Key Takeaways:
- Eligibility Differences: Medicare serves individuals aged 65 and above and those with qualifying disabilities, while Medicaid provides coverage based on income and state-specific requirements.
- Coverage and Cost Variations: Medicare includes hospital and medical coverage with premiums, while Medicaid often offers more comprehensive benefits at minimal costs.
- Long-Term Considerations: Medicare may require supplemental plans for full coverage, whereas Medicaid offers extensive benefits for those who qualify.
People are often confused by Medicare and Medicaid because both are government-funded health insurance programs with remarkably similar-sounding names.
In reality, both these programs serve different purposes and populations. They also have entirely different rules governing eligibility, coverage, and costs.
Understanding the essential differences between the two health insurance programs is crucial for effective healthcare planning.
Let’s understand Medicare vs Medicaid coverage in depth.
What are Medicare and Medicaid?
Medicare is a federal health insurance program created in 1965 to provide affordable healthcare for older Americans. It covers eligible individuals aged 65 years and above, regardless of medical history, health status, or income.
It also covers younger people with certain qualifying disabilities and conditions.
Medicare currently helps an estimated 65 million people live longer and healthier lives.
Medicaid, on the other hand, is a joint federal and state program that covers some medical expenses for individuals with low incomes and limited financial resources. It was also created in 1965.
The cooperative structure of Medicaid means that, while the federal government outlines its general scope and ambit, each state is free to administer its own program.
In other words, Medicaid eligibility requirements and benefits can vary by state.
To bring it all together, Medicare provides health insurance coverage based on age and medical conditions, while Medicaid does the same based on income level.
Eligibility Requirements
Most US citizens qualify for Medicare coverage when they turn 65, as do permanent residents who have been living in the US continuously for five years before their 65th birthday.
Younger individuals with covered disabilities like Lou Gehrig’s Disease and conditions like End-Stage Renal disease are also eligible for coverage.
Let’s now understand Medicaid eligibility requirements.
As we already mentioned, each US state has different rules governing Medicaid eligibility, based on factors like income level, age, disability, and household size, among others.
Despite these differences, the overall criteria that determine Medicaid eligibility are similar.
They include:
- Income: A three-member family that makes up to or less than $35,632 yearly is eligible for Medicaid in New York state, for instance. That number is $29,207 in Mississippi.
- Age: Eligibility rules differ for children, adults under 65 years, and those over.
- Disability: People with blindness and certain physical and mental impairments.
- Pregnancy: Almost every state covers low-income pregnant women.
- Household Size: The number of people in a household is also a determining factor.
Some people can qualify for both Medicare and Medicaid, which is referred to as ‘dual eligibility’. In such cases, the two programs work together to lower costs.
Medicare vs. Medicaid: Coverage and Costs
Let’s first understand Medicare coverage and costs:
Original Medicare: A federal health insurance plan that has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance).
Part A covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health. Those who have paid Medicare taxes for at least 10 years pay zero monthly premiums for Part A coverage. Others must pay 285 or $518 per month.
Part A coverage also comes with a $1,676 deductible per benefit period.
Part B covers outpatient care, doctor visits, preventive services, lab tests, and medical equipment. It comes with a $257 annual deductible and $185 in monthly premiums.
Medicare Advantage: Private insurers offer Medicare Advantage or Part C plans as an alternative to Original Medicare. They provide all the benefits of Original Medicare but with optional extra benefits like prescription drug coverage and dental, vision, and hearing services.
The cost of Medicare Advantage plans varies based on the provider, state, and optional benefits.
- Medicare Part D: Medicare Part D is an optional plan that covers some prescription drug costs. It can work as a standalone plan alongside Original Medicare or as part of the bundled benefits under a Medicare Advantage plan.
The cost of Part D plans depends on several factors, including the specific medications you require, your location, and your income.
- Medicare Supplement: Medicare Supplement or Medigap plans are designed to cover some of the out-of-pocket costs associated with Original Medicare.
Most states offer 10 standardized Medigap plans, labeled A through N, with some states also offering additional high-deductible options.
Once again, Medigap plan costs vary by state.
Let’s now look at Medigap coverage and costs.
A key attribute of Medicaid is that it covers a range of inpatient and outpatient services that Medicare does not cover. That includes personal care services, nursing home care, mental health services, and long-term care.
Coverage costs under this program can vary widely because each state runs its own Medicaid program. It is worth noting that all Medicaid benefits come with deductibles, copayments, coinsurance, and other out-of-pocket expenses.
Most out-of-pocket costs under Medicaid are either nominal or exempted for groups like children, people with terminal conditions, and those who are institutionalized.
Out-of-pocket costs do not apply to emergency services, preventive services, family planning services, and pregnancy-related services.
Finally, Medicaid-covered services cannot be denied for failure to pay applicable costs, even if beneficiaries are held liable for unpaid costs.
Here’s a table that breaks down Medicare vs Medicaid coverage and costs:
| Program | Coverage | Costs |
| Medicare | Part A: inpatient hospital stays, skilled nursing facility care, some home health care, and hospice care.
Part B: outpatient care, doctor visits, preventive services, lab tests, and durable medical equipment. Medicare Advantage: all benefits provided by Original Medicare with optional additional coverage. Medicare Part D: prescription drug costs. Medicare Supplement: out-of-pocket costs involved in Original Medicare. |
$285 or $518 per month in premiums (unless eligible for free coverage) plus a $1,676 deductible per benefit period.
$257 annual deductible and $185 monthly premium. Varies by provider, state, and additional benefits opted for. Varies by the drugs required, location, and income level. Plan costs vary by state. |
| Medicaid | Inpatient medical services and outpatient medical services, such as hospitalization, lab work, X-rays, and doctor visits. | Varies by state. |
Note: Data sourced from Medicare.gov, Medicaid.gov, and HHS.gov.
Choosing the Right Program for Your Needs
The decision between Medicare and Medicaid hinges on multiple personal, medical, and financial factors.
Here’s a quick breakdown:
Personal Factors
- Age
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- Medicare: Primarily for people aged 65 years and above and younger individuals with qualifying conditions.
- Medicaid: Based on income and financial situation, irrespective of age.
- Income and Assets
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- Medicare: Available regardless of income but involves premiums, copays, and deductibles.
- Medicaid: For low-income individuals and families; it typically covers more services at little or no cost.
- Work History
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- Medicare: Premium-free Part A coverage for those who paid Medicare taxes for at least 10 years.
- Medicaid: Coverage not linked to work history.
Medical Factors
- Disability Status
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- Medicare: People under 65 receiving Social Security Disability Insurance for 24 months may qualify.
- Medicaid: Covers low-income individuals with physical, mental, and developmental disabilities.
- Long-Term Care
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- Medicare: Usually not Covered. Some short-term coverage for stays in nursing facilities.
- Medicaid: Fully covers long-term care at home or in a medical facility for those eligible.
Financial Factors
- Deductibles and Copays
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- Medicare: Deductibles and copays apply to all parts of Medicare.
- Medicaid: Nominal or no deductibles and copays.
- Out-of-Pocket Costs
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- Medicare: Can be high without supplemental insurance.
- Medicaid: Minimal out-of-pocket costs.
- Dual Eligibility
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- Medicare: Eligible low-income individuals can qualify for both Medicare and Medicaid.
- Medicaid: May cover Medicare premiums and copays for dual-eligible individuals.
How to Enroll in Medicare or Medicaid
Individuals receiving Social Security benefits for at least four months when they turn 65 are automatically enrolled in Original Medicare (Part A and Part B).
All others must sign up during one of four Medicare enrollment periods:
- Initial Enrollment Period (IEP): It begins three months before your 65th birthday, includes your birth month, and extends three months thereafter.
- Annual Enrollment Period (AEP): You can switch between Original Medicare and Medicare Advantage, change Medicare Advantage plans, enrol in a Part D plan, or switch Part D plans from October 15 to December 7 of each year.
- Medicare Advantage Open Enrollment Period (MA OEP): You can switch Medicare Advantage plans or return to Original Medicare and join a stand-alone Part D plan from January 1 to March 31 of each year.
- Special Enrollment Periods (SEPs): SEPs are triggered by certain qualifying life events such as relocating to another state, losing employer coverage, or becoming eligible for Medicaid.
To enroll in Medicaid, you must apply to your state Medicaid office in person, online, or by phone.
Here are key points to remember about Medicaid enrolment:
- Application Process: You must submit the necessary documentation to verify eligibility.
- Medicaid Expansion: Some states have expanded their Medicaid programs to cover individuals with incomes up to 138% of the federal poverty level to make more people eligible.
- Renewal: Beneficiaries have to renew their coverage periodically by updating information about their income and circumstances.
Make the Most of Medicare With CoverRight
Making the right Medicare choices is key to securing your health and finances.
Talk to a licensed advisor at CoverRight to explore options and select plans that align just right with your healthcare needs and budget.
Reach out to us today to optimize your Medicare coverage while minimizing costs.
