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What's the Difference Between Medicare & Medicaid?

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If you don't receive health insurance through an employer or can't afford to purchase a private policy, you may be eligible for government-run Medicare or Medicaid. While their names sound similar, these programs are designed to cover different populations with varying needs. Depending on certain requirements, you could qualify for 1, none, or possibly even both. While fully understanding the programs can be a bit tricky, read on to learn the basics of who's eligible, the services they cover, and what (or if) you have to pay. 

Who's Eligible for Medicare & Medicaid?

Both Medicare and Medicaid are government programs designed to provide healthcare to certain people in need, but the requirements for eligibility are unique to each program.

Medicare is primarily for people over age 65, as well as younger people with certain disabilities, regardless of income. Medicaid, on the other hand, provides free or low-cost coverage to people with a demonstrated financial or medical need.

Read on to see how the qualifying factors differ for each program.

Medicare: If you've paid into the Medicare system through taxes on your earnings while working, you're automatically eligible for Medicare when you reach 65.

Medicaid:
This program is designed for those who have a financial or medical need, regardless of age. In some states, coverage is automatically granted to young adults up to age 21.

Medicare: There's no income requirement.

Medicaid:
This varies by state. If your state has expanded its Medicaid program, you can qualify on income alone if you're below 138% of the federal poverty level. Certain assets such as stocks, bonds, and additional vehicles also count toward determining your eligibility. In some cases, your income might be higher than the guidelines, but you could still qualify if your medical expenses are especially high.

Medicare: There's no requirement.

Medicaid:
If you have children under 18 and a demonstrated financial need, you're likely eligible. If you make too much money to qualify for Medicaid, your kids could still get low-cost coverage through the Children's Health Insurance Program (CHIP), depending on your state.

Medicare: If you've received Social Security Disability benefits for 2 years, you likely qualify for Medicare.

Medicaid:
Though this varies by state, if you qualify for Social Security Disability, and especially Supplemental Security Income, you might also be eligible for Medicaid.

Medicare: Isn't covered.

Medicaid:
If your income is too high to qualify for full Medicaid, you and your child could receive pregnancy-specific services if you meet certain income requirements of your state.

Medicare: Those with ALS or end-stage renal disease qualify for coverage.

Medicaid:
Varies by state.

What Do Medicare & Medicaid Cover?

On top of the requirements for coverage, Medicare and Medicaid also differ in the medical services they cover.

Medicare

There are 3 primary parts to Medicare: Part A, Part B, and Part D. Part A covers costs related to short-term stays in hospitals or other medical facilities, while Part B covers fees for doctors, medical tests, and procedures both in and out of a hospital. Part D can be purchased through private insurance companies to cover the cost of prescription drugs, which is required if you don't have coverage from another source. Together, the 3 parts provide basic coverage for people over age 65.

What Medicare doesn't cover is long-term care in a nursing home or most dental or vision services. If you end needing this type of care, you'll end up paying out of pocket.


There's also what's known as Part C Medicare Advantage coverage. This alternative insurance through private companies usually includes the same coverage as Part A, B, and D, while also having additional benefits. Like private plans, what they offer varies, but could include dental, vision, and long-term care.

Medicaid

No matter the state, Medicaid coverage is required to provide the same benefits as Medicare Part A and B. Prescription drugs can also be covered, but individual states decide which prescriptions they cover and which they don't. States also dictate if they provide benefits beyond the mandatory coverage, such as dental services, physical therapy, and chiropractic care.

What's more, there are 2 primary additions that can make Medicaid more beneficial if you qualify: extended care in nursing facilities and personal care at home.

For these reasons, many seniors who are concerned about needing these kinds of services attempt to qualify for Medicaid instead of automatically enrolling in Medicare.

The Cost of Medicare & Medicaid

While Medicare and Medicaid can be appealing options for those who don't have or can't afford private insurance, it's important to remember that they're not necessarily free. Especially for Medicare, some people might be surprised by the amount of the money they still have to pay in premiums, deductibles, and coinsurance.

Medicare

Those on Medicare don't get 100% of their coverage paid for. The amount of money you're responsible for depends on a number of different factors, including the parts of your plan and the level of your income. Below, get a basic idea of the costs associated with Medicare in 2019, but keep in mind that exact amounts vary depending on your situation.

Premium: Most people don't pay a monthly premium for Part A coverage since they paid at least 40 quarters of taxes into the Medicare system over the course of their careers or they're married to someone who did. If you don't meet these requirements, you'll have to pay a monthly fee depending on how many tax payments you've made.

Number of quarterly Medicare tax paymentsYou pay:
40 or more$0 per month
Between 30 and 39$240 per month
Less than 30$437 per month

Deductible: $1,364 for each benefit period.

Coinsurance:
You'll pay $0 in coinsurance for the first 60 days of a hospital stay within each benefit period and $341 per day for days 61–90. Beyond that, you'll have to pay $682 for each day of a hospital stay in the benefit period, however, these are considered a part of your "lifetime reserve." You're allowed a maximum of 60 reserve days over the course of your life, after which you'll have to pay all related costs.

For stays in a nursing facility, you'll pay $0 for the first 20 days within each benefit period, $170.50 per day for additional days up to 100, and all costs beyond day 100.

Premium: While the standard monthly premium for 2019 is $135.50, this could be slightly less if you receive Social Security, or more if your income on your tax return from 2 years ago is above a certain level. Using your 2017 earnings, below is what you can expect to pay in premiums in 2019.

Income on your 2017 tax returnYou pay:
Individual: $85,000 or less
Joint: $170,000 or less
$135.50 per month
Individual: $85,000–$107,000
Joint: $170,000–$214,000
$189.60 per month
Individual: $107,000–$133,500
Joint: $214,000–$267,000
$270.90 per month
Individual: $133,500–$160,000
Joint: $267,000–$320,000
$352.20 per month
Individual: $160,000–$500,000
Joint:
$32,000–$750,000
$433.40 per month
Individual: $500,000 or above
Joint:
$750,000 or above
$460.50 per month

Deductible: $185 per year.

Coinsurance:
Once your deductible is met, you'll typically be required to pay around 20% of the fees for approved medical services you receive.

Since Medicare Advantage plans are purchased through private insurance companies and vary based on the benefits they offer, premiums, deductibles, and coinsurance could be vastly different depending on the features of the plan.

The amounts you pay for Part D premiums, deductibles, and coinsurance vary by plan, however, no matter what your premium is, there's a monthly adjustment if your income from 2 years prior is above a certain level.

Income on your 2017 tax return:You pay:
Individual: $85,000 or less
Joint: $170,000 or less
Your premium as determined by your plan
Individual: $85,000–$107,000
Joint: $170,000–$214,000
Your premium, plus $12.40
Individual: $107,000–$133,500
Joint: $214,000–$267,000
Your premium, plus $31.90
Individual: $133,500–$160,000
Joint: $267,000–$320,000
Your premium, plus $51.40
Individual: $160,000–$500,000
Joint: $320,000–$750,000
Your premium, plus $70.90
Individual: $500,000 or above
Joint: $750,000 or above
Your premium, plus $77.40

Medicaid

Beyond the required benefits, each state is allowed to determine what their Medicaid services offer, meaning that the cost of participating in the program depends on where you live. If you're eligible, your Medicaid coverage could very likely come with no monthly premium and little to no deductible or copays.

Keep in mind, however, that what you pay is also dependent on your income. Those above the federal poverty level might have to pay a nominal premium as well as coinsurance of up to 20% of the cost of a prescription drug. If you seek emergency services in a non-emergency situation, you could be subject to paying the entire cost of the care you received.

Can You Qualify for Both Medicare & Medicaid?

It's possible to qualify for both Medicare and Medicaid, though is most cases, you'll need to meet both the age minimum of Medicare and the income and medical requirements of Medicaid. If you're a senior with low income and need long-term care in a nursing home, applying for coverage under both programs could be your best bet.

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