Medicaid and Medicare are both U.S government-sponsored programs specifically designed to help cover healthcare costs for different categories of American citizens. Both programs were established in 1965 and are sponsored by taxpayers.
Many people tend to confuse the two terms while others use them interchangeably to mean the same thing. But did you know that the two programs are entirely different?
Each of them is regulated by its own set of laws and policies, and each program is designed to cover different groups of individuals. To select the right option that will suit your needs, you need to understand how they differ.
In this post, we discuss the fundamental differences between Medicaid and Medicare. Read on to find out everything you need to know about these health policies.
What Is Medicaid?
Medicaid is a federal and state-funded program designed to provide healthcare coverage for low-income individuals who cannot afford to buy conventional health insurance.
Apart from low-income individuals, the policy also covers families with children, people with disabilities, and pregnant women. All beneficiaries must qualify through a thorough redetermination procedure that takes place every year.
The law requires all individuals on Medicaid to report any adjustments to their annual income while on a Medicaid plan. If you pass the redetermination process and qualify for coverage, Medicaid can cover your entire household.
However, if your income exceeds the set limits for eligibility yet you cannot afford to buy a private health insurance policy, kids up to the age of 19 living with you can be covered by the Children’s Health Insurance Program, commonly referred to as CHIP. Feel free to learn more about CHIP here.
Medicaid benefits can vary from state to state, and most of them only offer behavioral health benefits such as preventive care. To find out more about Medicaid and how it can help you, visit the official Medicaid website.
What Is Medicare?
On the Contrary, Medicare is a federal government program designed to provide you with healthcare cover no matter your income. However, it is only available for individuals who are 65+ years old. You must be disabled to qualify for Medicare if you are under 65.
Unlike Medicaid, individuals who qualify for Medicare pay for part of their health costs through deductibles. Each Medicare case is evaluated based on the stipulated eligibility requirements and other details of the program.
Medicare is a four-part program. You can choose between the original Medicare (Parts A and B) with prescription drug coverage (Medicare part D) or Medicare Advantage (Part C). Here is a quick summary of what each part covers:
- Medicare Part A (Hospitalization Coverage): Part A coverage is specifically designed to protect you if you are hospitalized.
- Medicare Part B (Doctor Visits): Medicare part B is usually referred to as the “Original Medicare” and is specifically designed to handle your outpatient needs, such as doctor appointments. Individuals who qualify for Medicare part A also qualify for Medicare Part B.
- Medicare Part C (Supplemental Insurance): Most individuals eligible for Medicare Part A and B qualify for Part C, also known as the Medicare Advantage. Part C works like Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs). Part C is designed to help reduce the cost of purchasing services separately.
- Medicare Part D (Prescription Drug Coverage): The prescription drug coverage is mostly offered by private companies and helps pay for prescription drugs. Part D is only available for people with Medicare parts A or/and B. It is not offered to those with Part C because supplemental insurance comes with its own prescription drug coverage.
Key Differences between Medicaid and Medicare
Now that we have discussed the basics of each program, let us evaluate some of the ways they differ.
The primary difference between Medicaid and Medicare is eligibility. While Medicare is based on age and disability, Medicaid is only based on income. However, you could be eligible for both if you meet each program’s age and income requirements.
People receiving Medicare benefits usually pay part of the cost through deductibles for health services such as hospital stays. Also, for health coverage outside the hospital, such as preventive care and doctor’s visits, Medicare requires you to pay a small amount in monthly premiums. There may also be out-of-pocket payment for things such as prescription drugs.
On the other hand, individuals receiving Medicaid benefits don’t have to pay for anything out-of-pocket. They also don’t pay monthly premiums, but some rare cases require a small copayment.
Reimbursement is a term used to refer to the payments that doctors and hospitals receive for providing healthcare services to patients. Medicare reimbursements usually come from the federal trust fund, which is a pool of funds accumulated from payroll taxes. Deductibles, premiums, and copayments also help pay for Medicare services.
Medicaid is quite similar, but the specifics of the program vary from state to state, including reimbursement rates. In some cases where the reimbursement rate is significantly lower than the actual cost of healthcare, doctors may decline Medicaid, which is also true for Medicare.
4. Open Enrollment
Medicare open enrollment opens on October 15 and runs to December 7 every year. During this period, you can either apply for Medicare or make changes to your existing plan. Typically, you will have three months after you turn 65 to sign up for a Medicare plan. This happens throughout the year.
Medicaid, on the other hand, does not have an open enrollment period. As long as you are eligible, you can sign up for a Medicaid plan at any time of the year.
5. Dental and Vision Care Coverage
Original Medicare (Parts A and B) don’t pay for routine vision care, such as an eye exam or dental care such as tooth cleaning. However, some Medicare Advantage plans (Part C) cover dental and vision care.
For Medicaid programs, things vary from state to state, but all Medicaid programs must include dental benefits for children at the federal level. Some states provide comprehensive adult dental care under Medicaid, but there is no minimum standard that they must meet.
How Does Medicaid Work with Medicare?
Individuals who qualify for both Medicaid and Medicare are dually eligible. In such a case, you can carry both plans, but the big question is, how do they work together?
The good news is that when you fall sick and are treated, you don’t have to worry about which one pays first. A well-coordinated system knows as the “coordination of benefits” will decide which insurer to pay first.
Generally, if you have both Medicaid and Medicare, your Medicare plan pays for primary care first. In this case, Medicaid is considered a secondary payer. All you have to do is make sure you seek services from providers who accept both plans.
Looking to Sign Up for Medicare? Contact Us Today
If you are looking to sign for Medicare, Insurance Master can help you find the best coverage that suits your unique needs. Contact us today to speak to one of our licensed insurance agents who will guide you through the entire process.