doesn’t pay.
Medicaid works differently. In all states, Medicaid must meet federal minimum standards for coverage. Medicaid covers many of the same services as a regular health insurance plan.
#6. Medicare Can Come with Monthly Premiums
Depending on the Medicare coverage you choose when you enroll, you may have a premium to pay in addition to co-pays. Most people do not pay a premium for Part A coverage. Part B, the medical insurance aspect of Medicare, has an average premium of $130 per month that may be higher depending on your income. There is also a premium for Part D that’s $34 per month on average.
Again, the Medicare vs. Medicaid comparison can get confusing when it comes to cost. States have the option of setting premiums for Medicaid. Small monthly premiums may be charged for some high earners. People who earn a lot of money may also pay more for health services like prescriptions and emergency services.
#7. Medicaid Is Often a Last Resort
When it comes to Medicare vs. Medicaid, it’s important to remember that it’s more than just how much each program covers. While Medicaid offers more comprehensive medical coverage at a much lower out-of-pocket cost, this is because it’s usually a program of last resort. Workers in the U.S. pay into the Medicare program their entire lives to enjoy more affordable medical coverage when they retire.
Medicaid, on the other hand, is designed for people who have very limited income with almost no assets. In most states, you can’t qualify for Medicaid if you have liquid assets of more than a few thousand dollars.
The good news is you don’t need to be destitute to qualify for Medicaid. Your home’s value up to $500,000 is excluded from your assets as well as a single vehicle. Even a qualified retirement account may not be counted as an asset for Medicaid eligibility.
#8. Medicare and Medicaid Can Work Together
If you qualify for Medicare and Medicaid, either through disability, age or low income, Medicare and Medicaid can work together to cover a greater variety of medical expenses. Medicaid can cover many of the costs that Medicare will not pay for, such as long-term care.
When a service is covered by both programs, Medicare will be the primary payer. This means Medicaid can cover Medicare coinsurance and co-pays. Most people who qualify for Medicare and Medicaid are automatically enrolled in the Medicare Savings Program (MSP) which pays premiums for Part B coverage. If you also qualify for Qualified Medicare Beneficiary (MSP), you will not pay Medicare co-pays, coinsurance, and deductibles.
Understanding Medicare vs. Medicaid overview is crucial when planning for your health insurance. Once you read through all the differences, you should have a concise idea of where you personally belong.
We welcome you to leave your experiences and impressions in connection with these two health programs in the comment section below. It will be beneficial for our readers to engage in a conversation regarding such a crucial subject in the life of an American citizen.