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Medicare and Medicaid are both government programs that enable access to healthcare services in the United States. The main difference between the two is the administration.
Medicare is a federal health insurance program designed for individuals at least 65 or who have been disabled for longer than two years. On the other hand, Medicaid is an assistance program administered at the state level, with eligibility determined by financial need, age, and certain medical conditions.
Learn about the differences between Medicare and Medicaid and each program’s eligibility requirements.
Types of Medicare: A Quick Breakdown
To be eligible for Medicare, you must either be over the age of 65 or younger than 65 with 24 consecutive months of disability benefits from Social Security or certain disability benefits from the RRB (Railroad Retirement Board). Individuals who are diagnosed with ALS (Lou Gehrig’s Disease) automatically qualify for Medicare.
Original Medicare (Parts A & B)
The red, white, and blue card, or Medicare card, is considered original Medicare and may include both hospital coverage (Part A) and outpatient healthcare coverage (Part B). The two types of coverage are exclusive from one another, and individuals may elect to delay enrollment in Part B for a variety of reasons.
Medicare Advantage Plans (Part C)
A Medicare Advantage plan, also called Part C, combines the coverage contained in Parts A and B into one plan. This one plan is then used to obtain healthcare services from providers who accept Medicare. It’s important to note that Medicare Advantage plans are managed by insurance companies and regulated by the Centers for Medicare & Medicaid Services (CMS). This means there may be provider networks, service area limitations, or other plan rules that apply.
Prescription Drug Coverage (Part D)
With Medicare, prescription drug coverage is offered through Part D. Part D plans are either standalone or included with certain Part C (Medicare Advantage) plans. If you want to keep using original Medicare and need prescription drug coverage, you can enroll in a standalone Part D plan.
What Does Medicare Cost? Are There Monthly Premiums?
There are monthly premiums for Parts A, B, C, and D, unless you receive assistance paying for your premium or are eligible for premium-free Medicare coverage. Many people have their Medicare premiums deducted from their disability income every month, but some elect to pay the premiums directly instead.
Medicare Parts A and B
The premium for Part A is determined by the number of quarters you paid Medicare taxes through employment. Individuals who paid Medicare taxes for 30 or fewer quarters pay a higher premium than those who paid Medicare taxes for 30-39 quarters. The Medicare Part B premium is generally less than the Part A premium but may be higher for people with above-average incomes. Premiums are the amount you pay every month to have insurance and do not affect the plan’s deductible, co-insurance, or coverage limitations.
Medicare Parts C and D
To be eligible for Part C or a Medicare Advantage plan, you must be enrolled in Medicare Part B. Some Medicare Advantage plans offer $0 premiums; however, if the plan you choose does have a premium, it will be added and not a substitute for applicable Part A or B premiums. Similarly, the premium for a Part D plan is separate from Part A, B, or C premiums, unless the Part C plan you chose includes Part D coverage.
Medicare Penalties for Late Enrollment
While you have the option to delay enrollment in Part B and Part D coverage, it’s important to understand that if you enroll in coverage later, you may be subject to a premium penalty. This is called a Late Enrollment Penalty (LEP).
Part B Late Enrollment Penalty
If you’re eligible for Part B and choose to delay enrollment, you may be subject to a 10% penalty per 12-month period in which you could have had Part B coverage but were not enrolled. This penalty is added to your monthly premium and continues for as long as you have Part B coverage.
Part D Late Enrollment Penalty
For people who don’t take any medications, delaying Part D enrollment is a common choice. But unless you have alternate credible coverage, such as you might receive through an employer, you will be assessed an LEP when you enroll in Part D. The LEP is in addition to the monthly premium for Part D and does not count toward deductibles or cost shares for prescription medication.
How Is Medicaid Different From Medicare?
Medicaid is an assistance program administered at the state government level. There are multiple Medicaid types available, including plans for children, disabled adults, pregnant women, and those with little-to-no income.
How Medicaid Eligibility Is Determined
State Medicaid programs consider multiple factors when determining eligibility for Medicaid coverage.
Modified Adjusted Gross Income (MAGI)
When determining financial eligibility for Medicaid, an individual’s modified adjusted gross income (MAGI) is reviewed. MAGI includes a review of taxable income and tax filing status in the Medicaid determination process. Individuals whose MAGI falls below the state-determined limits qualify for Medicaid.
Residency Requirements
Like proof of residence within the state and U.S. citizenship status, other factors are also reviewed when determining Medicaid eligibility.
Who Automatically Qualifies for Medicaid?
Some individuals may automatically qualify for Medicaid, such as those receiving Supplemental Security Income (SSI) benefits or who have been determined to be blind or disabled. Like residing in an inpatient facility or long-term care facility, other factors may help an individual qualify for Medicaid.
Types of Medicaid
Each state has a variety of Medicaid programs to meet the needs of its residents. Check with your state’s Medicaid office to confirm which types of Medicaid are available.
Full Medicaid Benefits
Individuals who qualify for full Medicaid benefits can access medical services, lab and imaging services, preventive care, and prescription drugs. In most cases, there is no cost share associated with receiving services from a Medicaid provider. Medicaid plans have no premium and no deductible. There are service and frequency limitations built into each plan, which is why it’s important to review your plan’s coverage rules.
Temporary Medicaid Benefits
Those experiencing temporary financial hardship, receiving temporary financial assistance from their state, or who are pregnant or nursing may qualify for Medicaid benefits. The expansion of Medicaid to cover pregnant and nursing women has helped significantly offset the cost of childbirth in the United States. The duration of Medicaid eligibility, including a tentative termination date, is typically communicated in writing during approval.
Medically Needy Coverage
Many states offer medically needy (also called “spend down”) plans to residents whose income is too high to qualify for full Medicaid benefits. With this type of Medicaid, full Medicaid benefits become active to cover one month once qualified Medicaid expenses to reach a certain monthly limit.
For example, an adult receiving Social Security Disability Income who is enrolled in a medically needy Medicaid plan may need to accrue a certain dollar amount in medical or prescription drug bills within a single month before Medicaid is activated for that month.
Medicare Savings Program
Adults who receive Medicare may qualify for a Medicare Savings Program as a Qualified Medicare Beneficiary or QMB. This is a form of limited state assistance that helps pay for Medicare premiums, deductibles, and cost shares.
Dual Eligibility: Qualifying for Medicare and Medicaid
Some individuals are considered dual-eligible when they qualify for both Medicare and Medicaid. The benefit of dual eligibility is zero cost-share for covered medical services and prescription drugs. Dual eligible individuals may choose to keep original Medicare and full Medicaid benefits or roll their benefits into a managed care plan offered by an insurance company. Some dual plans offered through a managed care plan provide enhanced benefits, such as routine vision care, dental care, and transportation to medical appointments.
Medicare and Medicaid Work Together to Keep People Healthy
Between Medicare offered at the federal level and the wide variety of state Medicaid programs, millions of Americans are able to receive free or low-cost healthcare services. If you are new to Medicare or Medicaid, it’s important to understand your coverage to obtain maximum health plan benefits. Contact TrueCoverage today to get answers about Medicare and Medicaid. We can help you find the best plan to meet your needs.
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