If you’ve ever been confused about Medicare vs Medicaid health coverage, our article will shed light on this important topic… Although they do sound similar, there are some key distinctions between these two government health insurance programs.
What is the difference between Medicare and Medicaid programs – key takeaways
Medicare is federally administered health care and Medicaid is a joint federal and state program. Both have the federal government involvement in common.
Medicare serves seniors and certain younger people (disabled individuals), while Medicaid supports individuals and families with low incomes, pregnant women, children, people with disabilities, etc.
Medicare eligibility is based on age, work history, and disability but Medicaid eligibility is based on income and household size – and varies by state.
Medicare covers hospital care, medical services, and optional prescription drugs. Medicaid health care includes broader medical services, including long-term care, dental services, rural health clinic services, personal care services, etc.
Medicare involves premiums, deductibles, and coinsurance. Unlike Medicare, Medicaid has minimal or no cost-sharing for eligible recipients.
Medicare offers a wide network of providers (any doctor that accepts Medicare), while Medicaid networks can be more limited.
What is Medicare in the US?
Medicare is a health insurance program funded by the federal government of the United States, primarily designed to provide coverage for individuals aged 65 and older, as well as certain younger individuals with disabilities. It’s run by the Centers for Medicare & Medicaid Services
Eligibility for Medicare
It hinges on several factors, including age and work history. Generally, individuals who have worked and paid Medicare taxes for at least 10 years are eligible at age 65. Those under 65 may qualify for this health care if they have certain disabilities or medical conditions (like end-stage renal disease).
Medicare structure
Medicare has different parts to address various health care needs.
Medicare Part A covers hospital care, inpatient care, skilled nursing facility care, hospice, and some home health services.
Medicare Part B medical insurance encompasses outpatient care, doctor visits, preventive services, and medical equipment.
Medicare Part C, also known as Medicare Advantage, offers an alternative to Original Medicare (Parts A and B) by private insurance companies and often includes additional benefits, like dental care.
Medicare Part D provides prescription drug coverage through private plans, aiding beneficiaries in affording essential medications.
What should I know about Medicaid in a nutshell?
Medicaid is a state and federally-funded health insurance program in the United States, designed to provide essential medical coverage for low-income individuals and families. This vital program offers a safety net for those who might otherwise struggle to afford health care services.
Eligibility for Medicaid
It’s determined based on income, household size, and other factors. While federal guidelines exist, states have the flexibility to set their own criteria within certain bounds. Eligible individuals often include low-income adults, children, pregnant women, and people with disabilities.
States play a significant role in administering Medicaid
It leads to variations in benefits and eligibility across different regions. They have the autonomy to expand Medicaid and design programs that best serve their populations’ healthcare needs.
The Key Difference in Purpose Between Medicare and Medicaid
It lies in their target populations. Medicare primarily serves seniors and disabled individuals, offering coverage as they age or face medical conditions. In contrast, Medicaid is a safety net for low-income individuals and families of all ages, ensuring access to healthcare services for those who lack the financial means to afford it.
Who’s eligible for Medicare vs Medicaid?
Eligibility for Medicare is primarily determined by age, with individuals becoming eligible at 65 years old or younger if they have certain disabilities.
Medicaid’s eligibility is based on income and assets, varying by state. Individuals and families with lower incomes and limited assets qualify for Medicaid assistance, with state-specific thresholds and guidelines.
What is the highest income to qualify for Medicaid?
As of 2023, the following Federal Poverty Level thresholds apply:
$14,580 for an individual, $30,000 for a family of four, and $50,560 for a family of eight. With the implementation of Medicaid expansion, these limits increase to $20,120, $41,400, and $69,772 respectively.
Various states set various income eligibility limits as a percentage of the Federal Poverty Level. Please refer to each state’s guidelines.
Are Social Security benefits and Medicare the same?
Well, Social Security and Medicare are distinct but interconnected programs in the United States.
Receiving Social Security benefits offers financial support to retirees, disabled
individuals, and survivors through payroll taxes, providing monthly payments based on work history. Medicare is a federally funded health insurance initiative primarily for those aged 65 and older, with select coverage for disabled individuals.
Medicare pays for various parts of hospital, outpatient care, Medicare Advantage, and prescription drugs.
While Social Security ensures financial assistance, Medicare focuses on healthcare coverage, both playing critical roles in supporting older adults and disabled individuals in the U.S.
What are Medicare savings programs?
They are Medicaid initiatives aimed at assisting individuals with low income in covering Medicare premiums and other associated expenses. Eligibility for MSP is determined based on income, and these income criteria can differ among states.
How do you apply for Medicare vs Medicaid?
To apply for Medicare, individuals usually enroll during their Initial Enrollment Period (IEP) around age 65. For more details, please see our other posts on this topic.
For Medicaid, applications are submitted to state agencies, with enrollment available year-round. States may have different enrollment periods and methods.
What’s the difference in coverage between Medicare and Medicaid?
Medicare coverage
Medicare provides coverage for a variety of essential medical services. Part A hospital insurance covers inpatient hospital care, skilled nursing facility stays, hospice care, and some home health services. Medicare Part B includes outpatient hospital care, doctor visits, preventive services like screenings and vaccines, and durable medical equipment.
Part C, known as Medicare Advantage, offers an alternative to Original Medicare (Parts A and B) and often includes additional benefits like dental, vision, and hearing coverage. Part D provides prescription drug coverage through private plans, helping beneficiaries afford necessary medications. You can read about this further in our other posts.
Medicaid coverage
Medicaid offers a comprehensive scope of medical services tailored to the needs of low-income individuals and families. Coverage may include doctor visits, hospital care, preventive services, mental health treatment, physical therapy, and some dental care and vision care.
Also, Medicaid covers health care costs for essential services like pediatric care, pregnancy-related care, and long-term care, including nursing home stays and home- and community-based services.
Any overlap in coverage?
While there are areas of overlap, such as hospital stays, Medicaid often offers a broader range of services for those who qualify based on income and other eligibility criteria.
What about the costs of Medicare vs Medicaid?
Medicare premiums and costs
In Medicare, Part A generally has no monthly premiums for those with sufficient work history, but it does have a deductible for hospital stays. Part B has a monthly premium, and an annual deductible, and usually requires a coinsurance or copayment for services. Medicare Advantage plans (Medicare Part C) and Part D plans often have premiums and out-of-pocket costs that vary based on the plan chosen.
Medicaid costs
Medicaid program, on the other hand, focuses on minimizing financial barriers for eligible beneficiaries. While some states may require nominal copayments for certain services, many low-income individuals receive care with minimal or no cost-sharing.
How does prescription drug coverage vary between Medicare and Medicaid?
Medicare Part D and Medicaid both offer prescription drug coverage.
Part D provides private companies-approved insurance plans for Medicare beneficiaries to access medications.
Medicaid includes drug coverage in its comprehensive benefits, varying by state.
Both aim to ensure individuals have access to necessary prescriptions while managing costs, catering to different demographics and needs.
What to know about long-term coverage in Medicare vs Medicaid
Medicaid and long-term coverage
Medicaid plays a critical role in providing coverage for long-term care services, which include assistance with activities of daily living, nursing home care, and home- and community-based services.
For low-income individuals who require extended care due to chronic illness, disabilities, or aging, Medicaid often becomes the primary source of funding.
Long-term coverage in Medicare
Medicare coverage for long-term care is limited and differs from the comprehensive coverage provided by Medicaid. While Medicare covers short-term skilled nursing facilities care following a hospital stay, it does not typically cover custodial care—assistance with daily activities like bathing and dressing—in nursing homes.
This is why you might want to plan for long-term care needs (like monitoring your health status) – and explore additional coverage options, like state Medicaid programs or private long-term care insurance.
Is there supplemental coverage for both programs?
The answer is no. Medicare beneficiaries can choose Medigap policies, also called Medicare Supplement Insurance, to fill the gaps in Original Medicare coverage, like copayments and deductibles, providing greater financial security for healthcare expenses.
Medicaid serves as a primary and comprehensive coverage option for eligible individuals with limited income. It covers a wide range of medical services, prescription drugs, and long-term care, reducing the need for additional insurance.
How do networks differ in Medicare vs Medicaid?
Fortunately, Medicare offers beneficiaries a wider network of healthcare providers, giving them greater flexibility to choose doctors, specialists, and hospitals across the country.
But Medicaid’s provider network can be more limited due to factors like state budgets and reimbursement rates. Beneficiaries may encounter restrictions in choosing healthcare providers, potentially impacting their options for specialized care and timely access to services. Because it’s controlled by the federal and state governments, it has more limitations.
While Medicaid is a crucial safety net, its limited network can pose challenges in certain regions or for specific medical needs.
Can you have both Medicare and Medicaid?
Yes, according to the Centers for Medicare & Medicaid Services, some individuals often have significant healthcare needs and face financial challenges, making them eligible for both programs simultaneously.
Dual-eligible individuals gain access to a comprehensive spectrum of benefits from both Medicare and Medicaid. They enjoy enhanced coverage for medical services, prescription drugs, and long-term care.
But Medicare alone can be a handful, and now we’re adding a whole other program in the mix. You would need to understand the nuances of both programs and effectively manage your healthcare options to optimize benefits and minimize potential complexities…
Reach out to us if you need further assistance with this or another Medicare question. We can advise you on the eligibility requirements, how to choose the right plan, avoid late enrollment penalties, etc. Our helpful agents are just a click or call away!
Matthew Claassen
Matthew Claassen, CMT and CEO of Medigap Seminars Insurance Agency. Medigap Seminars is an award winning premier national Medicare Insurance Brokerage, ranked among the top in the U.S.A. Matthew is considered a leading national expert on Medicare and Social Security. Mr. Claassen is a distinguished member of the Forbes Business council, an invitation only organization of business leaders and entrepreneurs. He and his team have received awards from many of the countries largest insurance companies including Mutual of Omaha, Aetna, Humana, Cigna, United American, United Healthcare and others. His videos have become the most popular Medicare educational videos on YouTube with millions of views. As a financial analyst Matthew lead a team of researchers to win the 2009 Best Equity Research & Strategy Award from The Technical analysis magazine.
