What are the differences between Medicare and Medicaid?

To meet a critical need for affordable healthcare, federal and state governments administer two complementary programs: Medicare and Medicaid. Each provides a wide range of programs and services to help ease the burden of coverage for millions of Americans.

What is Medicare?

Medicare is a federal health insurance program that provides coverage for people 65 years or older and some people under 65 with certain qualifying disabilities and medical conditions.  The program serves U.S. citizens and legal permanent residents regardless of their income, health status, or medical history.

What is Medicaid?

Medicaid is the single largest source of healthcare coverage in the United States, with more than 67 million people receiving some form of assistance in 2018.  It is a needs-based program that primarily assists eligible low-income adults, pregnant women, children, people with disabilities and elderly adults.  It is administered by states with oversight from the federal government.  Both state and federal governments share funding responsibilities. Eligibility and benefits vary from state to state.

Who is Eligible for Medicare?

In broad terms, there are two groups of people who are eligible for Medicare:

• People who are 65 years or older who are American citizens or who have been legal permanent residents of the United States for at least five continuous years.
• People between 18 and 65 years of age who have certain qualifying medical conditions or disabilities. Those conditions include:
• Received Social Security disability benefits for at least two years, or
• Have been diagnosed with ALS (Lou Gehrig’s Disease), and are starting to get Social Security disability, or
• Have been diagnosed with End Stage Renal Disease (ESRD) and have been on dialysis for three months or have had a kidney transplant.

Who is Eligible for Medicaid?

Because Medicaid is administered on a state level, eligibility requirements will vary from state to state.  However, in general, applicants must be a U.S. citizen or a qualified non-citizen, must be a resident in the state where they apply for benefits, and must be able to provide a Social Security number so that eligibility can be verified electronically through the federal government.

In addition to applying for Medicaid, to maintain eligibility, applicants must also apply for all other benefits they may be entitled to such as Social Security benefits, Medicare and pension payments.

There are strict income and asset limits that govern Medicaid eligibility which is determined by a person’s modified adjusted gross income.  Income requirements are also impacted by the number of people in a household.  The more people in a household, the higher the allowable requirements will be as well.

Almost every state has multiple Medicaid programs and those limits may vary depending on the program, but a good rule of thumb is that if you make less than 100% to 200% of the Federal Poverty Level, and you’re pregnant, disabled, a child, elderly, or a caretaker then you may qualify for one or more programs.  In some states, Medicaid covers all low-income adults below a certain income level.

What is the Difference Between Medicare and Medicaid?

Although the federal government administers and provides oversight for both Medicare and Medicaid, they are two distinctly different programs.

The main difference between the two is that Medicaid is an assistance program and Medicare is an insurance program.

Medicaid has no age restrictions and is based purely on need.  It provides benefits if a person falls below certain income and asset levels.  Most services are provided at no cost, with a few limited exceptions.  Although Medicaid must follow certain federal guidelines, it is administered by state and local governments.

Medicare is an insurance program for people 65 and older or those who have certain qualifying conditions who are under 65.  It helps people pay for medical bills and is divided into Parts A, B, C and D.  Each part provides a different kind of coverage.  For some services and coverages, participants will need to pay a monthly premium.  Many people qualify for Medicare coverage because they have paid Medicare taxes throughout their working life.  Medicare is a federal program and is administered uniformly throughout the United States.

What Do Medicare and Medicaid Cover?

Medicare

Medicare has four parts:

Medicare Part A provides coverage for hospital stays, skilled nursing facility stays, hospice care and some home health visits.

Medicare Part B covers doctor visits, outpatient services, preventative services, and some home health visits.

Medicare Part C, also known as the Medicare Advantage program.  Beneficiaries enroll in a private health plan such as an HMO or PPO and receive Part A, Part B and in most cases, Part D prescription drug benefits. In most cases, Part C provides enhanced benefits.  About one-third of all Medicare beneficiaries are enrolled in Part C plans.

Medicare Part D covers outpatient prescription drugs provided by private plans that contract with Medicare.  This benefit helps pay for drug costs after a deductible is met and also offers catastrophic coverage in cases where there are extremely high drug costs.

Medicaid

Each state administers its own Medicaid program.  Under the auspices of broad federal guidelines, individual states determine the type, amount, duration, and scope of services they will provide. Federal law requires states to provide certain “mandatory” benefits.  Beyond this, states are allowed to choose which additional optional benefits they will provide.

Federally mandated Medicaid benefits includes:

• Inpatient hospital services
• Outpatient hospital services
• EPSDT: Early and Periodic Screening, Diagnostic, and Treatment Services
• Nursing facility services
• Home health services
• Physician services
• Rural health clinic services
• Federally qualified health center services
• Laboratory and X-ray services
• Family planning services
• Nurse midwife services
• Certified pediatric and family nurse practitioner services
• Freestanding birth center services (when licensed or otherwise recognized by the state)
• Transportation to medical care
• Tobacco cessation counseling for pregnant women
• Autism Spectrum Disorder (Autism)

State level optional benefits can include:

• Prescription Drugs
• Clinic services
• Physical therapy
• Occupational therapy
• Speech, hearing and language disorder services
• Respiratory care services
• Other diagnostic, screening, preventive and rehabilitative services
• Podiatry services
• Optometry services
• Dental Services
• Dentures
• Prosthetics
• Eyeglasses
• Chiropractic services
• Private duty nursing services
• Personal care
• Hospice
• Case management
• Services for individuals age 65 or older in an institution for mental disease (IMD)
• Services in an intermediate care facility for individuals with intellectual disability
• State plan home and community-based services – 1915(i)
• Self-directed personal assistance services – 1915(j)
• Community first choice option – 1915(k)
• TB related services
• Inpatient psychiatric services for individuals under age 21
• Health homes for enrollees with chronic conditions – section 1945

Can You Have Both Medicare and Medicaid?

When you qualify for both programs, you are known as dual eligible.  About 20% of Medicare beneficiaries are also eligible for Medicaid and an income-based Medicare Savings Program.

If you have both, then Medicaid acts as supplemental coverage for Medicare.  Because you are eligible for Medicaid, you may also get help to pay for costs associated with other programs.  One example of this is Extra Help, which helps pay for prescription drug costs.

Medicare eligibility is determined by the federal government, while eligibility for Medicaid and Medicare Savings Programs are determined by each state.  Eligibility for each is determined separately.

There are four programs for dual eligible beneficiaries:

• Qualified Medicare beneficiary. This offers the highest level of coverage. Beneficiaries may pay for Part A and Part B premiums, deductibles, co-insurance and co-payments.
• Specified low-income Medicare beneficiary.People in this category receive Medicaid coverage for their Part B premiums.
• Qualifying individual.This program also helps pay for Part B premiums.
• Qualified disabled working individual.Limited to those who are disabled but still working, this Medicaid program helps pay for Part A premiums.

How Do Medicare and Medicaid Work Together?

When you have both Medicare and Medicaid, Medicaid acts as supplemental coverage for Medicare.  Because Medicare is your primary insurer, you are free to go to any provider that accepts Medicare.  You are not limited to Medicaid-only providers.

If a beneficiary has a Medicare Part C plan, then that insurer will be the secondary insurer.  Medicaid will now drop to become the tertiary insurer and will pick up any expenses that Medicare or the Part C supplemental provider does not.

When you are dual eligible, your Medicare Part B premium is paid for and Part D prescriptions are subsidized.  Co-pays for prescriptions will vary from $1 to $5.  Medicaid may also provide long-term care services depending on the beneficiary’s circumstances.

Attempting to understand what benefits you’re entitled to and which program will cover services can be complicated.  When you’re dual eligible, one option to keep things simple is to select a healthcare plan that combines Medicare and Medicaid benefits under one policy.  In some states, case managers, health centers or other organizations may be available to provide case management services to dual enrollees.

How do Medicaid and Medigap work with Medicare?

Medigap is supplemental health insurance sold by private companies.  It helps to pay for gaps in healthcare costs not covered by Medicare, such as copayments, deductibles and coinsurance.

Medigap may also pay for services not covered by Part A or Part B at all.  In other words, it “bridges the gap” in coverage that a beneficiary may be facing.  If you have Original Medicare and a Medigap policy, Medicare will pay to approved amounts for covered costs, and then Medigap will pay its share.

To qualify for a Medigap policy, an applicant must already be enrolled in Medicare Part A and B.  You can’t buy a Medigap policy if you already have a Medicare Part C plan.  A Medigap policy is different from a Part C plan because a Part C plan is a way to get Medicare benefits, while a Medigap plan only supplements the cost of Part A and Part B plans.

Medigap policies don’t cover long‐term care such as for a nursing home, vision or dental care, hearing aids, eyeglasses, or private‐duty nursing.

You will pay a premium for a Medigap policy and that cost will vary depending on the types of benefits and amounts of coverage you choose.  Costs can vary widely for the same coverage, so if you’re exploring a Medigap policy, be sure to do your homework and shop around.  Most people opt to buy a Medigap policy during their initial Medicare enrollment period.  If you attempt to buy a plan after that time, you can still do so, but there’s a good chance it will cost more money.

Medigap insurance companies can sell you only a “standardized” Medigap policy. All Medigap policies must have specific benefits, so you can compare them easily. In some cases, an insurance company must sell you a Medigap policy, even if you have health problems.

A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you each will have to buy separate Medigap policies.

There is a one‐time‐only, six‐month period when federal law allows you to buy any Medigap policy you want that’s sold in your state. It starts in the first month that you’re covered under Medicare Part B, and you’re 65 or older. During this period, you can’t be denied a Medigap policy or charged more due to past or present health problems. Some states may have additional open enrollment rights under state law.

If you bought your Medigap policy after 1992, in most cases the Medigap insurance company can’t drop you because the Medigap policy is guaranteed renewable. Your insurance company can only drop you if:

• You stop paying your premium.
• You weren’t truthful on the Medigap policy application.
• The insurance company becomes bankrupt or insolvent.

To find out which insurance companies sell Medigap policies in your state:

• Call your State Health Insurance Assistance Program and ask if they have a “Medigap rate comparison shopping guide” for your state. This guide usually lists companies that sell Medigap policies in your state and their costs.
• Call your State Insurance Department.
• Visit Medicare.gov/find‐a‐plan

Who is the Primary Insurer: Medicare or Medicaid?

Medicare will be your primary provider if you are enrolled in both programs.  Medicaid will act as your supplemental coverage for Medicare.  If you have a Part C supplemental health insurance plan through Medicare, then Medicaid will be the last option in paying for services.

Will Medicare and Medicaid Pay for Assisted Living?

Assisted living is a long-term senior care option that provides a host of personal care support services such as bathing, meals, transportation, life enrichment, medication management and related functions known as Activities of Daily Living (ADL).  Residents in assisted living communities generally only require custodial care.

Unfortunately, Medicare does not pay for any form of assisted living care.  Medicaid will provide coverage for an assisted living facility, but coverage will vary from state to state.  Medicaid may also cover home health care which can include home attendant services and programs to help beneficiaries live and function independently.

Seniors often also want to know about other healthcare costs that are especially important to them and whether they are reimbursable.  Among the most asked about are hearing aids. Unfortunately, hearing aids and most hearing tests are not covered by Medicare, but may be covered by a Medicare Advantage Plan, depending on the policy that is chosen.  Medicaid may cover hearing aids and tests, but coverage and requirements will vary from state to state.

Another common question is whether or not either program will cover the costs of a lift chair.  A lift chair is a motorized device that helps boost a person into a standing position or lower a person back into a sitting position.  It is different from a stair lift which allows a person to ride a chair up and down a staircase.

The good news is that Medicare Part B may cover a portion of the lift chair costs because it can be considered a piece of durable medical equipment if a doctor certifies that it’s medically necessary and can help a person’s condition.  This may be the case if someone has arthritis, muscular dystrophy or another type of neuromuscular disease.  Medicaid may cover the cost of a lift chair, but again coverage varies from state to state and you will need to check with the Medicaid administrator in your state to determine if this benefit is covered.

Will Medicare and Medicaid Pay for Nursing Homes?

Medicare can cover short-term rehabilitation stays in a nursing home after a hospitalization.  It does not pay for long-term care at a nursing home, residential care homes or for any kind of long-term care.

Medicaid coverage for Long-Term Care services are set on the federal level but each state has a high degree of flexibility in the way it chooses to implement this benefit.  States are required to offer nursing home services, but they may not necessarily also offer assisted living services.  And, not every long-term care facility will accept Medicaid as a form of payment.

Medicaid coverage for long term care will pay for all nursing home costs, including room, board, and all nursing and assistance care costs.  There is usually a monthly co-pay that must be met as part of this coverage.

Do Medicare and Medicaid Cover Dental Services?

Medicare does not cover most dental procedures or supplies, including includes services such as cleanings, fillings, extractions, dentures, dental implants, or other dental devices.  The exception to this is that Medicare Part A will pay for some dental services you may receive when you are in a hospital, as long as you need to have emergency or complicated dental procedures.  The only other way to get dental coverage through Medicare is by participating in a Medicare Part C Advantage plan that will offer additional benefits that may also include dental services.  If dental care is important to you, search for Medicare Dental Advantage plans in your area to see if they suit your needs.

Dental services through Medicaid vary from state to state.  They are not part of the federally mandated services states must offer.  As such, the type of services that are covered and the amount of coverage that is provided will be different depending on where you live.

Where Can I Apply for Medicare and Medicaid?

Medicare

Most people are eligible for Medicare when they turn 65.  Some will be enrolled automatically while others will need to apply for benefits.

If you’re already getting Social Security retirement, Railroad Retirement or disability benefits, you will automatically be enrolled in Parts A and B.  You will get a Welcome packet from Medicare about three months before your 65^th birthday that will fully explain your enrollment benefits and options.

If you are not already getting retirement benefits, you will need to contact Social Security to apply for Medicare.  You should do this about three months before your 65^th birthday.  There are three ways to apply for Parts A and B:

• Online at Social Security’s website
• By calling Social Security’s customer hotline at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY call 1-800-325-0778.
• In person at your local Social Security Office.

You can also access an Eligibility and Premium Calculator on the Medicare website by going here.

Medicaid

You can apply for Medicaid two ways:

• Fill out an application through the Health Insurance Marketplace. After you do so, if anyone in your household qualifies for Medicaid or CHIP, information will be sent from your state agency and they will contact you about enrollment.  You will need to start your application by creating an account, which you can do here.
• You can also apply for Medicaid directly through your state Medicaid agency.

When Can I Apply for Medicare and Medicaid?

Medicare

Depending on your situation, there are many times throughout the year that you can apply for Medicare.  However, to obtain the best coverage at the least amount of cost, you need to pay attention to the enrollment criteria for your specific situation or you could end up paying more for coverage than you need to.

If you already receive Social Security or Railroad Retirement benefits, you’ll be contacted about enrolling in Medicare three months before you turn 65.  You will be automatically enrolled in Medicare Part A and Part B if you live in any of the 50 states, Washington, D.C., the Northern Mariana Islands, American Samoa, Guam or the U.S. Virgin Islands.  Because Part B coverage requires you to pay a premium, you will be given the opportunity to opt out of it if you so choose.  You can get Medicare coverage even if you don’t plan on retiring when you turn 65.

You can apply for Medicare before you turn 65 if you meet certain special situations:

• You’re a disabled widow(er) between the ages of 50 and 65.
• You work for the government and became disabled before turning 65
• You or an immediate family member has permanent kidney failure
• You had Medicare Part B coverage in the past but dropped coverage
• You turned down Medicare Part B coverage when you first got Medicare Part A coverage
• You or your spouse worked for the railroad industry

If you don’t already receive Social Security or Railroad Retirement benefits, you can enroll in Medicare during an Initial Coverage Election Period.  This period is seven months longs and starts three months before the month you turn 65 and ends three months after you turn 65.  Enrolling during this period helps you avoid paying any enrollment penalties and avoiding any gaps in your healthcare coverage.

If you do not enroll during an Initial Coverage Election Period or want to change your Medicare coverage, you can do so during the Annual Open Enrollment Period that takes place from October 15 to December 7 each year.  During Open Enrollment, anyone with…

• Medicare Parts A and B can switch to a Part C Plan
• Medicare Part C can switch back to Parts A and B
• Medicare Parts A or B or is signing up for Parts A and B can join, drop or switch a Part D prescription drug plan
• Medicare Part C can switch to a new Part C plan

Coverage for any of these actions will start January 1 of the following year.

You can also enroll or make changes in your Medicare coverage during Special Enrollment Periods (SEP) if you meet certain criteria.

You can get a Special Enrollment Period for Parts A and B if you did not sign up because you were working for an employer with more than 20 employees when you turned 65 and you already had healthcare coverage through your job, your union or your spouse’s employer.  You can enroll in Parts A and B if you still have healthcare coverage or during the 8 months following when your healthcare coverage from your employer or union ends, or when your employment ends.

If you waited to sign up for Medicare Part C or D because you were working for an employer with more than 20 employees when you turned 65 and had healthcare coverage through your job, union or spouse, then you can get a Special Enrollment Period for Parts C and D for 63 days following the loss of your healthcare coverage.  During this SEP, if you elect to sign up for part C and D coverage, you must also sign up for Part A and B coverage as well

If you did not sign up during your Initial Enrollment Period or your SEP, then you can sign up for Medicare Parts A and B during the General Annual Open Enrollment Period. You can sign up for Parts A and B between January 1 and March 31 each year.  Your coverage would begin on the following July 1.

During an Annual Disenrollment Period, people enrolled in Medicare Part C who want to change to traditional Medicare can use the period of January 1 through February 14 to do so.  You can also use this period to enroll in Part D coverage as well.  In both cases, new coverage begins the first day of the month after you make your changes.

Medicaid

Because Medicaid is a needs-based program, you can apply at any time throughout the year for benefits.  If you qualify, coverage can begin immediately.