It’s easy to confuse the differences between Medicare and Medicaid. They’re both taxpayer-funded healthcare programs, they were both implemented in 1965, and they’re both designed to protect the most vulnerable members of our society. But what kind of services are covered? Who can qualify? How much do you have to pay? The answers to those questions are how Medicare and Medicaid differ.
The Medicaid program provides health coverage for people with low income or disability. Medicaid covers visits to the doctor, hospital stays, and basic medical equipment like eyeglasses. It can cover a portion of medical costs not covered by Medicare, including many of Medicare’s out-of-pocket expenses. It can also cover services which Medicare doesn’t, especially those related to long-term care.
Medicaid is operated jointly on the state and federal level. Consequently, every state has its own Medicaid program. Requirements for eligibility and coverage will vary from state to state. Depending on your coverage, some Medicaid services require a small copay. Many states have a spend-down program that allows you to deduct medical expenses from your income for the purposes of qualifying for Medicaid.
Like with Medicaid, Medicare provides health coverage. Because it’s a federal program, the rules for eligibility are the same in all states. Seniors over the age of 65 are the biggest group covered by Medicare. Other groups include people with ALS, end-stage renal disease, and those on dialysis. People who have received social security disability insurance for at least two years may qualify as well.
Medicare is composed of several different plans or “parts.” Part A covers hospital expenses. Part B covers lab costs, outpatient care, doctor fees, and 20-35% of your total medical bill. Part C is privately purchased, supplemental insurance, which is for people who want to extend their existing coverage. And last but not least, Part D covers prescription drugs.
Cost and Coverage
Most people are automatically enrolled in Part A and B upon turning 65. If you’re eligible but not enrolled, you can contact your local social security office. The specific types of coverage available through Medicare depend on the plan you choose. For example, Part D has four tiers of copay options. The least expensive tier only covers generic drugs, while the most expensive tier covers the most expensive specialty drugs.
Your income and assets aren’t relevant to your qualification for Medicare, but Part A does have a work requirement. If you’ve worked enough to qualify for social security retirement benefits, then Medicare Part A is free, and available to your spouse. Qualification requires roughly 10 years of employment in a position where you paid payroll tax. In absence of required work history, Part A can still be purchased, albeit with a hefty premium.
The Difference Between Medicare and Medicaid
Both programs are designed to spread the cost of healthcare across society, helping to provide more affordable coverage for the people who need it most. But they differ on the basis of coverage, cost, and qualification. Medicaid is for low-income and disabled people. It provides coverage for many medical essentials, like seeing the doctor. But it also covers long-term care services, like in-home caregivers.
Medicare is primarily for seniors over 65, providing inexpensive coverage that depends on the details of the plans you select. However, it does not cover long-term care services. Fortunately, these gaps in coverage can be closed because you can be enrolled in both programs simultaneously. The various costs associated with Medicare can be off-put by Medicaid, resulting in exceptionally strong yet inexpensive medical insurance.