Our health and the health of our families is always a top priority. That’s why long term care for your parents is so important. With the market for medical insurance constantly changing, as well as our needs when it comes to medical care, we are constantly on the hunt for ways to improve our coverage and save money along the way.
Still, there are some situations when people are simply unable to financially take care of medical coverage no matter how they shuffle their finances around. That’s why the US federal government offers different coverage programs to people in need, especially as they get older.
When it comes to governmentally funded medical care, two terms are often used interchangeably — even though they shouldn’t. Medicare and Medicaid sound similar enough, but they are not the same thing. Today, we will break these two programs down and outline the three most important differences between the two.
Make sure you go through these carefully as there is some overlap between the two programs, and it’s easy to get confused.
Medicare
Medicare is a federal health insurance program that only people who meet specific requirements can access. The insurance program is available to US citizens who are 65 years or older and younger people with specific disabilities. It’s also available to certain people suffering from End-Stage Renal Disease who require either a kidney transplant or dialysis.
The program has been envisioned as support for the elderly who are no longer working and have reached that age when medical care becomes a greater focus.
That way, the elderly who can’t afford coverage don’t fall through the cracks of the US medical system, and their longevity and spryness can be preserved throughout their golden years. The same goes for younger people struggling with specific diseases.
There are several types of Medicare that you can get, depending on what type of coverage you require:
Medicare Part A — The Part A variant covers inpatient care for individuals that have access to it. It covers all hospital stays, nursing facility care, hospice, and in some cases, even home health care.
Medicare Part B — The Part B variant covers medical supplies, services of medical specialists, outpatient care, and preventive treatments.
Medicare Part C — The Part C variant is reserved for those eligible for both A and B parts. It’s also known as Medicare Advantage, and this usually expands coverage to dental, vision, and hearing, amongst other things. It will cost you more money for this additional coverage.
Medicare Part D — The Part D variant covers shots, vaccines, and prescription drugs.
We should make a note of some things related to these variations of Medicare coverage.
In most cases, people don’t pay monthly premiums for Part A. All you have to do to get premium-free Part A coverage is pay the Medicare tax for a specific time while employed. You or your spouse can cover them — you don’t both have to pay the taxes to be eligible. If you don’t qualify for it, you can still pay to get Part A in some cases.
On the other hand, everyone pays for Part B. The standard premium for Plan B in 2021 was $148.50.
The American Association for Medicare Supplement Insurance is the best place to find in-depth information about this program. On their website, you can find out about the program’s efficiency and other Medicare insurance statistics, which can put some broader effects of the program into perspective.
Medicaid
The Medicaid program eligibility for coverage is based on income. It’s reserved for US citizens with little to no income and helps them get access to medical assistance regardless of their financial woes. It’s important to know that Medicaid programs are different from state to state and may cover different profiles of people. It usually covers people who fall into these categories:
- Parents and caretakers
- Children
- Pregnant women
- Disabled people
- The elderly
- Low-income people (present in every state)
When it comes to eligibility criteria, you have to be below a state-defined amount to qualify for this program. Since there are state-defined differences in how it is run in different states, we can’t give you the specifics for each of them. What we can do is give you the broad strokes.
Regardless if you meet the financial criteria, you can still apply for it. Other factors may make you eligible in your state, like suffering from a disability, being pregnant, or having children. When suffering from a disability the best thing you can do is get a disability insurance. It doesn’t have an Open Enrollment Period, so you can apply all year round.
Even when you don’t meet any of these criteria, you can still get a Medicaid spend-down program that allows you to deduct your medical expenses from your income. That way, you can qualify for Medicaid. If that is not the case, you should consider medigap planning.
There are two channels you can use to apply. One is your state’s Medicaid agency which is the obvious route. The other is through the Health Insurance Marketplace, and working with it to check your eligibility with state agencies. One advantage that the marketplace approach offers is when you apply for an account, you get a check-up on which other individual insurance plans you qualify for.
Being put into a low-income demographic is frustrating, but Medicaid can help you remain afloat, take care of your health. It’s a safety net that helps those who run into hard times avoid a terrible situation where they need medical assistance but don’t have the financial means to afford it otherwise.
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Dual eligibility
Since both Medicare and Medicaid are government-run programs, it only makes sense for them to work in tandem. Since some profiles of both programs overlap, some citizens may meet the criteria for coverage through both. That’s why the federal government has codified a dually eligible status making it possible to take advantage of both programs.
The dually eligible beneficiaries can take advantage of this cross-program option. The idea is that Medicare covers the medical services first, and Medicaid covers the rest. The reasoning behind this is that Medicaid is the last resort for medical coverage.
Furthermore, the Medicare program does not cover the full costs of some treatments and/or services, and Medicaid picks up the slack. It usually refers to personal care, nursing home care, home, and community-based care and services.
Again, the dual eligibility rules are not unified across all states. Each state has a slightly or significantly different approach to regulating this status. You should be aware that the rules and eligibility criteria on a state level are decided on an annual level.
This is done by the Centers for Medicare and Medicaid Services (CMS). You can find more details about dual eligibility in the Dually Eligible Beneficiaries Under Medicare and Medicaid PDF released by CMS. In this PDF, you’ll be able to find charts that explain who and when can take advantage of being a dually eligible beneficiary.
The three biggest differences between Medicare and Medicaid
Let’s take a look at the three biggest distinctions between the two. We’ll also outline the situations where the differences between the two matter most and why it’s important to consider them before applying for either of these programs.
Eligibility
As we’ve already pointed out, meeting the conditions to get covered by Medicare and Medicaid are very different. The Medicare option is aimed to help out the elderly and the disabled, while Medicaid is an effort to help those that are financially challenged.
The fact that you can be both old/disabled and financially challenged is what gives dual eligibility the legitimacy to exist. It also makes a lot of sense since people who meet these conditions usually have a situation on their hands and require greater assistance.
It is important to understand the differences between the two as you might get carried away and think you can get benefits from one of them when you are not eligible. It can make life very complicated, especially when facing a medical condition that you need to resolve.
What they cover
With Medicare, Part A covers hospital insurance, Part B covers medical insurance, Part D takes care of drug coverage, and Part C combines them all and potentially adds coverage for a few more things.
On the other hand, Medicaid provides two types of benefits — the federally mandated benefits and the optional benefits decided on by the states. The optional benefits vary, and so does the eligibility of getting them. The list of mandatory benefits include:
- Inpatient and outpatient hospital services;
- Laboratory services;
- X-Ray services;
- Physician services;
- Home health services.
The list of optional benefits includes:
- Case management;
- Occupational therapy;
- Physical therapy;
- Prescription drugs.
As you can see, there is a significant difference in which program covers what and in which situations. Even though there is some overlap here, the conditions that need to be met to open up the same options are vastly different.
Federal vs State-Federal
While the federal government regulates both Medicare and Medicaid, Medicaid is also partially regulated by the individual states. It is a bit more dynamic when it comes to the criteria for eligibility and the coverage they offer as individual states manage these details.
The fact that the Medicaid program is set annually is also a difference that is conditioned by the federal vs state-federal distinction. Each year there are adjustments on both the federal and state level regarding benefits offered and eligibility conditions that you have to meet.
Ultimately this distinction matters most because Medicare has universal rules across the USA while Medicaid is different from state to state. It can be especially important for people moving from one state to another since they will need to check if they can get the same benefits from Medicaid in their new place of residence. Moving from one state to another can also be a calculated move to get access to benefits you wouldn’t be eligible for in your own state or even get optional benefits that are not available in your home state.
There are a few more distinctions between Medicare and Medicaid, but these are the most important ones. Make sure you figure out where you fall in terms of eligibility and do not allow yourself to make treatment and coverage plans before you get confirmation.
Also, these programs don’t take care of 100% of your medical expenses. In some cases, you’ll have to pay premiums, copay, and be a coinsurer to get access to these benefits. All of these details need to be sorted out to get a clear idea of how much you are paying and for what.
Conclusion
Federal medical insurance programs are great options to have when you cannot handle your own medical expenses. They might not make everything completely free, but they will surely take the edge of the financial burdens you are facing when it comes to medical expenses. It’s good to know the answer to why is medicare supplement insurance important.
Make sure you understand the distinctions between these two federal programs. If you are still not sure which is which after reading this article, we recommend contacting us as that’s why we’re here – to help you navigate your medicare journey. We will guide you through the process and also give you advice when it comes to selecting the best plan for you.
Sources
U.S. Centers for Medicare and Medicaid Services. (n.d.). Retrieved from Medicare.gov website:
U.S. Centers for Medicare and Medicaid Services. (n.d.). Retrieved from Medicaid.gov website:
U.S. Centers for Medicare and Medicaid Services. (2020). Dually Eligible Beneficiaries Under Medicare and Medicaid. Retrieved from CMS.gov website:
Medicare Interactive. (n.d.). How Medicare Works With Medicaid. Retrieved from Medicare Interactive website:
