Just about anyone who has ever been to the doctor in the United States has heard the terms Medicare and Medicaid. If you’ve ever listened to a political debate about taxes or healthcare reform, you may have heard the two terms used back to back so often that they blend together. And it doesn’t help that the two services are both regulated by the Centers for Medicare and Medicaid Services, which are found all over the United States. But did you know that these are two totally different things?
Even if you have great insurance, and plan to never vote in a single election, it’s still a good idea to know the difference between Medicare and Medicaid. You may find that you need one or the other at some point in your life, or you may be put in the position to navigate the waters of Medicare or Medicaid for a sick relative someday. Here are the key differences between the two, and what you need to know about both.
What is Medicare?
Medicare is a health insurance program that is primarily in place to care for Americans who are over the age of 65, or who are younger but are legally disabled or on dialysis. This service is not dependent upon income. It is a tax-funded insurance that is funded by taxes that those who are receiving coverage have paid into all their lives through income tax. Anyone who pays income tax in the United States pays into Medicare, to keep the program funded. It is meant to offer retired citizens a guarantee that they will have medical coverage when they get older.
This program is run entirely by the federal government, and the regulations and procedures related to the coverage are largely the same in every state. Patients who are covered by Medicare must pay deductibles and minimal monthly premiums, just like a standard health insurance plan.
What is Medicaid?
Medicaid, on the other hand, is an assistance program that offers low-income citizens health care coverage. Anyone, regardless of age, can be covered by Medicaid. They have special programs for children and pregnant women, with different income level requirements used to assess worthiness. This program is regulated by the federal government, but is run by the state, and each state provides its own guidelines and assessments for citizens who apply.
In general, patients covered by Medicaid do not pay premiums or other costs, except for the possibility of a low co-pay in some states. This assistance program is funded entirely by the federal and state governments, and the money usually comes from revenue collected from sales tax and other sources, rather than income tax such as Medicare uses.
Similarities Between the Two
As you can see, Medicare and Medicaid are two very different things. While one is a sort of government-provided insurance to the elderly or disabled, that users must pay for and use like a standard insurance, the other is a low-income assistance program for citizens who cannot afford insurance otherwise.
But if they are so easily separated, why are they so often mistaken for one another? And why do politicians often utter them in the same sentence, seeming to use the terms almost interchangeably? Here are a few similarities between the two that make it easier to understand why people have a hard time keeping these terms separate:
- Both were created in 1965 by President Johnson in the same group of policies.
- Both are social insurance programs that share the monetary burden of medical treatment among the entire population.
- Because the elderly and disabled patients who use Medicare are so often a part of the low-income population, it’s easy to see how the low-income servicing Medicaid could be mistaken as an umbrella for all those groups.
- It is possible for a person to qualify for both Medicaid and Medicare, and to use both to help cover medical expenses.
- While the funding comes from different places, and the regulations are different, the federal government treats both programs as tax-funded health care programs and does their end of the regulating from the same department.
For these reasons, you will likely always hear Medicare and Medicaid uttered as a single entity by politicians, and most people will always think of them as linked services.
What Medicaid and Medicare Each Cover?
Both Medicare and Medicaid cover different things, though both strive to provide a full range of health care coverage for patients. The biggest reason that the cover different services and treatments is because of funding, but it also has to do with the target audience.
Medicare has four coverage areas, which include:
- Hospitalization coverage. This is especially important for the disabled or patients on dialysis who are covered by Medicare, but the elderly often experience a higher rate of hospitalization as well. This covers inpatient care, a limited amount of skilled nursing facility care, hospice care, and home healthcare.
- Medical insurance. This service can be used just like regular medical insurance. This covers services from your doctor or health care providers, outpatient care, home healthcare, preventative services, and medical equipment.
- Prescription drug coverage. This service is highly detailed, so not all prescriptions will be covered by Medicare. This is run by private insurance companies that work with Medicare.
- Finally, Medicare includes a supplemental insurance that Medicare patients can purchase privately, which offers additional services and extra coverage. This is called Medicare Advantage and is run by private insurance companies that work with Medicare.
Both the prescription drug coverage and the supplemental insurance are paid for out of pocket on the part of the patient, but because they are related to Medicare, they are usually much lower in cost than they would be through an employer. The insurance and the hospitalization coverage typically require copays and a small monthly premium. These two parts are funded by income taxes.
Medicaid, on the other hand, provides coverage for a specific list of services that are deemed “medically necessary” by a doctor. They include:
- Services preformed by a pediatrician
- Treatments administered at a clinic
- Nursing facility services for patients over 21
- Home healthcare services for those who are eligible
- Surgical dental procedures that are medically necessary
- Family planning services, such as birth control
- Services performed by a general doctor
- Services performed by a midwife
- Services performed by a laboratory
- Hospitalization coverage
- Screening, diagnostic, and treatment services for patients under 21
States may include other benefits that they are willing to cover under their Medicaid program, like prescription drug coverage, medical transportation, physical therapy, non-necessary dental services, prosthetic devices, optometrist services, and coverage for a pair of medically necessary eyeglasses.
Because Medicare does not provide coverage for nursing home facilities, which is something that many disabled and elderly people require, Medicaid is often used in conjunction with Medicare to fulfill this need. This is why it is possible for citizens to be dually eligible for both programs; an elderly or disabled person who typically relies on Medicare to cover their expenses may turn to Medicaid to cover the need for a nursing home facility as their health grows worse.
The high cost of long-term care, and the growing need for skilled nursing services as the Baby Boomer generation grows older is something that has created a lot of tension between the two services. Medicare offers only a small amount of coverage for nursing services, up to 100 days total. For patients who need long-term care, this presents a major problem.
Medicaid, then, is often forced to pick up the slack and is the main provider of long-term care coverage for both the lower and middle-class citizens in the United States. Because Medicaid has very strict requirements on income and assets to ensure eligibility, many people who would otherwise not qualify seek out lawyers that help them divide up their assets well before they need to so that their long-term health care can be paid for. This is one of the reasons why Medicaid has undergone reforms recently that open up the eligibility requirements for new patients.
When you are considering which service may be best for you, or for your family member, the first thing you should probably look at is the eligibility for each service. Whether you reach the age of 65 or your income dips to below a specific level, you won’t receive benefits automatically. Instead, you’ll have to go through the application process, be assigned a case worker, and be applied or denied based on certain factors.
Medicare is generally much easier to be considered eligible for. If you are an American citizen who is 65 years old or over, OR you have specific disabilities, OR you have end-stage renal failure that requires dialysis and/or a kidney transplant, you are typically eligible for Medicare. If you receive Social Security Retirement benefits or Social Security Disability benefits, you are defiantly eligible for Medicare.
Getting Medicaid can be trickier. The income levels are set by the state, so you’ll need to research your specific area to find out if you meet those guidelines. Additionally, income level guidelines differ for each type of Medicaid patient, so it’s probably best to simply apply if you fall into any of the fallowing categories, and find out if your income meets the requirements at that time.
Medicaid is only awarded to the following types of American citizens who meet specific income guidelines:
- Those who are 65 years old or older.
- Those who are under 19 years of age and are still legally considered a child.
- Those who are pregnant.
- Those who live with a disability.
- Those who have children living with them who depend on them for the majority of their care.
- Certain states also award Medicaid benefits to adults who do not have dependent children or fall into the above categories.
Additionally, some immigrants who are not yet American citizens can qualify for Medicaid. This includes those who hold green cards, those who are exempt from the 5-year waiting period for green cards (such as refugees, victims of trafficking, Cuban or Haitian immigrants, or families of military service members and veterans), or those who entered the country before 1996. These individuals are still required to meet the above guidelines, as well as the income guidelines, to qualify for Medicaid.
In general, if one person in your household qualifies for Medicaid, all of the other occupants who are immediate family or dependent children will also qualify. Many states have recently changed their guidelines for both income and situation guidelines, opening up Medicaid to accept more patients who are in need.
Where to Learn More
Reforms to the Medicare and Medicaid programs happen with some regularity. If you aren’t sure if you qualify, or you simply want to learn more, you can start by going to HealthCare.gov. There, you’ll be able to find links to your state, so that you can start exploring the specific coverage and guidelines that are related to Medicaid in your state. You can also get reminders emailed to you about deadlines for signing up.
The bottom line is that both Medicare and Medicaid are social insurance programs that are meant to provide American citizens with a way to stay healthy and to get the healthcare treatment they need. Whether they can’t get insurance because they are now retired and don’t have a job to purchase insurance through, or because they fall below the poverty line and cannot afford to purchase insurance on their own, these two programs offer a way for many citizens to access health care when they need it most.
Even if you think you’ll be turned down, you can always apply anyway. Applications are easy and can be done online in many states. Once you’ve filled out an application, it usually doesn’t take long for a case worker to notify you of your status, and begin the next steps with you if you are accepted for coverage.