There’s no question that the world of healthcare is confusing. From enrollment windows to monthly premiums to deductibles and out-of-pocket maximums, there’s so much to know!
In this article, we’re going to break down two of the biggest names in health insurance—Medicare vs. Medicaid—to help you learn once and for all what each does, when it applies, and which one could be right for you.
Medicaid Program Overview
Medicaid is a joint effort between the federal government, states, and the Children’s Health Insurance Program (CHIP). As of November 2022, over 84 million people utilized Medicaid for affordable health coverage, making it the largest source of health coverage in the US.
Because states play a heavy role in Medicaid, specific rules and regulations may vary depending on where you are in the country.
Medicaid Eligibility Requirements
Medicaid benefits are geared towards low-income families, qualified pregnant women, seniors, and those receiving Supplemental Security Income (SSI).
Each applicant will be evaluated based on their age, income level, and the number of people in their household.
Each state has the option to include additional benefits for those deemed medically needy. Medically needy individuals include those whose income level is too great to qualify for Medicaid but who have significant health concerns.
The Affordable Care Act of 2010 expanded Medicaid coverage to include those within 133% of the federal poverty line. However, this expansion was optional, and not every state passed the expansion. Therefore, you’ll need to check with your state’s Medicaid program for more details on your eligibility.
Covered Medicaid Services
Medicaid covers a variety of services, including both inpatient and outpatient hospital services, nurse midwife services, home health, nursing facility services, and transportation to medical care, among others. Some states have extended services, including chiropractic services, hospice, vision and dental services, prescription drugs, physical therapy, and more.
Check your local department of health for more information on what your state offers.
The Application Process
Because states play such a heavy role in Medicaid, and each state offers a slightly different version of the program, the application process will vary by state. Generally speaking, applications are available through your state’s health and welfare department. Applicants have also had success applying through the health insurance marketplace.
Is there a deadline to apply?
Unlike other health options, Medicaid is available year-round to those that qualify, so you don’t need to wait for an open enrollment window to apply.
What if I am denied?
The most common reasons for being denied Medicaid are that your income level is too high or you are missing documentation. Even if you’ve been approved in the past, Medicaid representatives check eligibility for renewal each year. So, you’ll always need to pay attention to Medicaid correspondence—especially if additional documentation is requested at renewal.
If your income level becomes too great for Medicaid, you may still qualify for the Children’s Health Insurance Program (CHIP). CHIP is geared specifically toward children up to the age of 19 and covers medical and dental care.
Getting New Coverage
If you find that you or your household has lost Medicaid or CHIP coverage, you will qualify for a special open enrollment window through the Marketplace. You may still qualify for savings on a health insurance plan, but the window only lasts 3 months, so don’t delay! If you miss your open enrollment window, you’ll have to wait for it to open again to the public in the fall.
Medicare Program Overview
Medicare is a health insurance option that is federally funded for people 65 or older. The program was started in 1965 by President Lyndon B. Johnson and is currently run by the Centers for Medicare & Medicaid Services. Because this program is run exclusively by the federal government, there is no variance between the states like there is with Medicaid—coverage and eligibility requirements are the same regardless of where you live in the country.
How is Medicare funded?
Medicare is paid by payroll taxes and funds approved by Congress. Additionally, Medicare participants help pay part of the bill through monthly premiums, deductibles, copays and coinsurance.
Medicare Eligibility Requirements
Medicare is generally geared toward people 65 or older. However, coverage also applies to those with a disability, End-Stage Renal Disease, or ALS.
The Application Process
The Medicare application is available through the Social Security Administration. The enrollment window opens up three months before you turn 65 and ends three months after your birthday.
For questions about the enrollment process, call the Social Security office at 1-800-772-1213 or use the online tool at Medicare.gov.
Doesn’t the Medicare enrollment process happen automatically?
If you’ve been getting benefits from Social Security or the Railroad Retirement Board at least 4 months before your 65th birthday, you will automatically get signed up for Part A and B Medicare coverage. Keep in mind that Part B requires a premium, so you will need to decide if you want to opt out of that part or not.
The A, B, D’s of Medicare
Medicare coverage is made up of a few parts—Part A, Part B, and Part D.
Part A: Hospital Insurance
Medicare Part A is also called hospital insurance. It covers inpatient hospital care, skilled nursing facility care, hospice care, nursing home care, and home health care.
The cool thing about Part A of Medicare is that not everyone pays a monthly premium.
Those eligible for a premium-free Part A include:
- Those who are already getting or qualify for retirement or disability benefits from Social Security
- Those who qualify for Medicare before the age of 65
- Those who paid Medicare taxes for a certain number of years while working
Part B: Medical Insurance
Medicare Part B is considered medical coverage. Unfortunately, there are no premium-free options here, so plan on paying something for this coverage, which is determined by your income. In most cases, you won’t see a bill come out each month for your Part B premium. Instead, it’s usually deducted from your Social Security stipend automatically. (If you don’t receive those benefits yet, expect a bill.)
Part B covers medically necessary and preventative services, including doctor visits, outpatient care, ambulance services, Durable Medical Equipment (DME), clinical research, inpatient and outpatient mental health options, and some outpatient prescription drugs.
In general, you can choose to go to an in-network doctor and avoid fees associated with preventative services.
Don’t want to pay a premium? Part B is optional Medicare coverage, although it is recommended as it covers things that Part A does not.
Part D: Prescription Drug Coverage
Medicare Part D is any prescription drug coverage. Like Part B, this is an optional coverage, and you’ll pay a monthly premium based on your income. However, even if you don’t take prescription drugs currently, it’s recommended to purchase this coverage upfront. If you end up needing to add in Medicare drug coverage later on, you could end up with a late enrollment penalty.
Keep in mind that the Medicare premium you pay for Part D could change each year.
What’s Not Covered In the Original Medicare?
Unfortunately, there are some gaps in Parts A, B, and D (together called the Original Medicare). Some of the most popular services that are not covered include:
- Long-term care
- Eye exams
- Dentures
- Most dental care
- Hearing aids
- Routine physical exams
- Massage therapy
- Concierge care
Medicare Advantage: “Part C”
Medicare Advantage plans are considered the missing Part C of Medicare, although they are not part of the original Medicare program. Instead, think of it more like an HMO or PPO health plan offered by private companies rather than the federal government.
You’ll need to pay a monthly premium for Medicare Advantage coverage, and like Part D, the amount you pay could change each year depending on your income.
Medicare Advantage plans provide many of the same benefits as Medicare Part A and B, aside from clinical trials and hospice services. However, this alternative does fill in the gaps of the Original Medicare plan, including vision, hearing, dental, and fitness programs.
Because Medicare Advantage comes from private parties, you’ll need to wait until the yearly open enrollment window to sign up.
FAQS:
The worlds of Medicaid and Medicare are vast and somewhat confusing. Here are some of the most common questions to help clear things up.
Who is eligible for Medicaid?
Medicaid is available for low-income families, qualified pregnant women, seniors, those with disabilities, and anyone else that receives SSI (Supplemental Security Income).
How do I apply for Medicaid?
If you think you are eligible for Medicaid, reach out to your state’s local Medicaid agency. Unlike other types of insurance, Medicaid is excluded from the open enrollment windows; you can enroll any time of the year. You can also apply through your state’s health Marketplace.
Can I lose my Medicaid Coverage?
Unfortunately, yes. You’ll need to renew your Medicaid coverage each year to verify you are still eligible for the coverage. The most common reasons you will lose coverage include having an income level outside of the limits or failing to provide the proper documentation. Even if you lose your Medicaid coverage, your children may still be eligible for coverage through CHIP (Child Health Insurance Plan). You will also enter a qualified life event and be able to shop for new plans through the Marketplace for a 3-month window.
Do I have to pay for Medicaid?
Your monthly Medicaid premium depends on your income level. While some people do pay premiums, others receive benefits for free.
Who is eligible for Medicare?
In general, Medicare is available for those 65 or older. However, people with disabilities and those with ALS or End-Stage Renal Disease may also qualify.
Do I have to pay for Medicare?
You should plan on paying for parts of your Medicare coverage. Medicare health plans are customizable. Therefore, you can pick and choose which coverages you want. While Part A is often considered premium-free, there are a number of services not covered, and you may experience some gaps. Parts B and D are optional coverages and fill in the gaps, but they do require a monthly premium based on your income level. You can also choose a Medicare Advantage plan (Part C). Medicare Advantage operates more like a traditional health policy, and you should expect to pay for coverage.
How do I know if a service is covered by Medicare?
To see if a service is covered by Medicare, you can either call your local Medicare office or use an online tool from the Medicare website.
Can I have both Medicare and Medicaid?
Yes, it is possible to be eligible for both Medicare and Medicaid. In fact, in 2022, about 12 million Americans qualified for both. If you find yourself dual eligible, you may choose to go with a D-SNP (Dual Eligible Special Needs Plan). However, because Medicaid varies by state, you’ll need to contact your local offices for specific details and customize your plan.
Can I have Medicare or Medicaid with private Insurance?
Yes, you can enroll in a private insurance policy even if you qualify for Medicare or Medicaid. Having a secondary policy can be especially helpful in covering the member responsibility and services the primary policy doesn’t cover.
Medicaid vs. Medicare—What’s The Difference?
While Medicaid and Medicare both provide health coverage that’s subsidized by the government, the programs vary in some substantial ways. First, Medicaid is designed to provide health coverage to low-income households, pregnant women and children. Medicaid is a joint effort between the federal and state government. Therefore rules and regulations will vary from state to state. The biggest upside to Medicaid is that there is no open enrollment window—you can apply anytime!
Medicare, on the other hand, is an entirely federally-funded health plan available for seniors and those with qualified disabilities. Medicare is made up of three parts—Part A, Part B, and Part D. Eligible recipients have the ability to customize their policy or add on a private Medicare Advantage Plan.
You might also be interested in: Understanding Social Security Benefits, Type, And Eligibility
