Although they were created at the same time, Medicare and Medicaid are not identical twins. And even though they’ve been around for almost 60 years, many people still confuse these two government-backed health care programs.
Many people don’t realize that about 20% of Medicare beneficiaries are eligible for both Medicare and Medicaid. These people are commonly referred to as “dual eligibles” and are afforded special benefits and lower out-of-pocket costs.
What Is the Difference Between Medicare and Medicaid?
On July 30, 1965, President Lyndon Johnson signed the laws that created Medicare and Medicaid as part of his Great Society programs to address poverty, inequality, hunger and education issues.
Both offer health care coverage
Both Medicare and Medicaid offer health care coverage, but they do so in different ways:
— Medicare is a federal program that provides health care coverage for people aged 65 or older, and younger people with disabilities, amyotrophic lateral sclerosis or end-stage renal disease, regardless of the person’s income.
— Medicaid is a combined state and federal program that provides health coverage to those who have low incomes, regardless of the person’s age.
Some people may be eligible for both Medicare and Medicaid, known as dually eligible, and can qualify for both programs. The two programs provide health coverage and lower costs for the people enrolled in the programs. Although Medicare and Medicaid are both health insurance programs administered by the government, there are differences in the services they cover and their costs.
Medicare offers essentially the same coverage and costs everywhere in the United States and is overseen by the Centers for Medicare & Medicaid Services, an agency of the federal government.
Medicare beneficiaries pay a portion of their medical costs through deductibles for hospital and other services, and they also pay monthly premiums for coverage.
Medicare has two parts. Part A covers hospital care, rehabilitative care and hospice, and Part B covers other services like doctor’s appointments, outpatient treatment, mental health care and durable medical equipment (such as walkers). CMS says you’re eligible for premium-free Part A if you are age 65 or older and you or your spouse worked and paid Medicare taxes for at least 10 years.
You can also get Part A at age 65 without having to pay premiums if:
— You receive retirement benefits or are eligible to receive benefits from Social Security or the Railroad Retirement Board.
— You or your spouse had Medicare-covered government employment.
If you’re under age 65, you can get Part A without having to pay premiums if:
— You have been entitled to Social Security or Railroad Retirement Board disability benefits for 24 months.
— You are a kidney dialysis or kidney transplant patient.
According to CMS, most people on Medicare don’t have to pay a premium for Part A, but everyone must pay a premium for Part B. This is deducted monthly from your Social Security, railroad retirement or Civil Service retirement check; those who do not get any of these payments are billed for their Part B premium every three months.
Prescription drugs are covered under Medicare Part D. Everyone with Medicare, regardless of their income, health status or prescription drug usage, can obtain prescription drug coverage for a monthly premium.
While the federal government administers what’s known as original Medicare, it’s also possible to purchase Medicare plans from some private insurance companies. These plans are known as Medicare Advantage. These include Part A and Part B coverage, but may or may not include prescription drug coverage.
Medicaid is a government assistance program administered by both the federal government and state governments. As such, its rules of coverage and cost vary from one state to another.
It serves low-income people, families and children, pregnant women, the elderly and people with disabilities of every age. Income levels are generally based on the federal poverty level, but each state can determine who qualifies and who doesn’t.
According to CMS, patients usually pay none of the costs for covered medical expenses or pay a small co-payment. Some states cover all low-income adults below a certain income level, CMS says. 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% of the federal poverty level. Some states use a different income limit, however.
The Fine Print
Being government programs, both Medicare and Medicaid can be complicated, confusing and challenging to navigate for some people.
Medicare would be your primary insurance payer, says Diane Omdahl, president and founder of 65Incorporated, a Medicare consulting firm. If you also qualify for Medicaid, that becomes your secondary payer. “It works like a supplement plan, picking up the costs that Medicare Part A and B don’t cover,” she says. However, she recommends talking to a consultant or a representative of your state health insurance assistance program, known as SHIP, for guidance. “Talk to someone about what needs to be done, because you can’t rest assured that it will be done automatically.”
When picking a Medicare Part D or Medicare Advantage plan, the choices can be overwhelming. How flexible is the coverage offered? Are your doctors included in the plan? Does it cover your needs for, say eye care or prescription medication? “It’s important that you look at the type of coverage you want in order to decide which way you want to go,” says Tatiana Fassieux, a consultant with California Health Advocates, a Medicare advocacy organization, who also serves as a counselor with her local SHIP in Chico, California.
Some beneficiaries say they want the cheapest plan, “but that’s not (necessarily) a good option,” she says. If you live in a big metropolitan area, you may have 40 or more Medicare Advantage plans to choose from — each considerably different than the others. “The devil is in the details,” Fassieux says. She also recommends talking to a local broker, Medicare advocate or a SHIP representative.
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What Is the Difference Between Medicare and Medicaid? originally appeared on usnews.com
Update 10/11/22: This story was previously published at an earlier date and has been updated with new information.