Although Medicare and Medicaid are both designed to serve those who can’t afford private health insurance, there are a few key differences between the programs. Medicare is health coverage for individuals age 65 and older and those with certain qualifying disabilities. Medicare benefits people within any income bracket. Medicaid, however, is health coverage specifically for low-income individuals, and is provided at low or no cost. Some people can qualify for both Medicare and Medicaid, provided they meet the right requirements.
How Medicare Works
Medicare is federally funded and operated the same way nationwide. It primarily serves the 65 and older population, but certain disabilities can qualify a person for Medicare even if they are under 65. Those who have received at least two years of disability benefits, suffer from permanent kidney failure and require a transplant/dialysis, or who have contracted Lou Gehrig’s disease are eligible. Medicare costs are typically deducted from social security payments.
There are four components to Medicare: Hospitalization Coverage (Part A), Medical Insurance (Part B), Medicare Advantage (Part C), and Prescription Drug Coverage (Part D). Medicare Part A covers inpatient hospital care, skilled nursing facility care, home health care and hospice care.
Medicare Part B covers all essential healthcare needs, from doctor visits to ambulance services. It also provides coverage for medically-necessary equipment (e.g. walkers and wheelchairs,) lab work, x-rays, preventive care screenings, and flu shots.
Medicare Part C provides everything that is offered by Part A and B, plus vision, hearing and dental benefits. The health insurance plans offered under Part C often have networks, so it’s important for beneficiaries to seek services that are in-network. Enrollment in Medicare Part C can help save money as well, since out-of-pocket costs under Part C can be lower than the costs under A and B.
Medicare Part D is optional, but can be valuable to individuals in need of prescription drugs. Coverage under Part D is provided by private insurance companies that have been approved by Medicare. The list of medication that is covered by Part D varies depending on the particular plan.
How Medicaid Works
Medicaid is funded by both state and federal governments, and programs differ from state to state. Only low-income households qualify for Medicaid, so coverage costs little or nothing. When determining eligibility, Medicaid assesses an individual’s annual income, household size, disability status, and family status.
Mandatory services under Medicaid include doctor visits, inpatient and outpatient hospital visits, lab and x-ray services, and family planning, among others. Optional benefits under Medicaid include services such as physical therapy, vision and dental services, private duty nursing services, and hospice care.
Dual Eligibility
Some individuals qualify for Medicare Part A/B as well as Medicaid. State-run Medicare Savings Programs, known as MSPs, cover premiums, copays and deductibles. Benefits for those that are dually eligible include doctor visits, hospitalizations, skilled nursing and home health services, prescription drugs, and hospice care. Benefits are determined by the individual’s income level, as well as the particular MSP.