What Is the Difference Between Medicare and Medicaid?
As older adults approach retirement age, they must consider their future medical needs. After years of paying into the Social Security and Medicare system, it is time to take advantage of these federal government benefits. However, even Medicare may not be enough to cover all your healthcare costs. You may be able to take advantage of state Medicaid programs for services not covered by Medicare.
Medicare is a federal program, but Medicaid and other healthcare programs vary from state to state. If you have questions about your legal rights to medical benefits as an older person, you can contact an older adult law attorney in your area for help.
The main difference between Medicare and Medicaid is that Medicare is a medical insurance program administered at the federal level, and Medicaid is a medical assistance program handled by the states. See below to learn more:
- Medicare Program: Medicare is funded by money contributed to trust funds as part of payroll taxes, similar to Social Security. When workers and their spouses reach age 65, they become eligible for Medicare benefits to pay for many of their hospital costs. Medicare also provides other medical insurance benefits for a monthly premium, including outpatient services and prescription drug coverage.
- Medicaid Programs: Medicaid is a government assistance program that covers people with a limited income. Medicaid can cover low-income people of any age, from older adults to families and children. There are no premiums for most medical services, and participants need to establish eligibility every year.
Medicare coverage can be complicated because there are many different parts of Medicare. The original Medicare is made up of Medicare Part A and Medicare Part B. Part A is hospital insurance that covers inpatient care, skilled nursing facility care, and hospice care. Part B is for outpatient services, including health care provider visits, durable medical equipment, home health care, mental health services, and ambulance services.
Medicare patients can also add Medicare Part D for prescription drug coverage and purchase supplemental insurance coverage or Medigap to cover other costs not covered by Medicare, like copays and deductibles. Supplemental coverage is available through private insurance companies, including Medicare Advantage, also known as Medicare Part C.
Medicaid benefits cover most medical needs, including inpatient and outpatient care. Under federal law, states must provide certain Medicaid services, including nursing home care, hospital services, long-term care, rural health clinic services, lab tests, and family planning services. States can offer additional benefits, including prescription drug services, screenings, dental services, and eyeglasses.
For example, the Medicaid programs in Connecticut and Ohio provide routine exams and eyeglasses for recipients 21 and over but states like Louisiana only cover regular eyeglasses for recipients under 21.
Some people can get both Medicare and Medicaid. This is known as being “dual eligible.” To become a beneficiary of both programs, the individual must qualify individually for each program, as described below.
Most participants in the Medicare health insurance programs are eligible based on age. Older adults can sign up for Medicare coverage when they turn 65. If you are eligible based on your work history, there are no Medicare premiums for Part A. Alternatively, older adults 65 and older can pay a monthly premium for Part A.
Others may also be eligible for Medicare, including those based on disability, individuals with ALS, or end-stage renal disease (ESRD). For more information about Medicare eligibility and enrollment, visit Medicare.gov.
Medicaid benefits are primarily for people who don’t make enough money to pay for health insurance. Medicaid eligibility requirements are different in every state. However, in most cases, they cover qualifying families and individuals with low income, including disabled individuals, children and families, pregnant women, and those 65 and older. Eligible children can get health coverage through both Medicaid and state Children’s Health Insurance Programs (CHIPs).
For more information about Medicaid eligibility and enrollment, visit Medicaid.gov.
Most Medicare recipients qualify when they turn 65 and are then covered for life. However, if you are still working or return to work and receive health insurance benefits through your employer, Medicare generally provides secondary coverage after your employer’s primary coverage.
Medicaid eligibility is based on income levels, and participants generally must renew for Medicaid at least every 12 months. If your income level exceeds the qualifying limit or you are no longer eligible, you can lose Medicaid coverage.
Medicare and Medicaid are not the only plans you should consider for your healthcare needs when you prepare for retirement. Even with Medicare, you may be left with out-of-pocket costs to pay for your medical services. Medigap plans have additional monthly premiums that can cover the costs of care that are not covered by Medicare or your Medicare Advantage plan.
In addition to medical care for older people, people of any age should consider how to care for themselves and their families. Wills, trusts, living wills, and other estate planning tools can help you care for aging parents and protect your adult children. In many cases, there are low-cost do-it-yourself (D.I.Y.) wills, living wills, and powers of attorney that can be found on our companion site, FindLaw.com.