Medicare vs. Medicaid

In the United States, there are two public healthcare programs, Medicare and Medicaid. Currently, more than 44 million Americans are enrolled in Medicare, over 74 million are enrolled in Medicaid, and 10 million Americans qualify for coverage from both programs and are known as dual-eligible beneficiaries. While these healthcare programs are different, they both help pay for healthcare expenses.

Medicare is a federal program, not a state-run program. Eligibility is based on age or Social Security determination. People who are 65 years or older or adults of any age with a qualifying disability can enroll in Medicare.

Medicaid is a federal and state-run program. This means that each state has different criteria for qualification, the services they provide, and the way that physicians and other healthcare providers are paid for their services. Medicaid is a public assistance healthcare program that bases eligibility on household income levels, not on age. The Medicaid program began in 1965 and has since become the largest provider of medical and health services for people in the United States who have limited income and resources.

Medicare and Medicaid are important health insurance providers in this country. Both programs help pay for healthcare expenses that many people would not have the ability to pay for on their own. Many people enrolled in Medicare may not know they may also be eligible for Medicaid services. Let’s discuss the differences between Medicare and Medicaid, who is eligible for each program, what services and benefits they cover, and who may be eligible for dual coverage.

What is Medicare?

The services, treatments, and supplies that Medicare covers is based on federal laws and national coverage decisions that are made by the Centers for Medicare & Medicaid Services (CMS). Private insurance companies who sell Part C Medicare Advantage (MA) plans or Part D Prescription Drug Plans must adhere to federal standards and CMS oversight.

Medicare is separated into Parts A, B, C, and D. Original Medicare includes Part A, which is hospital insurance, and Part B, which is medical insurance.

Part A of Medicare benefits covers the following services:

• Inpatient hospital care
• Skilled nursing facility care
• Inpatient care in a skilled nursing facility with the exception of custodial care and long-term care
• Hospice care
• Home health care

Part B of Medicare covers the following services:

• Medically necessary services
• Preventive services
• Clinical research
• Ambulance
• Durable medical equipment
• Mental health services
• Some outpatient prescription drugs that a health care provider administers

Medicare Advantage plans, also called Medicare Part C, are sold by private insurance companies who contract with Medicare to provide benefits. Each plan is different, but they are all required by federal law to at least provide the same Medicare benefits that are included in Parts A and B of Original Medicare. Many MA plans also include prescription drug (Part D) coverage, vision, dental, and hearing care, as well as fitness center memberships.

Medicare Part D is prescription drug coverage. If you have Original Medicare, you can enroll in a stand-alone Prescription Drug Plan or you can enroll in a Medicare Advantage plan that includes prescription drug coverage.

Medicare Advantage plans, also called Medicare Part C, are sold by private insurance companies who contract with Medicare to provide benefits. Each plan is different, but they are all required by federal law to at least provide the same Medicare benefits that are included in Parts A and B of Original Medicare. Many MA plans also include prescription drug (Part D) coverage, vision, dental, and hearing care, as well as fitness center memberships.

Medicare Part D is prescription drug coverage. If you have Original Medicare, you can enroll in a stand-alone Prescription Drug Plan or you can enroll in a Medicare Advantage plan that includes prescription drug coverage.

Who is Eligible for Medicare?

Eligibility for Medicare is based on age or disability. You may qualify when you turn 65 or under the age of 65 if you have certain long-term disabilities. If you have a disability you may qualify after receiving Social Security benefits for 24 months.

What is Medicaid?

Millions of people in the United States who are living on a limited income and have limited resources can get assistance through Medicaid services. This program is available to people of all ages who meet eligibility requirements.

Medicaid application rules are different in every state. In some states, potential beneficiaries must be medically screened and provide documentation for financial transactions, past and present, before they are accepted into the program.

There are also some states where Medicaid charges out-of-pocket fees for certain services. However, in most cases children and those who live in institutions do not have to pay fees for services.
Federal law requires that all states provide a list of mandatory benefits, but each state determines what optional services they cover, and for what duration. Here is a list of the mandatory and optional services that Medicaid may cover:

Mandatory Medicaid Benefits

• Inpatient and outpatient hospital services
• Nursing home care
• Home health care
• Early and periodic screening, diagnostic and treatment services
• Physician services
• Rural health clinic and federally qualified health center services
• Laboratory tests and X-rays
• Family planning
• Midwife services
• Certified pediatric and family nurse practitioner services
• Licensed or state-recognized freestanding birth center services
• Transportation for medical care
• Counseling for assistance to stop smoking for pregnant women

Optional Medicaid Benefits

• Prescription drugs
• Clinic services
• Physical and occupational therapy
• Speech, hearing, and language services
• Respiratory care
• Podiatry care
• Optometry care
• Dental care
• Dentures, prosthetics, and eyeglasses
• Chiropractic care
• Care provided by other practitioners
• Private duty nursing care
• Custodial care either in a nursing facility or at home
• Hospice care
• Case management
• Other services

Who is Eligible for Medicaid?

According to federal law, it is mandatory for every state to provide healthcare assistance through Medicaid services to low-income families, pregnant women and children who meet qualifications, and to people who are receiving Supplemental Security Income (SSI).

Each state has additional options to cover other groups of people. These may include those who are receiving home, or community-based services, and children in foster care who may not otherwise be eligible for Medicaid.

You may be eligible for Medicaid if you meet income eligibility and are in one of the following groups:

• You are pregnant.

• You are the parent of a child younger than 18. Medicaid also covers teenagers who live on their own.

• You are blind or have another qualifying disability.

• You are a low income individual with no disability or dependent children but meet your state’s requirements.

• You are 65 years of age or older.

To qualify for Medicaid, your income must meet your state’s guidelines which are based on the Federal Poverty Level. Each state has different qualifications so you must check with your local Medicaid office to find out what they are.

How Much Do You Pay for Medical Services?

Federal law considers Medicaid as the “payer of last resort.” This means that a person who qualifies for Medicaid may, or may not, have the means to cover all, or some of their medical expenses. Medicaid pays for your medical expenses after another insurance payer has paid its share first.

For example, if you have Medicare insurance, it pays first, and Medicaid pays the balance. Or, if you receive Social Security benefits, a small amount may be deducted from your benefits depending on your income and resources.

If there is not another payer, Medicaid pays 100 percent of the cost for most medical expenses. With Medicaid you do not have to pay premiums, deductibles, or coinsurances.

Do you qualify for both Medicare and Medicaid benefits?
You may become a dual-eligible beneficiary if you meet federal qualifications for Medicare and your state’s qualifications for Medicaid enrollment. Today in this country, there are over 9 million people who are eligible for dual status.

Through dual eligibility, Medicare becomes your primary insurance payer and Medicaid covers those costs and services that are not included in Medicare coverage. This includes services like long-term nursing facility care and home health visits, for example.

Dual eligibility is divided into two categories: full benefit and partial benefit. If you are in the full benefit category you are eligible for all services provided by Medicaid. You may only qualify for partial benefit status if your income and resources are not low enough for the full benefit. If you have partial benefits you do not have access to Medicaid-covered services, but Medicaid pays for your Medicare premiums or coinsurance, or both.

Do Medicare and Medicaid Pay for Drug Costs?

If you want prescription drug coverage and qualify for Medicare, you must enroll in Part D prescription drug coverage. Medicare Part D plans each have their own formulary, or list of drugs covered by the plan. According to the formulary and the category of the drug, you will pay a copay amount.

Medicaid has a program called Extra Help which is a federal program that assists people in paying for prescription drug costs. This program is also known as Part D Low Income Subsidy (LIS). If you are eligible for Medicaid in your state, you automatically qualify for the Extra Help program.

Both Medicare and Medicaid offer assistance in paying for many healthcare expenses. If you would like to learn more about your eligibility for Medicaid, or as a dual-eligible beneficiary, call a local Medicaid office in your state to get more details.