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In the United States, there are currently two government-provided health insurance policies that citizens can enroll in: Medicare and Medicaid. While they both provide general health insurance benefits, there are differences in eligibility and coverage that are crucial to identify and be aware of — the largest being that Medicare is available to adults who are over 65 years old whereas Medicaid is only available to low-income families.
Medicare vs. Medicaid
Medicare and Medicaid are both health insurance programs offered to U.S. citizens and permanent residents. However, there are two key differences between the two programs: coverage and the types of services that are eligible for reimbursement. Below you can see the Medicare vs. Medicaid chart which outlines all the differences in the policies.
|Who is eligible?||Individuals over 65 or with a disability||Low-income individuals|
|What does it cover?||Hospital, doctor and medications||Hospital, doctor and medications (some added benefits)|
|How does coverage vary?||Will depend on the plans you purchase||Your state of residence|
|What does it cost?||Depends on your selected plans||Depends on your income level|
|Who funds the program?||Federal government||Federal and state governments|
In general, Medicaid is a more comprehensive health insurance policy. Original Medicare, which includes Part A and B, has many gaps in coverage that can be filled if you are willing to purchase additional Medicare plans such as Part D or Medicare Advantage.
But the most notable of the differences in gaps between Original Medicare and Medicaid will be nursing home and custodial care coverage — these are offered through Medicaid.
What is Medicare?
Medicare is available for Americans who are over the age of 65 or younger citizens who have been diagnosed with a disability or illness. Some disease designations include Lou Gehrig's Disease (ALS) or End Stage Renal Disease (ESRD). It is key to note that eligibility for Medicare is not based upon your income.
For most U.S. citizens, during their working years, they would have paid a tax into the Social Security fund. By paying into this pool of tax dollars, you would be automatically enrolled in the Medicare plan when you turn 65 years of age.
However, this would only enroll you in Medicare Part A, which provides coverage for hospital care and nothing else. Therefore, you would need to select and purchase one of the many other parts of Medicare so that you would have a comprehensive plan.
Individuals who want Original Medicare will usually be automatically enrolled in Part A and then can choose to purchase Part B and Part D for an additional low-cost monthly premium. Most individuals do opt to purchase, since there are penalties for not enrolling in those programs after you become eligible for Medicare.
Part B provides coverage for doctors, medical tests and some procedures, while Part D is designed to offset the costs of prescription drugs. By enrolling in Medicare Part B and D, an individual can get closer to having a comprehensive health insurance policy.
Medicare Advantage, or Part C, is a newer health insurance policy that groups together all the parts of Original Medicare. It will typically cover the deductibles, out-of-pocket maximums and premiums for Original Medicare Part A and B and will provide additional coverage benefits such as dental, hearing and prescription drugs.
It is important to note that when comparing Medicaid versus Medicare, Medicare Advantage policies are offered through private health insurance companies such as UnitedHealthcare and Aetna and are not provided by the government. This gives you the ability to compare Medicare Advantage policies between providers and find a policy that will fit your individual situation.
What is Medicaid?
Medicaid is a federal and state health insurance program designed to be available for low-income Americans. In order to be eligible for Medicaid coverage, you would need to have an income level below 133% of the Federal Poverty Level (or 138% in Medicaid in expanded states), be pregnant or have a disability.
The most common qualification for Medicaid enrollees will be income. Qualifying income levels are set on a state-by-state basis and can be determined by using an income calculator at Healthcare.gov.
Here you can input your estimated income and find out whether you qualify based on the number of individuals in your household. As you will see, when the number of dependents in your household increases, the income threshold for Medicaid will increase as well.
Can I be covered by both Medicare and Medicaid?
It is possible to be eligible and covered by both Medicare and Medicaid. Within health care, it is known as being "dual eligible." Typically, these individuals will be enrolled in Original Medicare but receive subsidized Medicaid benefits through Medicare Savings Programs such as the:
- Qualified Medicare Beneficiary (QMB) Program
- Specified Low-Income Medicare Beneficiary (SLMB) Program
- Qualified Disabled Working Individual (QDWI) Program
All of these programs would provide extra help for covering premiums, deductibles and coinsurance for Medicare.
If you don't qualify for Medicaid when you are enrolled in Medicare, there are still options to help provide financial aid for Part A, B and D deductibles. This would include enrolling in a supplemental Medigap policy such as Medicare Part F, which is offered by private health insurance companies.