We’re hearing a lot about healthcare and Medicaid these days, and Medicare remains in the background as Congress seeks to reform the Affordable Care Act.
If you’re over the age of 65 or caring for someone with a disability, you have at least some familiarity with Medicare and Medicaid. You probably know that your lifetime of work entitles you to Medicaid and Medicare to help cover medical costs.
But when it comes down to the nitty-gritty details, you may feel a bit confused. What’s the difference between the 2? Who falls under Medicare and who falls under Medicaid? Do you have to pay for benefits? How much do you pay? Frankly, it can be a bit overwhelming.
We’re going to clear up any confusion and give you a simple, clear breakdown of the 2 programs and what’s included in each.
While this article certainly won’t make you an expert, it will help you more easily navigate a world that seems complex and confusing.
What Is Medicare?
Medicare is a federally facilitated health insurance program for adults 65 and older, as well as some younger people with disabilities or individuals with end-stage renal disease (ESRD). The law was signed by President Lyndon B. Johnson in 1965 and was created as a way to help older adults cover the cost of medical care.
When he signed the bill, Johnson said: “In 1935 the passage of the original Social Security Act opened up a new era of expanding income security for our older citizens. Now, in 1965, we are moving once again to open still another frontier: that of health security. For an older person, good health is his most precious asset. Access to the best our doctors, hospitals, and other providers of health service have to offer is his most urgent need.”
Since the inception of Medicare, it has also been expanded to cover a few other groups, including those who:
- Have received at least 24 months of Social Security disability benefits or a disability pension from the Railroad Retirement Board (RRB).
- Have permanent kidney failure (ESRD) and need routine dialysis or a kidney transplant.
- Have amyotrophic lateral sclerosis (Lou Gehrig’s disease).
In 2003, President George W. Bush signed the Medicare Modernization Act (MMA) into law, which created the Medicare Part D program to provide prescription drug subsidies for those on Medicare.
When Bush signed the bill, he said: “[…] Our government is finally bringing prescription drug coverage to the seniors of America. With this law, we’re giving older Americans better choices and more control over their healthcare, so they can receive the modern medical care they deserve.”
Prior to turning 65, an individual must get his or her insurance through his or her employer, his or her spouse’s employer, or an individual policy. Without pursuing one of these options, the uninsured person may have to pay a fee, often called a “penalty” or “individual mandate.” However, when you turn 65, you are eligible for Medicare. You can use Medicare as your only insurance option or in tandem with insurance you have through an employer, spouse, or former employer.
Medicare is broken down into several different parts.
Together, Parts A and B are called Original Medicare. Part A provides assistance for hospital bills. Most people have already paid their Part A premiums through their taxes (assuming they’ve worked in the U.S. for at least 10 years).
Part B provides assistance for doctor’s visits, as well as other medical services such as screenings for particular diseases. Some things covered by Part B include:
- Durable medical equipment (canes, walkers, manual wheelchairs and power mobility devices, etc.).
- Doctor and nursing services such as yearly wellness visits.
- Medically necessary X-rays, as well as laboratory and diagnostic tests.
- Outpatient hospital services.
- Some ambulance services.
- Drugs to support organ transplants.
- Prosthetic devices.
- Specific vaccinations such as flu and Hepatitis B shots.
- Outpatient maintenance kidney dialysis treatments.
Enrollment in Part B is voluntary and does require paying a small monthly premium and annual deductible. If you have additional insurance through an employer or spouse, it may be unnecessary to enroll in Part B since you have that additional coverage. However, if you don’t enroll and don’t have another policy, you could find yourself paying higher out-of-pocket costs.
Before turning 65, most people get health insurance through group plans offered by their employer or their spouse’s employer. People who are self-employed or who don’t have health insurance through their job may buy individual policies on their own.
Part C, which is also known as Medicare Advantage, is a type of Medicare plan provided through private insurance companies that combines Parts A and B (and usually includes Part D, too). These plans can be customized to fit an individual’s needs and cover hospital visits, doctor’s visits, and prescription drugs.
Part D plans are private plans that give assistance to people who have Parts A and B. This assistance helps them pay for prescription drugs, and the premium is a small amount each month.
It is essential to remember that Medicare doesn’t usually cover every health expense. Some services, such as dental and vision, don’t fall under the traditional Medicare umbrella and must be either covered through private plans or Medicare Advantage. Unless you have additional insurance or fall into a low-income bracket, you will probably still pay some premiums, deductibles, and copays.
Medicare usually only covers a small portion of a skilled nursing facility stay. If the requirements are met, Medicare will fully cover the first 20 days of a stay and then only partially cover the next 80 days.
An example of one of these requirements is that a patient typically must have been hospitalized for 3 consecutive days. Additionally, the care provided must be seen as medically necessary.
Medigap plans are purchased through private companies and cover expenses not covered by Original Medicare. As Kiplinger notes: “Beneficiaries of traditional Medicare will likely want to sign up for a Medigap supplemental insurance plan offered by private insurance companies to help cover deductibles, copayments, and other gaps. You can switch Medigap plans at any time, but you could be charged more or denied coverage based on your health if you choose or change plans more than 6 months after you first signed up for Part B.”
What Is Medicaid?
Unlike Original Medicare, which is administered strictly by the federal government, Medicaid is a joint program administered both by the federal and state governments. Each state must:
- Determine who is eligible.
- Determine the scope of what Medicaid covers outside of mandatory eligibility groups, such as low-income families.
- Set payment rates.
- Administer the program.
States must also decide what services are covered by their Medicaid plans. However, there are some federal standards that must be met by every plan. The services that must be included are:
- Inpatient and outpatient hospital services.
- Doctor services.
- Family planning services and supplies.
- Rural health clinic services.
- Home healthcare for eligible individuals.
- Prenatal care.
- Vaccines for children.
- Nursing facility services for individuals over age 21.
- Lab and X-ray services.
- Pediatric and family practitioner services.
- Nurse-midwife services.
- Federally qualified health center (FQHC) services and ambulatory services.
- Early and periodic screening, diagnostic, and treatment (EPSDT) for children under age 21.
There are also numerous Medicaid services that states can provide and receive matching funds from the federal government. The services often include prescription drugs, rehab and physical therapy, transport services, and more.
Because each state sets its own eligibility standards, qualification can depend on income, age, pregnancy status, disability status, citizenship, and other factors. To see if you qualify, you’ll need to research your state’s particular requirements.
Each state sets its own Medicaid eligibility guidelines. The program is geared toward people with low incomes, but eligibility also depends on meeting other requirements based on age, pregnancy status, disability status, other assets, and citizenship.
Approximately 8.3 million people in the United States qualify for both Medicare and Medicaid. Often, those who qualify for both programs are those in poorer health who need more care than either program can provide on its own.
Despite these challenges, it is worth seeing if you qualify if your expenses aren’t covered by Medicare alone. The independent agents with HealthMarkets have experience with both Medicare and Medicaid. They can help determine if you are eligible, as well as assist with plan enrollment.
Hopefully, Medicare and Medicaid will remain in place, as they offer valuable care to those in vulnerable positions at little to no cost.
And while it certainly can be confusing to navigate, people at companies such as HealthMarkets can help find what’s best for you—whether you’re eligible for Medicare or qualify for both Medicare and Medicaid. HealthMarkets’ agents are experienced in helping those who are eligible for Medicare or both Medicare and Medicaid find the plan that meets their needs.
Everyone deserves healthcare. Lyndon B. Johnson recognized that when he signed Medicare and Medicaid into law. George W. Bush understood that when he enacted Part D plans.
We wholeheartedly agree.