Medicare and Medicaid are both government-sponsored programs designed to help cover healthcare costs. Because the programs have similar names, people are often confused about how the programs work and what coverage they offer. While both were established by the U.S. government in 1965 and are taxpayer funded, they are actually very different programs with differing eligibility requirements and coverage. In the most basic sense, Medicare is designed to help with long-term care for the elderly, while Medicaid covers healthcare costs for the poor, but there is much more to it than this.
Medicare is a federally funded program available to most U.S. citizens and permanent legal residents who have lived continuously in the country for five years or more and are age 65 or older.
How does someone qualify for Medicare
People younger than 65 may also be eligible for the program if they:
- Have received at least 24 months of Social Security disability benefits or a disability pension from the Railroad Retirement Board (RRB).
- Have permanent kidney failure and need routine dialysis or a kidney transplant.
- Have amyotrophic lateral sclerosis (Lou Gehrig’s disease).
To qualify for premium-free Part A, you or your spouse need to have worked at least 10 years and paid Medicare payroll taxes while working. Part B has a premium that most people pay. To cover additional costs or provide more health-care services, you may enroll in a Medicare Advantage Plan (Part C) or a Medicare Prescription Drug Plan (Part D). Advantage plans and Prescription Drug Plans are offered by private CMS-approved insurance companies, and costs, coverage details, and availability may vary among plans.
Services covered under Medicare
The four-part program includes:
- Part A: Hospitalization coverage
- Part B: Medical insurance
- Part C: Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by private companies approved by Medicare
- Part D: Medicare Prescription Drug Coverage
Medicaid is jointly funded at the state and federal levels. Medicaid supports low-income individuals and families by covering costs associated with both medical and long-term custodial care for those who qualify. Some of the benefits covered under overlap with Medicare, such as inpatient and outpatient hospital care and doctor services. However, depending on the state, Medicaid may also offer coverage that is not included under Original Medicare, such as personal care, optometry services, and dental services.
Also, the service providers (such as hospitals and doctors) available to people using Medicaid are often different than those available to people using Medicare.
How does someone qualify for Medicaid
To qualify a recipient must:
- Have been eligible for an SSI cash payment for at least one month;
- Still be disabled;
- Still meet all other eligibility rules, including the resources test;
- Need Medicaid in order to work; and
- Have gross earned income that is insufficient to replace SSI, Medicaid, and any publicly funded attendant care.
Eligibility for Medicaid is means-based, and the program has strict income eligibility requirements that vary from state to state. The Affordable Care Act expanded Medicaid eligibility levels in some states beginning on January 1, 2014. For more information on current qualification requirements, individuals should call their State Medical Assistance office or visit Medicaid.gov.
Services covered under Medicaid
Each state runs its own Medicaid programs and determines which services are included. However, all states are required to provide certain mandatory benefits. According to Medicaid.gov, these mandatory benefits generally include services such as:
- Certain inpatient and outpatient hospital services
- Early and Periodic Screening, and Diagnostic, and Treatment (EPSDT) services for children
- Nursing facility services
- Home health services
- Doctor’s services
- Rural health clinic services
- X-ray and laboratory services
- Family planning services
- Midwife services
- Freestanding Birth Center services
- Certified pediatric and family nurse practitioner services
- Tobacco cessation counseling for expectant mothers
In addition to the above list of mandatory benefits, states can also choose to provide coverage for optional benefits like occupational or physical therapy services; speech and hearing services; or respiratory care services.
Dual eligible: How to qualify
Beneficiaries who qualify for both Medicaid and Medicare Part A and/or Part B are known as “Dual Eligible.”
If you are dual eligible, you may qualify for benefits through state-run Medicare Savings Programs (MSPs), which provides coverage for certain Medicare premiums, deductibles, and copayments. While the type of benefits available depends on the dual eligible individual’s income level and the specific MSP, it is possible to cover all out-of-pocket expenses. Individuals who qualify for full Medicare coverage are considered Full Benefit Dual Eligible (FBDE).
In addition, those who qualify for the MSP program automatically qualify for Extra Help (a program that helps low-income individuals with prescription drug costs). For more information on each state’s MSP eligibility requirements and enrollment, please visit this list of state MSP websites.
Medicaid spend down
According to the Medicare website,
Even if your income exceeds Medicaid income levels in your state, you may be eligible under Medicaid spend down rules. Under the “spend down” process, some states allow you to become eligible for Medicaid as “medically needy,” even if you have too much income to qualify. This process allows you to “spend down,” or subtract, your medical expenses from your income to become eligible for Medicaid.
To be eligible as “medically needy,” your measurable resources also have to be under the resource amount allowed in your state. Call your state Medicaid program to see if you qualify and learn how to apply.