Medicare and Medicaid - Understanding the Differences
by Don Drake, Connelly Law Offices, Ltd. 3.10.24
"At our office, we receive a lot of inquiries about the difference between Medicare and Medicaid, usually just before or in the months following the open enrollment period," stated professional fiduciary and certified elder law Attorney RJ Connelly III. "Medicare and Medicaid are government-funded programs to provide healthcare coverage to eligible Americans. These programs were established in 1965 and are financed through taxpayers' money. Despite having similar names, they have different eligibility criteria, coverage, and purpose, often confusing people, and understandably so. Let's explore the differences."
"Medicare is designed to provide medical coverage to people 65 and older and those with specific disabilities," said Attorney Connelly. "Unlike Medicaid, income level is not a determining factor for eligibility. Medicare is divided into four parts: Part A, Part B, Part C, and Part D, each intended to provide coverage for specific medical services."
"Medicaid, on the other hand, is primarily intended for people of any age with limited income and resources and cannot afford healthcare coverage through other means," continued Attorney Connelly. "It is often considered a program of last resort for those who cannot access other healthcare resources. Medicaid provides coverage for a wide range of medical services, including doctor's visits, hospital stays, prescription drugs, and long-term care, to name a few. We will now take a more in-depth view of both these programs, starting with Medicare."
Medicare
Part A: Hospitalization Coverage
Medicare Part A is a health insurance program that provides hospitalization coverage to individuals 65 years or older, regardless of their income. However, to qualify, you or your spouse must have worked and paid Medicare taxes for at least ten years. This program covers hospital inpatient care, hospice care, skilled nursing facility care, and home health care services. Most people don't pay any premium for Part A, as it is funded through payroll taxes paid by employees and employers during their working years. However, deductibles and coinsurance apply, meaning you may have to spend a certain amount before Medicare starts covering the cost of your care. It's important to understand these costs and how they apply to your specific situation so that you can make informed decisions about your healthcare coverage.
Part B: Medical Insurance
It's important to know that those eligible for Medicare Part A also qualify for Part B. This program covers medically necessary services and equipment, such as doctor's office visits, lab work, x-rays, outpatient surgeries, wheelchairs, walkers, and preventive services like disease screenings and flu shots. Do note that deductibles and coinsurance apply to these services.
For this year (2024), the standard Part B premium has been set at $174.70, representing an increase from 2023's premium of $164.90. This premium is usually deducted from Social Security or Railroad Retirement payments. However, it is essential to remember that individuals with a modified adjusted gross income (MAGI) greater than $103,000 per year (or $206,000 for a couple) must pay more for this program.
Part C: Medicare Advantage Plans
If you are eligible for Medicare Part A and Part B, you may also qualify for Part C, commonly known as Medicare Advantage. Unlike Parts A and B, which the government provides, Medicare Advantage plans are offered through private companies approved by Medicare.
Most Medicare Advantage plans offer additional benefits beyond those provided by Parts A and B. These benefits may include vision, hearing, dental care, and prescription drug coverage. In many ways, Medicare Advantage plans function similarly to health maintenance organizations (HMOs) and preferred provider organizations (PPOs) that people often use during their working years to receive medical services.
While Medicare Advantage can benefit some, it can result in higher out-of-pocket costs for others due to coinsurance, deductibles, and copays. Therefore, evaluating your health status and the plan's structure and coverage is essential to determine the right choice.
Part D: Prescription Drug Coverage
Medicare Part D is a government program that provides eligible individuals with prescription drug coverage. This program allows participants to obtain medication coverage but requires paying for Part D plans out of pocket. In addition to monthly premiums, participants must also pay a yearly deductible and copayments for certain prescriptions.
It should be noted that some Medicare Part C plans do not come with prescription drug coverage. If you have a Part C plan and wish to obtain Part D coverage, you may need to purchase it separately.
If you want to enroll in Medicare Part D, the annual open enrollment period runs from October 15 to December 7 every year. You can enroll in a plan for the first time, switch to a different one, or change your existing one. Reviewing your options and making any necessary changes during this period to ensure you have the best coverage for your needs is crucial.
Medicaid
"Medicaid is a healthcare program jointly funded by the federal and state governments and is designed to assist low-income individuals and families of all ages with the costs associated with medical and long-term custodial care," said Attorney Connelly. "This includes expenses such as doctor visits, hospital stays, prescription drugs, and medical equipment, among others. Medicaid eligibility is based on income and other factors such as age, disability status, and family size."
The Children's Health Insurance Program (CHIP) is available for children who require affordable healthcare but whose families earn too much to qualify for Medicaid. CHIP is a separate program from Medicaid and has its own set of rules and regulations. The program provides comprehensive healthcare coverage to children under nineteen, including doctor visits, dental care, vision care, and prescription drugs. Families must meet specific eligibility requirements, such as income and residency, to qualify for CHIP.
Medicaid is a joint program between the federal and state governments, with different programs available in each state. The Affordable Care Act (ACA), signed into law by President Obama in 2010, aimed to provide health care coverage to more Americans. This resulted in all legal residents and citizens of the United States with incomes below 138% of the poverty line being eligible for coverage in Medicaid-participating states.
Although the ACA expanded federal funding and eligibility for Medicaid, the U.S. Supreme Court ruled that states are not required to participate in the expansion to receive their current level of Medicaid funding. As a result, some states chose not to expand funding levels and eligibility requirements.
Unlike Medicare, Medicaid recipients pay little or nothing for covered services. However, Medicaid has strict eligibility requirements that vary by state. When Medicaid recipients reach age 65, they continue to be eligible for Medicaid and become eligible for Medicare, with blended plans available. Currently, Medicaid coverage may change based on the recipient's income. Higher-income individuals may find that Medicaid only pays for their Medicare Part B premiums, while lower-income individuals may continue to receive full benefits.
A Final Word
"Medicare and Medicaid are two government-run healthcare programs in the United States. Medicare is a federal health insurance program available to American citizens aged sixty-five or older and those with certain disabilities or illnesses," said Attorney Connelly. "This program is designed to cover various healthcare costs, including hospital stays, doctor visits, and prescription drugs. Medicaid is a joint state and federal program primarily intended to provide healthcare coverage to low-income individuals and families, regardless of age. The eligibility criteria for Medicaid vary by state but require strict income requirements. Medicaid can cover various medical services, including doctor visits, hospital stays, long-term care [Medicaid Planning], and prescription drugs."
Please note that the information provided in this blog is not intended to and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise you to consult your attorney, professional fiduciary advisor, or medical provider.
Comments