The terms Medicaid and Medicare are often confused or used interchangeably. They sound extremely similar, but these two programs are actually very different.
Each is regulated by its own set of laws and policies, and the programs are designed for different sets of people. In order 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 age 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.
Medicaid is a program that combines the efforts of the U.S. state and federal governments in order to assist households in low-income groups with healthcare expenses, such as major hospitalizations and treatments as well as routine medical care.
It’s designed to help those unable to afford quality medical care and who don’t have other forms of medical coverage due to strained finances.
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.
People receiving Medicaid benefits often don’t have to pay for covered expenses at all, but some cases require a small copayment.
In order 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 of age 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 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 is based primarily on income. Whether or not someone qualifies depends on income level and family size.
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 the age of 65, eligibility is an income lower than 133 percent of the federal poverty level. According to Healthcare.gov, this amount is approximately $14,500 for an individual and $29,700 for a family of four.
Children are afforded higher income levels for Medicaid and the Children’s Health Insurance Program (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 women 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, also referred to as hospital insurance, is offered without premiums to all individuals who meet the eligibility requirements and have paid — or are the spouse of a person who has paid — Medicare taxes for a minimum of 40 calendar quarters in the span of their life.
Those who aren’t eligible to receive Part A premium-free may have the option of purchasing it. Part A is associated with skilled nursing care, hospital services, hospice services, and home healthcare.
Medicare Part B is the medical insurance portion. It offers coverage for outpatient hospital care, physician services, and other such services traditionally covered by health insurance plans.
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).
Medicare Part D is run by approved plans according to federal rules and helps pay for prescription drugs.
Medicare parts and A and B are sometimes called Original Medicare, and many people enroll automatically through Social Security when they turn 65. In some cases, you may choose to delay enrollment, say, because you’re still insured through an employer. In that case, you would sign up manually later on.
For Medicare parts C and D, you can sign up when you first become eligible or during certain enrollment periods each year.
The State Health Insurance Assistance Program, or SHIP, works to inform Medicare-eligible people and their families about their options and different types of coverage. This sometimes also means helping beneficiaries apply to programs like Medicaid.
The benefits covered by Medicaid vary by the issuing 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
- surgical dental services for adults
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.
Reimbursements are payments doctors and hospitals receive for providing services to patients. Medicare reimbursements come from a federal trust fund. Most of the money for this fund comes from payroll taxes. Premiums, deductibles, and copays also help pay for Medicare services.
Medicaid is similar, but many of the specifics vary by state, including reimbursement rates. In cases where the reimbursement rate is much lower than the cost of care, doctors may prefer not to accept Medicaid. Occasionally, this is also true of Medicare.
Original Medicare (parts A and B) won’t pay for most routine dental care, like a cleaning, or vision care, like an eye exam — but some Medicare Advantage plans (Part C) will.
Medicaid programs vary by state, but are federally required to include dental benefits for children. While some states provide comprehensive adult dental care, there’s no minimum standard they have to meet. Similarly, eyeglasses fall under the list of optional benefits states may choose to cover.
People with a disability and some of their family members may receive benefits from Social Security Disability Insurance. This program includes Medicare, but, in some cases, there’s a 24-month waiting period before it starts. To qualify, you must also have worked and paid Social Security taxes.
The Supplemental Security Income (SSI) program includes Medicaid and makes cash assistance payments to qualifying people with disabilities and limited income.
Some people also qualify for concurrent disability benefits through both programs.
People who qualify for both Medicare and Medicaid are 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 probably covers 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 65 and over and those with certain chronic conditions or disabilities, while Medicaid eligibility is mainly based on income level.