Medicare and Medicaid have been around for almost 60 years, but it’s still easy to confuse these similar-sounding, government-backed health care programs. However, their costs and services differ, as can the makeup of their beneficiaries (with some exceptions).
In this article, we’ll walk through what Medicare and Medicaid are, who’s eligible for their services and what they cover when it comes to your health.
Medicare vs. Medicaid: An Overview
Both Medicare and Medicaid offer health care coverage, but they do so in different ways:
— Medicare is an insurance program administered by the federal government that provides health care coverage for people age 65 or older and younger people with disabilities, amyotrophic lateral sclerosis or end-stage renal disease, regardless of the person’s income.
— Medicaid is an assistance program administered by the state in accordance with federal guidelines. It provides health coverage to those with incomes below a specific threshold, regardless of age.
[READ: How to Spend Down Your Assets for Medicaid]
What Is Medicare?
Medicare is designed primarily to help older Americans cover the costs of medical care.
Who is eligible for Medicare?
Those age 65 and older are eligible for Medicare, as are those under that age threshold who have disabilities or specific diseases (as mentioned above).
What does Medicare cover?
Medicare has two main parts:
— Part A, which covers inpatient services, such as hospital care, rehabilitative care and hospice.
— Part B, which covers outpatient services, including doctor’s appointments, outpatient treatment, mental health care and durable medical equipment, such as walkers.
Medicare Part A and Part B, known as “original Medicare,” offer the same coverage and are priced the same across the United States. They are overseen by the Centers for Medicare and Medicaid Services, an agency of the federal government.
Other parts include:
— Part C: Also known as Medicare Advantage, these plans are available from private, Medicare-approved insurance companies. They include the same coverage as original Medicare and also usually include prescription drug coverage. However, the network of providers that you can see is usually much tighter than it is on an original Medicare plan.
— Part D: Eligible prescription drugs are covered under Medicare Part D. Everyone with Medicare, regardless of income, health status or medical history, can obtain prescription drug coverage for a monthly premium. Medicare Part D is optional but strongly recommended.
[Read: 5 Steps for Picking a Medicare Plan.]
What Is Medicaid?
Medicaid is a government assistance program administered by both the federal and state governments. As such, rules of coverage and cost vary from one state to another.
Who is eligible for Medicaid?
Although each state can determine eligibility guidelines for Medicaid, low-income families, pregnant women, children and people receiving Supplemental Security Income — money provided to individuals who are disabled or blind or who meet specific financial guidelines — are always covered.
According to CMS, patients with Medicaid usually pay none of the costs for covered medical expenses, or they may pay a small copayment. Since the enactment of the Affordable Care Act, states have been allowed to expand their Medicaid programs to cover all people with household incomes below a certain level. Some states have done so, while others have not.
Whether you qualify for Medicaid coverage depends partly on whether your state has expanded its program. CMS says that in states that have expanded Medicaid coverage, you can qualify for Medicaid if your household income is below 133% (effectively 138% per current calculations) of the federal poverty level. Some states, however, may use a different income limit.
What does Medicaid cover?
Coverage can vary by state, but Medicaid generally covers areas such as:
— Inpatient care.
— Outpatient care.
— Nursing home and assisted living care.
— Transportation to health care services.
— Labs and X-rays services.
How can you apply for Medicaid?
To apply for Medicaid, you’ll need to work through your state’s Medicaid agency. Medicaid.gov provides links to each state’s office.
[READ: Does Medicaid Pay for Assisted Living: What Is Covered and What’s Not]
Can I Have Both Medicare and Medicaid?
The short answer: Yes.
About 20% of Medicare beneficiaries qualify for both Medicare and Medicaid. These individuals are called “dual eligibles” and are afforded benefits from both programs and lower out-of-pocket costs.
Medicare acts as your primary insurer, notes Diane Omdahl, Wisconsin-based president and founder of 65 Incorporated, a Medicare consulting firm. If you also qualify for Medicaid, it will be your secondary payer.
“It works like a supplement plan, picking up the costs that Medicare Parts A and B don’t cover,” she explains.
However, she recommends talking to a consultant or a representative of your State Health Insurance Assistance Program, known as SHIP, for guidance and to ensure you’re getting the benefits you need.
Update 03/27/24: This story was published at an earlier date and has been updated with new information.
