Medicare vs. Medicaid: The Important Differences to Know
In the United States, there are currently two government-provided health insurance policies that citizens can enroll in: Medicare and Medicaid.
While they both provide general health insurance benefits, there are differences in eligibility and coverage that are crucial to identify and be aware of — the largest being that Medicare is available to adults who are over 65 years old whereas Medicaid is only available to low-income families.
Medicaid is usually cheaper than Medicare, providing those who are near or below the poverty line with free or low-cost coverage. In contrast, Medicare is open to all income levels and usually costs a few hundred dollars per month.
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Differences in Medicare vs. Medicaid
Medicare and Medicaid are both health insurance programs offered to U.S. citizens and permanent residents. However, there are two key differences between the two programs: coverage and the types of services that are eligible for reimbursement.
Medicare | Medicaid | |
|---|---|---|
| Who is eligible? | Individuals over 65 or with a disability | Low-income individuals |
| What does it cover? | Hospital, doctor and medications | Hospital, doctor and medications (some added benefits) |
| How does coverage vary? | Will depend on the plans you purchase | Your state of residence |
| What does it cost? | Depends on your selected plans | Depends on your income level |
| Who funds the program? | Federal government | Federal and state governments |
Coverage
In general, Medicaid is a more comprehensive health insurance policy, with a single plan providing broad coverage across medical, hospitalization and prescription drug needs. In some states, Medicaid also covers vision and adult dental.
In contrast, Medicare is made of several parts, each providing different coverage. Original Medicare, which includes Parts A and B, has many gaps in coverage that can be filled if you are willing to purchase additional Medicare plans such as Part D or Medicare Advantage.
But the most notable coverage differences between Original Medicare and Medicaid is that only Medicaid covers long-term care such as nursing homes.
What is Medicare?
Medicare is available for Americans who are over the age of 65 or younger citizens who have been diagnosed with a disability or illness. Some qualifying medical conditions include Lou Gehrig's disease (ALS) or end-stage renal disease (ESRD).
It is key to note that eligibility for Medicare is not based upon your income.
For most U.S. citizens, during their working years, they would have paid a tax into the Social Security fund. By paying into this pool of tax dollars, you can enroll in the Medicare plan when you turn 65 years of age.
However, this would only enroll you in Medicare Part A, which provides coverage for hospital care and nothing else. Therefore, you would need to select and purchase one of the many other parts of Medicare so that you would have a comprehensive plan.
Original Medicare
Individuals who want Original Medicare will usually enroll in Part A and then can choose to purchase Part B and Part D for an additional low-cost monthly premium. Most individuals do opt to purchase, since there are penalties for late enrollment.
Part B provides coverage for doctors, medical tests and some procedures, while Part D is designed to offset the costs of prescription drugs. By enrolling in Medicare Parts B and D, an individual can get closer to having a comprehensive health insurance policy.
Medicare Advantage
Medicare Advantage, or Part C, is a newer health insurance policy that groups together all the parts of Original Medicare. Plans set their own deductibles and out-of-pocket maximums, and they will usually provide additional coverage benefits such as dental, hearing and prescription drugs.
It is important to note that when comparing Medicaid versus Medicare, Medicare Advantage policies are offered through private health insurance companies such as UnitedHealthcare and Aetna and are not provided by the government. This gives you the ability to compare policies between providers and find the best Medicare Advantage policy that will fit your individual situation.
What is Medicaid?
Medicaid is a federal and state health insurance program designed to be available for low-income Americans. In order to be eligible for Medicaid coverage, you would need to have an income level below the state's threshold, which is 138% of the federal poverty line in states with expanded Medicaid.
In these states, you can qualify for Medicaid if you're an individual who earns less than $18,754 or a family of four who earns less than $38,295.
Income eligibility criteria vary by state and by condition, such as having a disability or being pregnant. You can input your estimated income at Healthcare.gov find out whether you qualify based on the number of individuals in your household.
As you will see, when the number of dependents in your household increases, the income threshold for Medicaid will increase as well.
Can I be covered by both Medicare and Medicaid?
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It is possible to be eligible and covered by both Medicare and Medicaid. Within health care, it is known as being "dual eligible." Typically, these individuals will be enrolled in Original Medicare but receive subsidized Medicaid benefits through Medicare Savings Programs such as the:
- Qualified Medicare Beneficiary (QMB) Program
- Specified Low-Income Medicare Beneficiary (SLMB) Program
- Qualified Disabled and Working Individual (QDWI) Program
All of these programs would provide extra help for covering premiums, deductibles and coinsurance for Medicare.
If you don't qualify for Medicaid when you are enrolled in Medicare, there are still options to help provide financial aid for Part A, B and D deductibles. This would include enrolling in a supplemental Medigap policy such as Medicare Part F, which is offered by private health insurance companies.
Frequently asked questions
What is the difference between Medicare and Medicaid?
Medicare and Medicaid provide health coverage to different groups of people — Medicaid is for those who have a low income, such as an individual who earns less than $18,754 per year, and Medicare is for seniors age 65+ and those who have a disability. It's possible to be enrolled in both Medicare and Medicaid if you meet the eligibility criteria for both programs.
How do you qualify for both Medicare and Medicaid?
To be dual enrolled in both Medicare and Medicaid, you must meet the income criteria of your state's Medicaid program while also meeting Medicare's criteria of being age 65+ or having a qualifying disability.
What's covered by Medicaid vs. Medicare?
Medicaid and Original Medicare both cover hospitalizations, doctors and medical care. But Medicaid's coverage is usually more comprehensive, including prescription drugs, long-term care and other add-ons determined by the state such as dental care for adults. In contrast, Medicare means combining multiple parts, so your benefits will be determined by the private Medicare plans that you add on top of Original Medicare.
How many people are enrolled in Medicaid vs. Medicare?
There are 64 million people enrolled in Medicare. There are 87 million people enrolled in either Medicaid or CHIP, the Children’s Health Insurance Program. About 19% of all Medicare enrollees are also enrolled in Medicaid.
Sources
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