What’s the Difference Between Medicaid & Medicare?
If you’ve ever been confused about the difference between Medicaid and Medicare, you’re not alone. These two government-funded health insurance programs have similar names and offer overlapping benefits, but they’re actually very different—from who can enroll and how they work to how they’re funded and what benefits they provide. Whether you are eligible for one or both, it’s helpful to know what makes each program unique. Keep reading as we cover the differences between Medicare and Medicaid, so you can find the health insurance that’s right for you.
Medicaid vs Medicare: Eligibility
Medicare provides health coverage for eligible people who are over 65 – not all are eligible – or those who have a disability, regardless of income. On the other hand, Medicaid is an assistance program that provides health insurance to low-income people of all ages. The easiest way to differentiate the two is that Medicare is an insurance program while Medicaid is a social welfare program.
Medicare recipients get Medicare because they paid for it through payroll taxes while they were working, and through monthly premiums once they’re enrolled. Medicaid recipients don’t need to have paid the same taxes, and most don’t pay premiums for their coverage.
You may be eligible for Medicare coverage if you’re:
- 65 or older
- Under 65 with a disability
- Affected by End-Stage Renal Disease (ESRD), regardless of your age
You may be eligible for Medicaid if you have limited income and are:
- 65 or older
- A child under 19
- Living with a disability
- A parent or adult caring for a child
- An adult without dependent children (in certain states)
Medicaid vs Medicare: Costs
Medicare Costs: Medicare saves a lot on health coverage. However, Medicare recipients may still be responsible for out-of-pocket costs, such as deductibles, premiums and copays, depending on their plan.
Medicare has four parts that each cover different things—hospitalization, medically necessary services, supplemental coverage, and prescription drugs. The total cost of Medicare for you will depend on what parts and plans you select for your coverage. Costs will vary greatly depending on your work history, monthly premiums and deductibles. Below is an overview of what you could be paying on a monthly basis in premiums for Medicare coverage:
- Cost of Medicare Part A (Hospitalization): If you have worked 40 qualifying quarters (10 years), you don’t have to pay a Part A premium, since you already paid Medicare payroll taxes during your working years. If you have not worked 40 qualifying quarters, you will be required to pay full price for Medicare Part A health insurance, at $471 per month.
Another cost for Medicare Part A is the deductible, which runs at $1,484 per benefit period. However, this cost is usually covered if you enroll in a Medigap policy or Medicare Advantage plan.
Cost of Medicare Part B (Medical Insurance): The cost of Medicare Part B depends on your adjusted gross income. Typically, if you make less than $91,000 a year, then you would pay $170.10 per month—the standard cost in 2022. You’ll pay this standard 2022 cost if:
You enroll in Part B for the first time in 2022.
You don’t get Social Security benefits.
You’re directly billed for your Part B premiums.
You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard premium amount of $170.10 in 2022.)
If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above $91,000 a year, you’ll pay the standard Part B premium as well as an income-related monthly adjustment amount. You can find that amount according to your income threshold here.
In addition to the monthly premium, you’ll also be required to pay the deductible if you don’t have another policy — such as Medicare Supplement — that covers it. The Part B deductible for 2022 is $233, which means you would need to pay $233 before your coinsurance benefits would kick in.
Cost of Medicare Part C (Medical Advantage Plan): A Medicare Advantage plan covers everything that traditional Medicare covers, including Part A (hospitalization) and Part B (doctor’s visits). However, it also offers additional benefits such as coverage for prescription drugs, vision, dental, hearing and more.
Because part C is offered by private health insurance companies, your premium will depend on who you choose as your provider. You’ll also be responsible for co-payments, deductibles and other out-of-pocket costs. However, with Medicare Advantage, you don’t need to sign up for Part D (drug coverage). You can compare costs for Part C plans here.
Cost of Medicare Part D (Prescription Drug Coverage):
Medicare Part D helps pay for the medications your doctor prescribes. Costs for Part D are similar in nature to Medicare Part B costs, since the premium amount you’ll pay depends on your household income. It will also vary depending on the following:
- Whether your prescriptions are covered by your policy
- Which “tier” the drug is in.
- Which pharmacy you use
- Which insurance provider you choose
- Whether or not you are eligible for Extra Help to pay for your prescription drug coverage.
You can compare costs for Part D plans here.
Medicaid costs: Most people who receive Medicaid benefits pay nothing for medical coverage, although vision and dental coverage may require small copays. Each state has the option of charging limited premiums and enrollment fees as a form of cost sharing. This applies to the following Medicaid beneficiaries:
- Eligible disabled and working individuals with an income above 150 percent of the FPL
- Pregnant women and infants with a household income at or above 150 percent of the federal poverty level (FPL)
- Disabled working individuals eligible under the Ticket to Work and Work Incentives Improvement Act of 1999
- Disabled children eligible under the Family Opportunity Act
If you’re a high earner (your income is at or above 150% of the poverty level) you may be required to pay a small monthly premium. You may also be charged more for prescription drugs or for using the emergency room in a non-emergency situation.
Medicare vs. Medicaid: Coverage
Medicare coverage: The Medicare program is broken down into four parts that offer coverage for different aspects of healthcare, including:
- Medicare Part A: The first part of Medicare covers inpatient medical care in a hospital or skilled nursing facility care—both of which may be necessary for rehabilitation after a serious injury or stroke. It also provides hospice care and limited home health care, but it does not cover custodial or long-term care).
- Medicare Part B: This part pays for outpatient medical services, including doctor visits, outpatient hospital care and preventive care. It also covers mental health coverage, medical equipment, and certain outpatient prescription drugs.
- Medicare Part C: Also known as a Medicare Advantage plan, Part C is run by approved private insurance companies. It includes all the benefits of Medicare part A (hospital insurance) and part B (medical insurance). However, these plans offer extra benefits that Original Medicare doesn’t cover— including like vision, hearing, and dental services.
- Medicare Part D: This part helps pay for certain common types of prescription drugs—including many recommended shots or vaccines—which will be listed on a drug list known as formulary. Each plan chooses which specific drugs it covers, so make sure to pick a policy that covers your medications before you enroll.
Medicaid coverage: The full list of covered Medicaid benefits varies by state (depending where you live). That’s because each state determines the type, amount, and duration of covered services. However, regardless of where you live, the Medicaid program is required to cover the following:
- Inpatient and outpatient hospital services
- Physician services
- Laboratory and X-ray services
- Home health services
- Family planning services, such as birth control and nurse midwife services
- Health screenings and applicable medical treatments for children
- Nursing facility services for adults
- Surgical dental services for adults
Can You Have Both Medicaid and Medicare?
Yes, it is possible to enroll in both Medicare and Medicaid. If you are eligible for both, you’re considered to be dual eligible. If you have Medicare and full Medicaid coverage, most of your health care costs are likely covered.
Dual enrollees generally use Medicare as their main form of coverage, while Medicaid serves as their supplemental insurance. If you’re dual eligible, you may have original Medicare (parts A and B) or a Medicare Advantage plan (Part C), and Medicare will cover your prescription drugs under Part D. Medicaid may also cover other care and drugs that Medicare doesn’t, so having both will probably cover most of your healthcare costs.
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