If you don’t know the difference between Medicare vs Medicaid health plans, you’re not alone. The two names are so similar that the lack of understanding as to whom is eligible for which program, may prevent people from getting the care they require. Toss the Affordable Healthcare Act into the mix and we have full blown confusion.
In 1965 President Lyndon B. Johnson signed the Medicare and Medicaid Act into law. The idea of a national health plan had been percolating since President Theodore Roosevelt’s time and President Harry Truman was also proponent, so much so, that he was given the honor of issuing the first Medicare card.
Medicare vs Medicaid
Although the two programs share a similar prefix (“medi”) and offer similar types of medical coverage, Medicare and Medicaid are two different products. Nearly every American will eventually qualify for Medicare, but Medicaid is available only to low-income individuals and to children below the federal poverty levels. When you think Medicare, think “care” for those who are considered a “senior.” Think of Medicaid as “aid” to assist those who are in need. Medicare offers insurance to US citizens who are 65 and older at reduced rate premiums. Medicaid is free.
What is Medicare
Medicare is administered by the federal government. The Medicare model is similar to the typical type of insurance that you may receive from your employer. Premiums are paid monthly, and depending on your plan a co-pay may be required.
Who Qualifies for Medicare
- US citizens 65 years and older
- Anyone collecting disability for 24 months regardless of age
- Those diagnosed with end stage renal failure or Lou Gehrig’s disease
Medicare is a health plan that is divided into 4 key parts: A, B, C and D. Parts A and B are referred to as “Original Medicare.” Part A offers coverage for hospitalization and Part B offers medical coverage (doctors visits). Coverage includes the following:
- durable medical equipment
- home health care
- hospice care
- inpatient hospital care
- lab tests
- outpatient care
- physician services
- selected preventive services
- skilled nursing facility care for a limited number of days, under specific conditions
Medicare Part A
Medicare Part A is free to those who worked for 10 years and contributed to the Medicare system. It’s also free for those who are married to someone who worked 10 years and contributed to the Medicare system. Throughout your working career you made contributions to FICA. These contributions are what helps pay for Medicare benefits.
Those who did not contribute to FICA for at least 40 quarters, but have contributed somewhat, will be required to pay either $232 or $422 monthly. This depends on whether or not they had at least 30 quarters of qualifying work.
Medicare Part B
Part B Medicare insurance premiums are calculated based on your income. The annual standard deductible for Part B is $183 a month. Some higher income beneficiaries may pay more than the standard premium.
A deductible is the amount of money you need to spend until Medicare kicks in. A premium is the monthly fee you must pay to maintain your Medicare benefits. There are other costs associated with Medicare, be sure to understand what is covered and what is required to be paid out of pocket or through supplemental Medicare.
Non US citizens may qualify for Medicare if they receive Social Security Retirement, Railroad Retirement Benefits or Social Security Disability Insurance.
Medicare Part C
Part C refers to Medicare Advantage plans which are administered by private insurance companies. Part C offers the same coverage as Parts A and B. In some cases they provide broader coverage and additional benefits compared to Original Medicare.
If you opt to participate in Medicare Advantage, out of pocket costs are capped. Advantage plans include Health Maintenance Organizations (HMO) Preferred Providers, Special Needs Providers (SNP), and Medical Savings Account. You may find that your Advantage plan covers gym memberships. Advantage benefits vary by insurers.
Medicare Supplements (Medigap)
Supplemental Medicare can be purchased to cover out of pocket costs beneficiaries are left with after their Original Medicare has paid its portion. These OOP costs include coinsurance, deductibles and copayments.
Medicaid is provided free to individuals in need, mostly children. Medicaid is a joint program between federal and state governments. Unlike Medicare, the rules vary from state to state.
Medicaid covers the following:
- Doctor visits
- Inpatient and outpatient hospital care
- Lab tests
- Home health care
- Hospice care
- Medical equipment and supplies
- Non emergency medical transportation services
- Dental care (up to age 21)
- Long Term Care
Just because Medicaid is free, it doesn’t mean it’s extended to everyone. There’s certain eligibility criteria that vary from state to state. In general, women who are pregnant who meet state and federal guidelines generally receive same day Medicaid. Women who do not have insurance and who are suffering from breast or cervical cancer are also eligible for Medicaid. Approval time for Medicaid can take up to 60 days. Cards are usually received within two weeks.
If you’re not an American citizen, you won’t be reported if you apply for benefits. Typically Medicaid benefits are extended only to US citizens, however children of undocumented aliens can receive benefits. If you receive Social Security Supplemental benefits, you’ll automatically qualify for Medicaid.
You can collect both Medicare and Medicaid, this is called “dual eligibility.” Medicare will pay out before Medicaid. Therefore, your Medicaid will act like supplemental insurance. If you think you may be dual eligible, contact your state health department for information on how to apply.
How to Apply for Medicaid
You can apply for Medicaid in person at your local office, online or through the mail. You’ll be required to present a number of documents. Not all these documents will pertain to you.
- Driver’s License
- Bank statement, annuities, IRA’s, brokerage accounts, pension statements, mortgage
- Civil service, Veteran Administration and disability statements
- Prepaid Burial plot
- Social security letter
- Supplemental health insurance card
- Life insurance card
- Power of attorney
- Your Medicare card
Medicare and Medicaid coverage differs from one another. Medicare is extended to primarily the elderly, Medicaid covers low income individuals and children. A smart consumer is an informed consumer, so be sure to understand the types of coverage, eligibility and what you’re entitled to.
The Patient Protection and Affordable Care Act, known as Obamacare, is administered by the individual states. President Obama signed ACA into law in 2010. Obamacare allows individuals without insurance access to health care coverage through state exchanges at lower rates. The government does not supplement an individual’s purchase. Insurers who extend coverage through the Obamacare exchanges must meet certain levels of care. This includes:
- allowing children to stay on their parents plan till age 26
- allows for pre-existing conditions and coverage for preventative testing such as mammograms.
Obamacare has no bearing on Medicare or Medicaid benefits. Medicare, Medicaid and Obamacare are available to assist Americans with costly medical care. Medicare is available to all individuals 65 and older, Medicaid is extended to individuals and families living below the poverty level and Obamacare allows Americans to access lower cost insurance
Once you have clarity on the facts regarding Medicare vs Medicaid, you can make the right decisions for you and your family. If you have questions about your Medicare options, contact us today. Our senior Medicare agents are here to help inform you on all your Medicare options.