Medicare Vs. Medicaid – The Definitive Guide A Guest Post by Kayda Norman

medicaid

Originally published on Quote Wizard at https://quotewizard.com/health-insurance/medicare-vs-medicaid

Every year, millions of Americans receive medical assistance through a pair of government funded programs: Medicare and Medicaid. Although they are often confused, they were created to help two separate groups in need of medical coverage.

Medicare provides health benefits to senior citizens. Those receiving care usually have to be at least 65 years old. Medicaid helps low-income families or children in need. Eligibility is generally based on income levels.

We’ll compare Medicare and Medicaid by looking at the history, eligibility, and benefits of both programs below.

History and Recent Changes

Medicare

The government created Medicare because senior citizens weren’t able to find quality healthcare at an affordable cost. President Lyndon B. Johnson signed the program into law on July 30, 1965. Initially, it only included Medicare Part A and Part B.  This is why they’re sometimes referred to as “Original Medicare.”

Over the years, this federal program expanded to cover more people, including those who are disabled or have end-stage renal disease. In 2003, regulations were created to allow private insurance companies to provide Medicare Parts A and B. These are called Medicare Advantage plans. Part D, the prescription portion of Medicare, was added in 2006.

Medicare and Obamacare

Although Medicare is separate from the Health Insurance Marketplace, Obamacare did change many things about Medicare.

It added certain preventive services without charging a co-pay or deductible. These services include procedures like mammograms and a yearly wellness visit. Another benefit the Affordable Care Act (ACA) added is discounts on brand name drugs. Now those who are in the “donut hole” or coverage gap can save 55 percent on brand name prescriptions.  Find out more about the donut hole and Medicare’s prescription program (Medicare Part D) here.

Medicaid

Although Medicaid was created the same year as Medicare, it was designed as a federal- and state-funded program. Because of this, Medicaid regulations differ from state to state. Medicare, on the other hand, is run by the federal government only.

Like Medicare, Medicaid has expanded over the years to allow more people into the program. According to the Centers for Medicare and Medicaid Services, Medicaid originally only provided medical coverage to those getting cash assistance. Now, others such as low-income families and the disabled are eligible.

Affordable Care Act and the Obamacare Gap

Ultimately, the goal of Obamacare was for every single American to have affordable healthcare. This is why the ACA gave states the option to expand Medicaid in 2014. This change allowed people under 65 whose families had an income below 133 percent of the Federal Poverty Level to enter the program. Currently, 19 states have not opted to expand Medicaid.

Originally, expanding Medicaid was a requirement under the ACA. Later, the requirement was dropped. This one small change created a big problem for hundreds of Americans known as the Obamacare Gap.

Why is this such an issue? The ACA states that Americans who are living above the poverty line can buy private health insurance plans. Anyone who has an income 133 percent below the poverty line can apply for no-cost state-run health insurance. This is the expanded version of Medicaid.

But because states can opt-out of the Medicaid expansion, those who are living below the poverty level but don’t meet the Medicaid requirements for their state have no affordable way to buy health coverage. Not exactly the outcome people were hoping for when they created the ACA.

To learn more about this gap, read our article “Obamacare Coverage Gap.”

Medicare and Medicaid Eligibility

Medicare

People who are 65 or older are eligible for Medicare as long as they’re also qualified to receive social security. To receive social security, you have to meet the following requirements:

  • Worked in the US a minimum of 10 years
  • Been a US citizen or legal resident for five years

Some people under 65 may also qualify for Medicare including those:

  • Who are permanently disabled and have received disability benefits for two years or more
  • With end-stage renal disease
  • With Lou Gehrig’s disease
  • Who are at least 62 years old and who have a spouse receiving Medicare

Medicaid

Under federal law, Medicaid must cover specific groups. However, state laws can then add extended coverage. This is why eligibility differs from state to state. Medicaid provides healthcare to the following groups:

  • Pregnant women
  • Children
  • Low-income families
  • Elderly
  • Disabled

Dual Eligibility

Yes, it’s possible to qualify for both Medicare and Medicaid. This can benefit policyholders since Medicaid pays for some Medicare fees like those from Medicare Part D. Medicaid will also cover medical procedures that Medicare won’t.

Not eligible for Medicare or Medicaid? Use QuoteWizard to compare health insurance plans.

Medicare and Medicaid Enrollment

Medicare

Parts A and B

There are specific timelines you must follow when signing up for Medicare. When you first receive Medicare, you’ll have a seven-month enrollment period. At this time, you can register for Original Medicare. This seven-month period includes:

  • Three months before you turn 65
  • The month you turn 65
  • Three months after you turn 65

If you’re eligible to get Part A for “free,” you can sign up for it anytime during or after your initial enrollment period. Anyone who has paid Medicare taxes is eligible to get Medicare for “free.” These taxes are automatically taken out of your paycheck.

People who missed signing up for Parts A and B during the seven-month period won’t be able to sign up again until next year’s General Enrollment period. The General Enrollment period is January 1 to March 31 every year. Sign up during this time and your coverage will kick in July 1.

Confused? Learn more about when you can sign up here.

Luckily, those getting social security or Railroad Retirement board benefits shouldn’t have to worry too much about such timelines. You’ll automatically be enrolled in Medicare Parts A and B. Also, you’ll receive information about Medicare a few months before you’re eligible.

While Medicare Part A is “free,” Medicare Part B requires you to pay a monthly premium. Because of this, you’re able to turn down part B coverage.

To turn down Part B before your coverage starts, follow the instructions on the back of your Medicare card. This card will be sent to you if you’re automatically enrolled.

If you want to sign up for Medicare and aren’t receiving social security benefits, you can apply at a Social Security office or online. To drop your Part B coverage (assuming you signed up yourself), you’ll also need to contact Social Security.

If your coverage has already started and you want to drop Part B, you’ll again contact Social Security. Chances are, though, you won’t be able to drop your plan until the next General Enrollment period.

Part C

You can enroll in a Medicare Advantage Plan instead of Parts A and B during your initial enrollment period. You’re also able to switch to this type of plan and drop Original Medicare during the Annual Election Period (AEP) every year. This occurs October 15 to December 7 every year. Similarly, if someone has a Medicare Advantage Plan and wants to switch to Parts A and B, they can do so during the AEP.

You can also drop your Medicare Advantage Plan and join Original Medicare during the Medicare Advantage Disenrollment Period. This is January 1 to February 14 annually. During this time, you may sign up for Medicare Part D. It’s important to note that you can’t switch from Original Medicare to a Medicare Advantage Plan during this period. You also won’t be able to change your Medicare Advantage Plan for a different one.

Part D

You won’t automatically be enrolled in the prescription portion of Medicare (Part D). You have to elect to receive this coverage.

MedSup Insurance

When you sign up for Medicare, you can also choose to get Medicare Supplement insurance, or MedSup coverage. This type of coverage also is called Medigap. You can buy MedSup through a private insurance company. It usually covers:

  • Co-pays
  • Deductibles
  • Co-insurance

You’re only eligible for Medigap if you have Original Medicare, not Medicare Part C.

Penalties

Policyholders who don’t sign up for Medicare Parts B and D when they’re first eligible might have to pay a late fee for as long as they have Part B or Part D. For more detailed information about late enrollment penalties, visit Medicare.gov.

Changing your plan

While you won’t need to sign up to receive Medicare each year, you’ll be able to change your plan annually. You can do this during the Medicare AEP. As discussed, this is when you can switch from a Medicare Advantage Plan to Original Medicare or vice versa. You may also enroll in a prescription plan or change your coverage. The changes you make during this period go into effect January 1.

Medicaid

To enroll in Medicaid, you first have to apply to see if you qualify (based on your income). Remember, states have different requirements for Medicaid eligibility. Check here to see if you qualify based on your salary.

Another way to apply for Medicaid is through the Health Insurance Marketplace or through your state Medicaid agency. The Centers for Medicare and Medicaid Services recommends you apply for Medicaid even if you’re not sure you’re eligible. If you are able to receive benefits, you will have met your requirements to have healthcare under the ACA. You won’t need to buy any additional health coverage.

Medicare and Medicaid Benefits

Medicare

Like all health insurance plans, Medicare isn’t a cut-and-dry program. It has four different parts. These include:

Part A

Medical insurance, or Part A, helps to pay for hospital costs such as:

  • Hospice
  • Skilled nursing facility care
  • Hospital care
  • Home health services

Costs: You won’t usually pay a monthly premium for Part A. This is paid for by the Medicare taxes you had taken out of your paycheck.

If you do need to pay for Part A, it will cost $411 a month.

Part B

Part B of Medicare is also referred to as medical insurance. It covers medically necessary procedures as well as preventive services. It pays for things like:

  • Clinical research
  • Lab tests
  • Surgeries
  • Doctor’s visits
  • Mental health
  • Ambulance services
  • Durable medical equipment

Costs: Unlike Part A, you do pay a premium for Medicare Part B. Usually this is automatically taken out from the following benefits:

  • Social Security
  • Railroad Retirement Board
  • Office of Personnel Management

The standard premium is $121.80. This may change depending on your income.

Together, Medicare Parts A and B make up Original Medicare.

Part C

Part C refers to a different way you can receive your Original Medicare. If you choose to get Part C, or a Medicare Advantage plan, then you’ll receive your Medicare coverage through a private insurance company.

Medicare Advantage plans must cover everything Original Medicare provides. The only exception is hospice care. If your Medicare Advantage plan doesn’t cover hospice care, Original Medicare will step in if needed.

Many people prefer to get Medicare Part C rather than Original Medicare because it often covers items Parts A and B don’t. This can include procedures that aren’t deemed “medically necessary,” like dental work and hearing tests.

Costs: It depends on the type of plan you choose. You may have a monthly premium, co-pay, and/or deductible.

Part D

Part D provides prescription benefits to Medicare policyholders. Participants who don’t sign up when they’re first eligible will have to pay a late enrollment fee.

Costs: Expenses depend on the drug plan you choose, but most Medicare prescription plans have a monthly charge.

Other potential expenses

Unfortunately, Medicare doesn’t cover all medical costs. As discussed, Medicare doesn’t provide annual ear, eye, and vision exams. And although you won’t have to pay a monthly premium for some parts of Medicare, you will still have co-pays and deductibles.

One way to pay for extra deductible costs is by purchasing MedSup. Looking to save on your MedSup plan? Shop around and compare quotes with multiple companies.

Medicaid

Medicaid benefits vary by state. That being said, states have to provide some benefits.

Though there are definite overlaps between what Medicaid and Medicare cover, in some cases Medicaid can provide extra insurance. While Medicare has restricted long-term care coverage, Medicaid pays for nursing home, assisted living, and other fees when needed.

“For those who need skilled nursing care, Medicare will cover a very limited number of days,” says Karen Roberts, a Medicaid Service Coordinator for a nonprofit agency in Rochester, New York. “Once a person has used up his or her resources, a social worker at a skilled nursing facility or hospital will help him or her apply for Medicaid, which then will pay without limit of days.”

According to the Medicaid.gov website, the mandatory benefits are:

  • Inpatient hospital services
  • Outpatient hospital services
  • Nursing facility services
  • Early and periodic screening, diagnostic, and treatment services
  • Family planning services
  • Physician services
  • Laboratory and X-ray services
  • Federally qualified health center services
  • Nurse midwife services
  • Certified pediatric and family nurse practitioner services (when licensed or otherwise recognized by the state)
  • Transportation to medical care
  • Tobacco cessation counseling for pregnant women

Here are some of the optional benefits and services states can provide:

  • Prescription drugs
  • Clinic services
  • Physical therapy
  • Dentures
  • Dental services
  • Podiatry services
  • Speech, hearing, and language disorder services
  • Personal care
  • Eyeglasses
  • Chiropractic services
  • Other diagnostic, screening, preventive, and rehabilitative services

These are only a few of the benefits states might offer through Medicaid. For a complete list visit Medicaid.gov.

Costs: There may be some small costs, but usually you won’t have to pay for covered procedures.

Frequently Asked Questions

Q: What is the difference between Medicare and Medicaid?

A: These two programs have a several differences, despite the fact that they were created under the same law. Medicare is a federally run insurance program primarily for citizens 65 years and older. Income isn’t a factor in determining whether you qualify. Some younger people may also be eligible if they have end-stage renal disease or Lou Gehrig’s disease.

Both the federal government and the states regulate Medicaid. It provides medical coverage for low-income families and children, the disabled, and pregnant women. Eligibility varies by state.

Q: What is the best way to compare private health insurance vs Medicare?

When deciding between Medicare or a private healthcare plan, you should know you’ll face several consequences if you don’t sign up for Medicare. These penalties only apply if you’re eligible for Medicare yourself, not if you qualify through a spouse.

For instance, if you decide to get Medicare Part B or D later, you’ll have to pay a penalty fee for the rest of the time you have the coverage.

According to Consumer Reports, you might also risk losing your Social Security benefits. In the eyes of the government, the two are linked and you can’t turn down Medicare without turning down Social Security.

In addition, you could have trouble finding a decent insurance plan due to age and pre-existing conditions. There are less private healthcare plans in general for senior citizens since most people end up using Medicare.

“For the most part, most insurance carriers will not accept an eligible [Medicare] individual for individual or private health insurance. The reason for this is that they will only cover what Medicare would not have covered and it leave the individual with higher out-of-pocket cost,” says Gladys Boutwell, Insurance Agent at PBP Insurance and author of Health Insurance Secrets Revealed. “Now, if an individual is eligible through a group plan, such as their own or their spouse, they are not obligated to sign up for Medicare and can maintain their group plan.”

If you’re looking at joining a group plan instead of Medicare, Boutwell stresses the importance of contacting an insurance agent. “The best way to compare Medicare with a group plan is to have an insurance agent help you. It will not cost anything to determine if Medicare and a supplement is best or if the group plan is best, based on needs,” she says.

Q: I’m eligible for Medicaid, but is it good insurance?

Medicaid is often the best choice for those who qualify because it is generally free. Of course, every program has its problems, including Medicaid.

“Medicaid covers most medical issues completely, but at low rates, so you may have difficulty finding medical providers,” Roberts says.

And because Medicaid is state run, the quality of care you receive differs across the country.

“Each state is different and providers may or may not treat Medicaid recipients different than those with private insurance,” Boutwell says. “The main reason for that is that they are paid a flat dollar for services for Medicaid.”

If you choose not to enroll in Medicaid, Boutwell warns you won’t be eligible for tax subsidies that help people pay for private insurance. So if you’re eligible and don’t enroll in Medicaid, you should be prepared to pay all of your private healthcare insurance costs on your own.

Q: What are the biggest challenges facing Medicare and Medicaid?

Boutwell believes Medicare and Medicaid both face their own unique challenges. She considers Medicare’s biggest problem to be getting the general public to understand what it does and doesn’t cover. Some people also don’t understand why they might need a Medicare Supplement plan.

“My suggestion is always to use an insurance professional to assist through the process, as there is no cost to the person,” Boutwell suggests.

Medicaid, on the other hand, has its own challenges. Because Medicaid is regulated through the state and federal government, there are different rules depending on where you live.

“This means that if somebody from California has Medi-Cal (California’s name for Medicaid) and they are visiting Oregon, their Medi-Cal will not cover services in Oregon,” Boutwell says. “Additionally, there may be up to a 45-day wait period for Medicaid to respond if the person qualifies or not. And then, there are limited providers that they can go to for their care, as not all providers accept Medicaid.”

Q: What do you see happening in the future with Medicaid and Medicare?

Roberts believes premiums will increase in the future for Medicare as well as co-pays and deductibles for Medicare Advantage plans.

“It’s hard to tell about Medicaid,” Roberts says. But she sees a push towards managed care. “Medicaid will probably push to get those it covers involved in that in hopes that it will help people’s health and coordinate their healthcare services.”

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