Did you know that Medicaid and Medicare are two different things? You might be familiar with Medicare, as it’s something that most people over the age of 65 are eligible for. But Medicaid is a little less well-known, even though it’s an extremely important program.
Medicaid and Medicare are both government-run healthcare programs. They provide healthcare assistance for Americans, covering a wide range of services. While they may sound similar, they have different eligibility requirements and serve different groups of people.
Learning more about the key differences between the two health programs can help you better navigate the healthcare system. Here we’ll break down the differences between these two programs, so you have a better understanding of what each one offers.
What Is Medicare?
Medicare is a public health insurance program primarily for older adults aged 65 years and above. It is fee-for-service insurance that is also partly funded by the U.S. federal government. Beneficiaries must meet eligibility requirements and sometimes pay monthly premiums to use the benefits.
The cost of premiums will depend on several factors like the type of plan, your income, and the taxes you have paid. Most applicants who have been part of the workforce for over 10 years don’t need to pay a monthly premium for certain plans.
Medicare is divided into four sections: Part A, Part B, Part C, and Part D. These parts have different premium costs and coverage.
Medicare Part A
Medicare Part A can be “premium-free” for those who have been contributing to Social Security and paying Medicare taxes for at least 10 years. If you purchase Part A, the monthly premium in 2022 will cost up to $499.
Medicare Part A coverage includes:
- Inpatient hospital care
- Skilled Nursing facility care
- Home health care
Medicare Part B
Medicare Part B is part of Original Medicare, along with Medicare Part A. In 2022, the standard monthly premium for Medicare Part B is $170.10.
Medicare Part B coverage includes:
- Outpatient care
- Ambulance services
- Clinical research
- Durable medical equipment
- Limited prescription drugs
Medicare Part C
Medicare Part C is also called Medicare Advantage. This optional plan is offered by third-party insurance companies. This plan covers Parts A & B and can be bundled with extra benefits that Original Medicare doesn’t cover. The cost of Part C will vary depending on where you live and the specific plan you buy. The premium typically ranges from $0 to $200.
Medicare Part C coverage includes:
- Inpatient hospital care
- Limited home healthcare
- Limited stay in a skilled nursing facility
- Hospice care
- Doctor’s appointments
- Laboratory testing and imaging tests
- Mental health counseling
- Additional services depending on the specific plan
Medicare Part D
Part D is Medicare prescription drug coverage. The cost of its monthly premium also varies. In 2022, the approximate cost for Part D is $33, according to the Centers for Medicare and Medicaid Services (CMS).
What Is Medicaid?
Medicaid is a federal financial assistance program that is administered by the state. It provides health coverage to low-income individuals and families, regardless of age. Unlike Medicare, beneficiaries of Medicaid don’t need to pay monthly premiums to get benefits.
This joint federal-state program covers a wide array of health services. It funds nearly a fifth of personal care spending in the United States. Beneficiaries pay little or no out-of-pocket costs.
Some of the people who can benefit from Medicaid assistance are:
- Pregnant women with low incomes
- People with disabilities
- Children in foster care
The law requires that Medicaid provide mandatory benefits. States can also choose to cover optional benefits.
Mandatory benefits include:
- Inpatient hospital services
- Outpatient hospital services
- Home health services
- Nursing facility services
- Family planning services
- Nurse midwife services
- Pediatric and family nurse practitioner services
- Freestanding birth center services
- Laboratory and x-ray
- Transportation to medical care
Optional benefits include:
- Prescription drugs
- Occupational therapy
- Physical therapy
- Diagnostic, screening, and rehabilitation services
- Dental services
- Chiropractic services
- Personal care
- Private duty nursing services
- Private duty caregivers
- Personal care
- Case management
What’s the Difference Between Medicaid and Medicare?
Because they have similarities, it is easy to confuse the two. However, they have very different purposes and are also funded in different ways. Here are some of the main differences between these two public health programs:
Administered by the federal government on a national level.
Limits eligibility to elderly adults who are 65 years and above, and people with disabilities or end-stage renal disease.
Requires a monthly premium for beneficiaries.
Covers hospital services, medical care, prescription drugs, and some home health services.
Potential out-of-pocket costs.
Enrollment starts three months before the applicant’s 65th birthday.
Administered by individual states, each offers different benefits.
Limits eligibility to low-income individuals and families.
No monthly premiums but may require a copayment.
Covers hospital services, physician services, laboratory services, and home health services.
Limited out-of-pocket costs.
Enrollment is available anytime.
Can You Have Both Medicare and Medicaid?
Yes, you can be dual eligible for both Medicare and Medicaid if you meet eligibility requirements. Dually eligible individuals can benefit from wider healthcare coverage and little or no out-of-pocket costs. The two programs will work together to pay for most of your healthcare expenses. Medicare typically pays first for services that fall under their coverage. Then, Medicaid will pay for services that Medicare doesn’t cover.
How Do I Apply for Medicare?
The initial enrollment period for Medicare starts three months before your 65th birthday. It lasts for seven months, ending three months after your 65th birthday. If you miss this period, you will have to wait and pay a late fee, which increases the longer you delay enrollment.
To sign up for Medicare, contact your local Social Security office. You can also apply online through the SSA website. Social Security will verify if you are eligible and if you qualify for a premium-free plan.
How Do I Apply for Medicaid?
Unlike Medicare, you can apply for Medicaid anytime. First, you need to check your eligibility status. Contact your state Medicaid agency so they can assist you in the application process. Keep in mind that you must be a resident of the state where you are applying for benefits.
Disadvantages of Medicaid
While Medicaid covers a wide array of services, it also has some disadvantages that you should be aware of. Keep this in mind before you turn in your application.
- Medicaid beds can be limited in some hospitals. When these beds are full, you may be forced to wait longer.
- While Medicaid covers many services, it still has coverage limitations. The program might not approve some procedures even if it is necessary for the treatment.
- Not all healthcare providers accept Medicaid. Small-scale clinics may refuse treatment for Medicaid beneficiaries.
What Is the Highest Income Level To Qualify for Medicaid?
Medicaid income limits vary by state, depending on several factors. Some of the factors that affect income level limits are family size, state of residence, and disabilities. You can find out more information about the income limits in your state by contacting your local Area Agency on Aging.
It’s Complicated: Get Help Applying for Medicaid
If you need help applying for Medicaid, you need to contact the Medicaid/CHIP office in your state of residence. You can find more resources and contact information for your state at the Medicaid.gov website.
In many communities, resources to assist with applying for Medicaid are available at local Area Agency on Aging locations, aging service organizations, and senior centers.
A solid understanding of Medicare and Medicaid is essential when you need healthcare assistance. When you understand the key differences between these programs, you can maximize their benefits and limit potential out-of-pocket costs.
The main differences between Medicaid and Medicare are:
- Medicare is a federal public health insurance program for people 65 and older and people with disabilities or end-stage renal disease.
- Medicaid is a federal and state-funded financial health coverage program for low-income individuals and families, regardless of age.
- Medicare beneficiaries pay a monthly premium for coverage, while Medicaid recipients do not.
- Medicare beneficiaries are expected to pay some out-of-pocket costs for services. Medicaid recipients may be responsible for some co-pays to providers.
- Medicare enrollment starts three months before the applicant’s 65th birthday. Medicaid enrollment is available anytime.
Medicaid vs Medicare Frequently Asked Questions
Medicaid and Medicare both provide healthcare assistance but serve different groups. Medicare covers elderly adults 65 years old and above, while Medicaid covers individuals and families with limited income. If you meet eligibility requirements for both programs, you will benefit by having wider coverage and limited out-of-pocket costs.
Only Medicare Part A can be “premium-free”. Most people need to pay a monthly premium to purchase Medicare Part B. In 2022, the standard premium for Part B is $170.10.
Medicare does not cover the costs of long-term care, including assisted living. Medicare only covers short-term skilled nursing care for the purpose of rehabilitation. In most states, Medicaid offers partial coverage for assisted living, including memory care, or Alzheimer’s care.
Medicare and Medicaid don’t cover dental services, including dentures. However, in some states, Medicaid covers some of the costs of dentures. Medicare may cover dental services if you have Part C, also known as a Medicare Advantage Plan.
Medicaid provides financial assistance to eligible adults, children, pregnant women, people with disabilities, and seniors who are 65 years and above. To be eligible, you must meet the income limits in your state of residence.
Amie Clark, BSW
Aging Advocate and Senior Care Expert
Amie has worked with older adults and their families for the past twenty-plus years of her career. Her senior care knowledge is based on her experience as a social worker, family caregiver, and senior care consultant. Learn more about Amie here.