|
September 13, 2021
Medicare is a federal program, while Medicaid is state-based and varies depending on where you live. Medicare provides health care to individuals who are 65 and older or on disability, while Medicaid provides health care to people of all ages who meet designated income requirements.
| Medicare | Medicaid |
|---|---|
|
|
Yes, you can have both Medicare and Medicaid. This is known as being dual eligible. You’re dual eligible if you’re over 65 years old or have been collecting Social Security Disability Income (SSDI) for at least 24 months and you also meet your state’s Medicaid low-income requirements.
When you’re dual eligible, Medicare is primary and Medicaid is secondary. Basically, Medicaid fills in the coverage gaps the way a Medigap plan does. When you’re dual eligible, you also may qualify for a Medicare Savings Program.
When you have Medicare, Medicaid, and a Medicare Savings Program, you have full health-care coverage for which you pay nothing out of pocket.
Pro Tip: Medicare generally won’t pay for most coverage related to vision and dental work. To learn more, read my guides: Does Medicare Cover Dental? and Does Medicare Cover Cataract Surgery?
The biggest misconception about Medicare is that it’s completely free. It’s not, but Medicaid is. Medicaid also can help cover most if not all the costs of Medicare.
Once you have paid into Medicare through payroll taxes for 40 quarters (10 years), you’re eligible for premium-free Part A. Part A is hospital coverage. The majority of Medicare beneficiaries are eligible for premium-free Part A. The premium if you’re not eligible ranges from $251 to $471, but the numbers vary each year. You can also be eligible for premium-free Part A through your spouse.
Part B is doctor coverage, and it comes with a monthly premium of $148.50 for 2021. If you’re collecting Social Security, the premium will automatically come out of your monthly check. If you’re a higher income earner, you could pay a higher premium for Part B. This is known as IRMAA.
Part D is prescription-drug coverage, and it also comes with a monthly premium. Part A, Part B, and Part D all come with cost-sharing in the form of coinsurance, copays, and deductibles. The deductibles increase annually.
Since Medicaid is for low-income individuals, it’s free. There are no premiums, deductibles, coinsurance, or copays.
FYI: If you’re looking to offset your remaining costs with Medicare, then read my choices for the best Medigap plans.
If you are dual eligible for Medicare and Medicaid, you’ll have the above-mentioned Medicare cost-sharing covered by your state Medicaid program. You can even have your Part B premium paid for if you’re eligible for a Medicare Savings Program. If you aren’t eligible for Part A premium-free, then you can also get your premium covered through a Medicare Savings Program.
If you are not considered low income and therefore not eligible for Medicaid, you can enroll in a Medicare Advantage plan — also known as Part C. When you opt for Part C, a private carrier pays for your health care instead of Medicare.
Medicare Advantage plans all come with their own cost-sharing. A rule of thumb: the lower your monthly premium, the higher your cost-sharing. You still need to set aside extra funds to cover your medical costs in order to protect your retirement savings.
The other option to help cover cost-sharing is to enroll in a Medigap plan. Medigap plans come with a monthly premium, but they cover significantly more than a Medicare Advantage plan. They also do not have all the limitations Medicare Advantage plans come with.
Did You Know: To learn more about the differences between these types of coverage, read my guide: Medicare Advantage vs. Medigap.
Many individuals mix up the eligibility requirements for Medicare and Medicaid. These programs were created to provide health care, but the eligibility criteria for each program are not the same.
There are two ways to become eligible for Medicare: age in at 65 years old or collect Social Security Disability Income for 24 months. It’s important to note that your spouse becoming eligible does not make you eligible.
If you collect Social Security or SSDI, you’ll be enrolled automatically in Medicare Part A and Part B. If you age in at 65, you’ll receive your Medicare card in the mail the month of (or the month before) your 65th birthday. If you’re on SSDI, you’ll receive your Medicare card in the mail around month 24 of collecting benefits.
If you don’t collect Social Security or SSDI, you will need to enroll yourself. You can do so easily by creating a MyMedicare.gov account and completing the online application. Your application status will be updated in your account dashboard. You can also enroll over the phone or at your local Social Security office.
To be eligible for Medicaid, you must meet your state’s low-income requirements, which vary by state. You may also be eligible for Medicaid if you’re pregnant or have a permanent disability.
If your income is above your state’s low-income threshold and you have high medical bills you’re having a hard time paying, check with your local Social Security office to see whether a spend-down program is available.
There are two ways to apply for Medicaid: You can reach out to your state Medicaid agency or complete an online application through the Health Insurance Marketplace.
Medicare and Medicaid were both created to provide health-care coverage, but they don’t cover the same services.
Depending on the parts of Medicare you have, you may have coverage for inpatient services, outpatient services, and prescription medications.
Part A covers services received at a hospital, including hospital stays up to 60 days, diagnostic testing while in the hospital, and any surgery performed at the hospital.
Part B covers services received at your doctor’s office, including preventive care such as routine screenings, diagnostic testing, vaccines, durable medical equipment, and mental-health care. It also covers any procedures done in an outpatient facility.
Part D is prescription drug coverage, which covers the medications you pick up at your pharmacy. It also covers medications you receive through the mail.
FYI: Another great way to save on medications is through a prescription discount card. Read our choices for the best prescription discount card to learn more.
Since Medicaid is handled on the state level, coverage varies from state to state. There are broad federal guidelines all Medicaid programs must follow, but each state is given the flexibility to cover additional benefits.
Both inpatient and outpatient services fall under the mandatory guidelines. Additional benefits states can add on include prescription drug coverage, dental, vision, hearing, and some types of therapy.
Quick Tip: Did you know Medicare can be used to pay for family caregivers? To learn more, read my guide: Which States Pay Family Caregivers?
The primary differences between these two federal programs are the eligibility criteria and costs. Medicare was created to provide health care to people who are over 65 or on disability, and it comes with a monthly premium and cost-sharing. Medicaid was created to provide health care to low-income individuals or households, and it’s free.
When incorporated into your greater health-care plan, they can cover most of your health-related costs.
The biggest difference between Medicare and Medicaid is that Medicare was created for people who are 65 or older or collecting SSDI, and Medicaid was created for people of any age considered low-income.
There are a few disadvantages to Medicaid, the most common of which are coverage limitations and a limited network of doctors. Some nursing homes also discriminate against Medicaid beneficiaries by either rejecting them completely because they are on Medicaid or treating them unfairly.
The biggest difference between Medicare and Medicaid for the elderly is that Medicaid covers costs for nursing-home care that Medicare doesn’t cover. Another big difference is Medicaid helps pay for Medicare benefits. Since a lot of elderly people are living on Social Security, it’s the only way they can afford Medicare due to their limited income.
Unless you’re considered low income and dual eligible for both Medicare and Medicaid, Medicare is not free for seniors. Most Medicare beneficiaries are eligible for premium-free Part A, but Part B has a monthly premium. Additionally, both Part A and Part B come with cost-sharing.
