The government provides millions of Americans with access to health care every year through its Medicare and Medicaid programs. If you believe you might be eligible for one or both of these programs, here’s a guide to understanding the differences between the two.
Medicare and Medicaid are both government insurance programs. While Medicare is federal health insurance, Medicaid is insurance provided by the state in accordance with federal regulations. Each state has its own rules for Medicaid, but the funding comes from both the state and federal governments.
Medicare is primarily for people aged 65 and older but it also serves people of all ages with disabilities, end-stage renal disease, and Lou Gehrig’s disease, or ALS. Medicare recipients are not necessarily low-income.
Medicare is for:
- People aged 65 and older
- Disabled people
- Patients with end-stage renal disease
- People diagnosed with Lou Gehrig’s disease (ALS)
- Anyone who fits in the Medicare-eligible category even if they are not low-income
Medicaid serves people of all ages. The purpose of Medicaid is to provide free or low-cost health care to low-income individuals and people with disabilities. Medicaid provides for pregnant women, children of all ages, and adults, including the elderly.
Medicaid is a resource for people with little to no money and minimal resources including:
- Pregnant people
- Elderly people
- People with disabilities
Once you turn 65, you will automatically be enrolled in Medicare (Original Medicare) if you are receiving or eligible for Social Security. You don’t need to do anything. The government will send your Medicare card to you three months before your 65th birthday. If you are not receiving Social Security benefits, you can still apply for Medicare.
For anyone younger than 65, you’re automatically enrolled if you have been receiving Social Security Disability Insurance (SSDI) for two years. You don’t need to apply. A Medicare card will be sent to you at the start of the 25th month of being on SSDI. If you have End-Stage Renal Disease or ALS, your Medicare coverage will start the same month you begin receiving Social Security.
Medicare has four parts:
- Medicare Part A – Hospital Insurance (with Medicare Part B makes up Original Medicare)
- Medicare Part B – Medical Insurance (with Medicare Part A makes up Original Medicare)
- Medicare Part C – Medicare Advantage (federally-approved private insurance plans)
- Medicare Part D – Prescription Coverage
Original Medicare consists of Medicare Parts A and B.
Medicare Part A covers inpatient care, nursing homes, hospice, and certain home health visits. You most likely won’t have to pay a premium for Medicare Part A assuming you paid Medicare taxes while you were still working.
You pay a deductible without a required co-pay for the first 60 days of each benefit period. After that, you’re responsible for co-pays.
Medicare Part B covers doctors’ visits, including preventive medicine appointments, an annual wellness exam, necessary medical equipment, lab tests, and certain home health visits. Medicare pays for 80% of these outpatient visits while you cover the rest.
For Medicare Part B, you are required to pay monthly premiums, even if you don’t go to the doctor. The premiums are normally pulled from Social Security checks automatically. Therefore, you are unlikely to ever get a bill for Medicare Part B premiums. However, premiums are not fixed and might change each year.
Medicare Advantage plans offer all of the benefits you receive from Original Medicare, except hospice care, plus whatever your private insurance plan allows. These plans may include prescription coverage.
Medicare Part D is available by choice to anyone on Medicare. The coverage comes through federally approved private insurance companies.
Some things to know about Medicare Part D:
- There is an additional monthly premium (in addition to Part B)
- Some plans have preferred pharmacies that can save you money on co-pays
- Plans may require a deductible before the insurance company pays its share
- You may be eligible for “Extra Help” to pay for prescription drug costs
Medicaid and Children’s Health Insurance Program (CHIP) help low-income individuals and families access health care they couldn’t otherwise afford.
There are two ways to apply:
- Directly through your state
- The Health Insurance Marketplace
- Sends payments directly to health care providers
- May require a co-pay
Currently covers outpatient prescriptions in every state