Medicare vs. Medicaid: Key Differences and Eligibility Explained

How Does Medicaid and Medicare differ?

Medicare and Medicaid are often confused due to their similar names and both helping with healthcare expenses. Here's what you need to know about the differences between the two and how you may qualify for each program.  The key difference between Medicare and Medicaid is the groups they serve. Medicare is a healthcare program for individuals aged 65 and older, as well as those under 65 with certain disabilities. Medicaid, on the other hand, is designed for people of any age with low incomes. 

 What is Medicare?

Medicare is a federal health insurance program primarily for individuals aged 65 and older, as well as certain younger individuals with disabilities. It helps cover hospital care, medical services, and prescription drugs through different parts, including Part A, Part B, Part C (Medicare Advantage), and Part D.  

Who is eligible for Medicare? 

• You typically become eligible for Medicare at age 65.
• If you have 40 quarters of required work history, you won't pay for Medicare hospital benefits.Also referred to as Part A. 
• During your working years, you paid FICA (Federal Insurance Contributions Act) taxes, which help fund Medicare and Social Security.
• You may qualify for Medicare before age 65 if you receive Social Security disability benefits or have end-stage renal disease or Lou Gehrig’s disease.
• There are no income requirements for Medicare. As long as you are a U.S. citizen or permanent legal resident and meet the age and work history criteria, you qualify for benefits.

One key difference between Medicaid and Medicare is that Medicare is not free. Both Part A and Part B typically require monthly premiums, although many people qualify for premium-free Part A. The federal government sets the Part B premium each year, with about 95% of people paying the standard premium. However, high-income enrollees may face an additional surcharge.

<u>Medicare consists of four parts</u>: 

1. Part A (hospital insurance)
2. Part B (medical insurance)
3. Part C (Medicare Advantage)
4. Part D (prescription drug insurance)  

Part A and Part B, also known as Original Medicare, have no cap on hospital, medical, or prescription coverage costs. Because of this, many beneficiaries choose to enroll in a Part C plan or Part D drug plan for more comprehensive coverage.  

Part C and Part D are provided by private insurance companies contracted with Medicare to offer these plans. When you enroll, Medicare pays the plan to deliver your benefits.  While these plans are managed by private companies, the government ensures basic benefits are available across all parts.

What is Medicaid?  

Medicaid is a program that provides healthcare services to low-income individuals and families. Eligibility is determined by factors such as income, family size, and sometimes conditions like disability or pregnancy.

Administered by both federal and state governments, Medicaid's benefits and eligibility rules can differ from state to state. It is usually available at low or no cost, with most expenses covered for those who qualify.

Can you have both Medicare and Medicaid?

Yes, it is possible to qualify for and enroll in both Medicare and Medicaid simultaneously. Individuals who are eligible for both programs are considered "dual eligible" and receive their care through specific Medicare Savings programs.  

How to Sign Up for Both Medicare and Medicaid 

If you are 65 or older, or meet the disability requirements for Medicare, you can apply for Medicare through Social Security. If you also meet specific income eligibility, you can apply for Medicaid through your state.

The Centers for Medicare and Medicaid Services (CMS) oversees coordination between Medicare and Medicaid, helping dual-eligible individuals access both programs seamlessly.

If you already have Medicare and believe you may qualify for both programs, reach out to your state’s health services department for guidance on how to apply for Medicaid.

How Does Medicare and Medicaid Combine to Provide Coverage?  

Medicaid eligibility varies based on income. Those with the lowest incomes may qualify as a QMB (Qualified Medicare Beneficiary), which provides the highest level of coverage with minimal out-of-pocket costs.

If you have Original Medicare Parts A and B and qualify for the Medicaid QMB program, your Medicaid will act as supplemental insurance. Keep in mind, you'll likely need to see doctors who accept both Medicare and Medicaid.

For those interested in a Medicare Advantage plan, it's important to look for Medicare Special Needs Plans tailored for dual-eligible individuals. You can do this by registering at MyMedicare.gov and using your personal portal to explore available plans in your state.

Most of these programs will assist in covering some or all of your Part B premiums and can help reduce your out-of-pocket costs for Medicare Part D.

Overview of Medicare and Medicaid  

As you can see, Medicare and Medicaid serve different purposes. Medicare provides coverage for seniors and individuals with disabilities, while Medicaid supports those with low incomes.

Understanding how Medicare and Medicaid works can be confusing. McDonald Group Insurance Services is here to help. Our experienced brokers will guide you in selecting the best plans for your needs and answer any questions you may have.