Navigating through healthcare options can be a tricky and confusing process. Not only are there endless health insurance plan options, but there are also the government-administered programs Medicaid and Medicare.
Both of these programs are incredibly complex and can be difficult to navigate alone. If you are seeking enrollment in either, it’s important to find a trusted source who can guide you through the process. For Medicare, consult the State Health Insurance Assistance Program, or SHIP, in your state here or call the Medicare Rights Center at 1-800-333-4114. You can also visit cms.gov for help with Medicare or Medicaid enrollment and eligibility.
While not exhaustive, here we take a look at what distinguishes Medicare vs. Medicaid.
What are the key differences between Medicare and Medicaid?
While Medicare and Medicaid are both government-administered health insurance programs to help with healthcare costs, they serve different purposes and populations.
Medicare covers seniors ages 65 and over as well as people under 65 with certain disabilities. The amount of Medicare taxes you paid to the federal government while employed will determine how much you will be charged for Part A (see below). However, you could still qualify for Medicare if you didn’t pay Medicare taxes. There are four different parts of Medicare.
- Part A covers inpatient hospital care, skilled nursing facility care, home health care, and hospice care.
- Part B covers doctor visits and many outpatient services. Part B also covers durable medical equipment, ambulance services, mental health services, and several other outpatient services. Note: Traditional, fee-for-service Medicare Parts A and B are often referred to as “Original Medicare.”
- Part C, also called Medicare Advantage plans (or MA), is optional coverage provided by a private insurance company instead of directly from the federal government. This is an alternate way to receive Medicare. It sometimes covers things that Original Medicare does not, like routine dental and vision care. It may also cover prescription drugs and extras like meal delivery or transportation to doctor visits.
- Part D is an optional part of Medicare that provides prescription drug coverage, and is available only through private insurers that have been approved by Medicare. (For more information on prescription costs associated with Part D, read more about the Medicare donut hole.
Medicaid is a public program that provides health insurance to certain people with a low income and is funded by the state government in addition to the federal government. Medicaid covers older adults, people with disabilities, children, pregnant women, parents, and caretakers of children.
People can have both Medicare and Medicaid at the same time.
Who qualifies for Medicare vs. Medicaid?
Not everyone is eligible for Medicare coverage and/or Medicaid coverage. Here are the qualifications for each government program.
The eligibility requirements for those 65+ include:
- You (or a spouse) receive or qualify for Social Security retirement or Railroad Retirement Board (RRB) benefits. OR
- You are either:
- a U.S. citizen. OR
- a permanent legal resident living continuously in the U.S. for a minimum of five years prior to applying.
It is also possible to qualify on the work record of a deceased or divorced spouse. To be eligible for full Medicare benefits under age 65:
- You have received Social Security Disability Insurance (SSDI) payments for at least 24 months. OR
- You have a qualifying disease
- Amyotrophic lateral sclerosis (ALS) also referred to as Lou Gehrig’s disease and receive SSDI (you do not have to wait 24 months)
- End-stage renal disease requiring recurring dialysis or if you’ve had a kidney transplant AND
- you are eligible to receive SSDI or Railroad Retirement Benefits OR
- You have paid Medicare taxes for a specific amount of time as specified by the Social Security Administration
If you meet the qualifications above, and are a citizen or have been a legal resident a minimum of five years, but do not have the work history to qualify for free enrollment into Medicare Part A, it still may be possible to qualify for Medicare benefits if you are low-income. You should contact Medicare, the Social Security Administration, or a local advocacy group for further assistance.
As for enrollment, some people are automatically enrolled in Medicare Part A, the hospital insurance, when they reach 65. Those who receive retirement benefits from Social Security or the RRB are automatically enrolled in Medicare Part A and B.
If you are still unsure if you qualify or were not automatically enrolled, call Social Security at 800-772-1213. Medicare also has a calculator to help you determine your eligibility or calculate your premium.
Medicaid eligibility varies from state to state, though the federal government sets minimum eligibility standards that each state must follow. Medicaid is typically based on income level, size of household, disabilities, and other factors such as pregnancy, but these factors may vary somewhat between states. The Affordable Care Act also brought into place expanded eligibility for Medicaid, in some places, which only uses income status. If a household income is below 133% of the federal poverty level (but actually 138% because of the way it’s calculated) a person may qualify for this expanded Medicaid coverage. Several states use a different income limit.
To see if your state has expanded Medicaid and to see if you qualify, visit here. To verify your income when applying for Medicaid, you will need to provide proof. This may be with a pay stub, social security income check, or letter from your employer, for example. There are a number of other factors, eligibility criteria, and requests for additional information which may be required when applying for Medicaid.
If your state does not have expanded Medicaid, visit your state’s Medicaid website to see if you’re eligible. The federal healthcare marketplace can also tell you what plans are best for you based on your personal factors.
It is possible to receive Social Security benefits while having Medicaid.
Is Medicaid free? What about Medicare?
Medicaid is free or low-cost depending on the state.
Medicare is a little more tricky. Unless you have low-income, there is coinsurance, copayments, premiums, and deductibles that have to be met.
- Medicare Part A is free to those who are eligible by virtue of work history. However, those buying in could pay up to $458/month in 2020. There is also a $1,408 deductible for each benefit period (which begins the day you are admitted to a hospital as an inpatient, or to a skilled nursing facility, and ends only when you have been out of the hospital or nursing facility for 60 consecutive days), as well as hospital and skilled nursing facility daily coinsurance, which can be hundreds of dollars a day without supplemental insurance. Examples of supplemental, or secondary insurance, include (but are not limited to) retiree coverage from a union, or privately-purchased Medigap policies. You can contact your state’s department of insurance in order to learn more which Medigap plans are available to you, how much they will cost, and which of Medicare’s services and costs they will cover. Some people with Medicare are also eligible for Medicaid, which will pay for most Medicare Part A cost sharing.
- Medicare Part B premiums are typically $144.60 per month, but can vary based on income, and there is a 20% coinsurance for doctor’s services, outpatient services, and durable medical equipment (if they are Medicare-approved). As with Medicare Part A, secondary insurance, Medigaps, and Medicaid may help cover most Medicare Part B cost sharing. The state-administered Medicare Savings Programs, or MSPs, which include QMB, SLMB, and QI-1, will also pay for the Medicare Part B premiums for those who financially qualify. Contact your state or local Department of Social Services in order to learn more about the MSPs.
- Medicare Part C, or Medicare Advantage, is administered through a private insurer so the cost structure will vary between plans.
- Medicare Part D, like part C, is administered through private insurers and costs will vary. Those financially eligible for the federal Extra Help program may have their Medicare Part D costs (premiums, deductibles, copays or coinsurance) significantly reduced. Go to ssa.gov to learn more about Extra Help, and to apply for the benefit. The income eligibility guidelines for both Part D Extra Help and the MSPs are significantly more generous than those for Medicaid.
- To find which Part C or Part D Medicare plan works best for you, visit medicare.gov and use the Plan Finder tool.
What major benefits does Medicaid cover that Medicare does not?
Many of the services covered by Medicaid and Medicare overlap. However, there are some services that Medicaid provides that are not covered under Medicare. These services include:
- Optometry services
- Routine dental care
- Custodial care (daily care i.e., assistance with Activities of Daily Living [ADLs] like eating, bathing)
- Nursing home care
Medicaid services can vary between states. In general Medicaid benefits include:
- Inpatient and outpatient hospital services, doctor’s visits, blood tests, X-rays, and home health care
Medicare benefits vary between Part A and Part B.
- Part A covers inpatient hospital care, short-term stays in skilled nursing facilities, hospice, and some home healthcare services.
Part B covers non-hospital care including doctor’s office visits, screenings, blood tests, X-rays, equipment, and most outpatient care.