Medicare plan options and costs are subject to change each year.
- Medicare and Medicaid are two U.S. government programs designed to provide access to healthcare.
- Medicare covers citizens ages 65 and over, as well as those with certain chronic conditions or disabilities.
- Medicaid is typically available to those with a lower income and helps provide healthcare services at little or no cost.
The terms Medicaid and Medicare are often confused or used interchangeably. They sound similar, but these two programs are actually very different.
Each is regulated by its own set of laws and policies, and the programs are usually designed for different sets of people. However, it’s possible to be eligible for both programs.
To select the correct program for your needs, it’s important to understand the differences between Medicare and Medicaid.
Medicare is a policy designed for U.S. citizens ages 65 and older who have difficulty covering the expenses related to medical care and treatments. This program provides support to senior citizens and their families who need financial assistance for medical needs.
People under the age of 65 living with certain disabilities may also be eligible for Medicare benefits. Each case is evaluated based on eligibility requirements and the details of the program.
Those in the final stage of kidney disorders can also apply for the benefits of a Medicare policy.
There are two main branches of Medicare to choose from: original Medicare and Medicare Advantage.
Original Medicare is a government-funded medical insurance option that many older Americans use as their primary insurance. It covers:
- Inpatient hospital services (Medicare Part A): Part A benefits include coverage for hospital visits, hospice care, and limited skilled nursing facility care and at-home healthcare.
- Outpatient medical services (Medicare Part B). Part B benefits include coverage for preventive, diagnostic, and treatment services for health conditions.
Medicare Advantage (Part C) is an insurance option for people who want the coverage of original Medicare but with more coverage choices.
Medicare Advantage plans are offered through private insurance companies. Many of these plans cover services like prescription drug coverage, dental, vision, and hearing care that aren’t included in original Medicare.
Medicaid is a program that combines the efforts of the U.S. state and federal governments to assist households in low-income groups with healthcare expenses. These costs may include major hospitalizations and treatments as well as routine medical care.
The program provides services to millions of adults, children, and people with disabilities each year. As of November 2022, 84,815,742 individuals were enrolled in Medicaid, and 6,970,515 children were enrolled in Children’s Health Insurance Program (CHIP).
People receiving Medicare benefits pay part of the cost through deductibles for things like hospital stays. For coverage outside the hospital, such as a doctor’s visit or preventive care,
Medicare requires small monthly premiums. There may also be some out-of-pocket costs for things like prescription drugs.
Here’s an overview of the costs with original Medicare and Medicare Advantage:
|Original Medicare||Medicare Advantage|
|Monthly premium||Part A: typically $0; Part B typically $164.90||Varies (can start at $0)|
|Deductible||Part A: $1,600 each benefit period; Part B: $226||Varies (can start at $0); you may have a health and a drug deductible if your plan includes both coverages|
|Coinsurance/copays||Part A: $0, $400, or $800 per day (depending on the length of hospital stay); Part B: 20% of all approved medical services after deductible is met||The amount changes per year|
|Out-of-pocket max||None||Varies by plan; after max is met, 100% of costs covered for the year|
People receiving Medicaid benefits often don’t have to pay for covered expenses at all, but some cases require a small copayment.
States can charge limited premiums and enrollment fees as a form of cost-sharing. This applies to certain groups of Medicaid enrollees, including:
- pregnant people and infants with a household income at or above 150% of the federal poverty level (FPL)
- qualified disabled and working individuals with an income above 150% of the FPL
- disabled working individuals eligible under the Ticket to Work and Work Incentives Improvement Act of 1999
- disabled children eligible under the Family Opportunity Act
- medically needy individuals
To enroll in each program, you must meet certain criteria.
In most situations, eligibility for Medicare is based on the age of the applicant. A person must be a citizen or permanent resident of the United States and 65 years old or older to qualify.
Premiums and specific Medicare plan eligibility will depend on how many years of Medicare taxes have been paid. The exception to this is people younger than age 65 who have certain documented disabilities.
Generally, people who receive Medicare benefits also receive some form of Social Security benefits. Medicare benefits can also be extended to:
- a person eligible for the Social Security disability program who’s also the widow or widower and is age 50 or older
- the child of a person who worked a minimum length of time at a government job and paid Medicare taxes
Eligibility for Medicaid in each state is based primarily on income. Whether someone qualifies depends on income level and family size as well as other factors such as disabilities.
The Affordable Care Act has extended coverage to fill in the healthcare gaps for those with the lowest incomes, establishing a minimum income threshold constant across the country. To find out if you qualify for assistance in your state, visit Healthcare.gov.
For the majority of adults under age 65, eligibility is an income lower than 133% of the FPL. According to Healthcare.gov, this amount for 2022 is approximately $13,590 for an individual and $27,750 for a family of four. Children are afforded higher income levels for Medicaid and CHIP based on the individual standards of their state of residence.
There are also special programs within the Medicaid program that extend coverage to groups in need of immediate assistance, such as pregnant people and those with pressing medical needs.
There are several parts of the Medicare program that offer coverage for different aspects of healthcare.
- Medicare Part A provides coverage for many inpatient medical care, such as hospital stays, hospice services, and limited skilled nursing care and home healthcare.
- Medicare Part B is the outpatient medical portion. It offers coverage for items and services including outpatient hospital care, physician appointments, preventive care, and certain medical equipment.
- Medicare Part C, or Medicare Advantage, is run by approved private insurers and includes all the benefits of Medicare parts A and B. These plans may also include other benefits for an extra cost, like dental and vision, as well as prescription drug coverage.
- Medicare Part D is run by approved plans according to federal rules and helps pay for prescription drugs.
The benefits covered by Medicaid vary by state, but there are some benefits included in every program.
- lab and X-ray services
- inpatient and outpatient hospital services
- family planning services, such as birth control and nurse midwife services
- health screenings and applicable medical treatments for children
- nursing facility services for adults
- home health services
Because Medicaid is different in each state, you may want to connect with a caseworker in your state to assess your situation and get help applying.
People who qualify for both Medicare and Medicaid are considered dual eligible. In this case, you may have original Medicare (parts A and B) or a Medicare Advantage plan (Part C), and Medicare will cover your prescription drugs under Part D.
Medicaid may also cover other care and drugs that Medicare doesn’t, so having both will probably cover most of your healthcare costs.
Medicare and Medicaid are two U.S. government programs designed to help different populations get access to healthcare.
Medicare typically covers citizens ages 65 and over and those with certain chronic conditions or disabilities, while Medicaid eligibility is mainly based on income level and need.