Medicare vs. Medicaid: The Basics

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We know everyone has heard of “Medicaid” and “Medicare” but most people don’t know exactly what these Government programs do, or confuse the two. Some even think they are the same thing, when they are both completely different types of programs.

Each program is designed for specific populations, controlled by different areas of the Government (one on the State level and one in the Federal level) and both offer different “perks” for those enrolled. The short answer is that Medicare is designed usually for people over 65, while Medicaid is an incomes based insurance.. but it’s a little bit more than that and some people can be eligible for both. So below we have compared both types of policies in an –easy to understand format.

 

Who is eligible?

Medicare  -Medicare beneficiaries are primarily seniors. Everyone who has paid into the Medicare system becomes eligible for Medicare coverage at age 65. Those who have received Social Security disability benefits for two years or who have certain conditions are also eligible. Medicare is run by the federal government, and costs are paid from Medicare trust funds.

 

Medicaid -Medicaid is the government health insurance program for people with low to moderate incomes. People can also qualify if they have physical, intellectual or behavioral disabilities.  Income and asset limits can vary by state, but 138 percent of the federal poverty limit is the median eligibility requirement for adults. Applicants can typically have no more than $2,000 to $3,000 in liquid assets. States run the Medicaid program, but they have to work within certain parameters to get federal funding.

 

What is covered?

Medicare  -Original Medicare includes Part A and Part B. Part A pays for expenses related to hospitalizations, while Part B covers outpatient care. Beneficiaries can also purchase a separate Part D plan for prescription drugs. Those who want additional coverage can sign up for a Medicare Advantage, or Part C, plan. These plans are ran by Private Insurers, and are required to cover everything provided by Medicare A and B, and many also provide Part D coverage along with other benefits such as dental or vision care. There is also the option of getting a Supplement for your Medicare coverage. Supplements usually have a higher premium, but less out-of-pocket costs. With a Supplement, you would need a Part D. To find out more indepth info on Medicare, please click here

 

Medicaid -Medicaid coverage includes hospitalizations, outpatient care and prescription drugs. Some states also cover additional services such as adult dental, long-term care and hearing care. For many enrollees, there are little to no out-of-pocket costs. Many states contract with private insurers to provide coverage to recipients. As with Medicare Advantage, Medicaid plans may have a network of participating providers. In some areas, this network can be limited. Since Medicaid reimbursement to physicians and health care facilities can be lower than the payments made by commercial or Medicare insurance plans, many providers don’t accept Medicaid patients.

 

Can Medicare and Medicaid Coverage Be Combined?

About 17 percent of Medicaid enrollees also receive Medicare, according to 2018 data from the Centers for Medicare & Medicaid Services. Many of these people are seniors receiving long-term care. Medicaid will cover nursing homes, whereas Medicare won’t. Medicare will pay for short-term stays after a hospitalization, but extended, ongoing custodial care is not a covered benefit.

However, to become eligible for Medicaid, seniors must spend down most of their assets as well as meet income requirements. In most states, there is a five year look-back period that prevents seniors from simply transferring assets to another family member in order to meet Medicaid eligibility. The look-back provision considers asset transfers made during the applicable time period and can be used to apply a penalization period before someone becomes eligible for Medicaid. However, there are legal ways to spend down assets, including buying a Medicaid compliant annuity. Since state rules can vary significantly and be complex, speaking with a financial planner is best.

For those living independently, Medicare is the primary source of health insurance, and Medicaid serves as a supplement.  People can be either partially or fully eligible for dual enrollment in Medicaid and Medicare. Their status can depend on their income and health needs. Dual enrollees may maintain separate policies or, in some cases, select a Medicare Advantage plan that also includes their Medicaid benefits. Hill notes that fully eligible individuals will be unable to buy a Medicare supplemental policy, or Medigap plan, should they remain on original Medicare.

 

For more information, please click here: What You Need to Know About Getting Both Medicare and Medicaid.

 

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