Elder law attorneys are often asked by clients about the difference between Medicare and Medicaid. While the names of these government-sponsored programs sound very similar, each has a distinct purpose and serves a specific audience.
MEDICARE is a federal health insurance program. No matter what your income is, you can obtain Medicare benefits if you are 65 and over, or have a qualifying disability. The program is not free – you must pay part of the costs through deductibles for hospital stays and you must pay monthly premiums for coverage.
MEDICAID is a federal and state financial assistance program for people over 65, people with disabilities, children, pregnant women and parents of eligible children. To be eligible for Medicaid benefits, individuals from these groups must also have low income. Because it is run jointly by the state and the federal government, rules and eligibility requirements vary state by state.
The two programs offer similar coverage and services.
The primary difference between the two programs is that Medicare eligibility depends on your age while Medicaid is designed to meet the needs of low-income individuals and other select special circumstances, regardless of age.
Here’s another quick overview of the differences between the two programs:
|What is it?||A federal health insurance program||A joint federal and state* financial assistance program to help cover medical and long-term custodial care expenses|
|Who is it for?||People who are age 65 and over, or who have a qualifying disability or condition||People over age 65, people with disabilities, children, pregnant women, and parents of eligible children|
|What are the primary eligibility requirements?||Being age 65 or older
Having a qualifying disability
A minimum of 10 years paying Medicare taxes
|Being a member of one of the eligible groups
Having low income
|What does it cover?||
|What does it cost?||Monthly premiums, deductibles, and coinsurance apply||Free or low-cost|
* Because each state runs its own Medicaid program, eligibility requirements and benefits can vary from state to state.
Medicare — Healthcare Coverage in 4 Parts
Medicare health insurance is broken down into four parts, each of which covers different types of services and products.
Part A: Hospitalization Coverage
This part covers stays and services at a hospital, skilled nursing facility (or nursing home), and also for some home health services such as physical and occupational therapy. Part A Medicare coverage is free for most people, assuming they have paid into Medicare via taxes throughout their lives. Medicare’s nursing home benefit does not exceed 100 days. Medicare will pay the entire bill at the nursing home for the first 20 days, but there is a $185.50/day Medicare co-pay for days 21 – 100. It’s also important to note that the nursing home benefit is only applicable if the patient’s health is improving while at the nursing home. If their condition plateaus, they are no longer eligible.
Part B: Standard Health Insurance
This part covers health services outside of hospitalization including routine and non-routine doctor’s visits, ambulance services, lab tests, flu shots, mental health care, durable medical equipment like wheelchairs and walkers, and more. There is a monthly premium for Part B, but it is substantially lower than private health insurance.
Part C: Medicare Advantage Plans
Part C plans are approved by Medicare, but provided by private companies. These privately run plans typically replace the coverage offered under Medicare Parts A, B, and D. In addition, some Medicare Advantage plans also include hearing, vision, and dental coverage. Patients on a Medicare Advantage plan are usually restricted to seeing providers within a specific network. Medicare Advantage members must also continue to pay Part B premiums, and coinsurance, deductibles, and copays do apply.
Part D: Prescription Drug Coverage
Depending on an individual’s prescription drug needs, it may make sense to pay additional monthly premiums, deductibles, and copays to get Part D Medicare coverage, which provides enhanced prescription drug coverage. If the individual also has a Part C Medicare Advantage plan, it’s important to make sure that they aren’t doubling up on coverage.
Because of the strict financial eligibility requirements, individuals covered by Medicaid do not pay anything for services covered by the program. Unlike Medicare, which is a health insurance program, Medicaid is a financial aid program that is designed specifically to defray or eliminate medical expenses for those in greatest need.
Because Medicaid, also known as Title 19, programs are jointly managed by both federal and state governments, specific eligibility requirements and benefits vary from state to state. The rules for Medicaid eligibility in Connecticut are very specific and precise, with very little room for error.
Here are some basics you should know about:
- 5-year lookback period
- $1,600 asset limit
- Real estate cannot be counted if making good faith effort to sell
- Generally, your residence is exempt
- Assets held jointly are presumed to be owned solely by the applicant
- You are allowed an irrevocable burial contract up to $10,000
- The cash surrender value of life insurance policies is excluded if the total face values of the policies do not exceed $1,500.
- The total assets of the spouse at home must be evaluated on the Date of Institutionalization
For all states, the federal government mandates that certain services are always covered. The current list of mandated services is available on the Medicaid.gov website, and includes:
- Inpatient and outpatient hospital services
- EPSDT: Early and Periodic Screening, Diagnostic, and Treatment Services
- Home health services
- Laboratory and X-ray services
- Family planning services
- Transportation to medical care
Learn More About Medicare and Medicaid
While this brief overview helps explain the difference between these two programs, there is a great deal more to learn about Medicare and Medicaid, when to use which program, what restrictions apply, and how to best protect your assets while also ensuring the best and most cost-effective medical coverage.
The fact is, there are few planning tasks more intimidating than applying for Medicaid. The process can quickly become overwhelming, both because it’s complicated and because it opens up a Pandora’s Box of legally nuanced questions and concerns.
If you’re ready, learn how we can help with Medicaid planning to protect assets from the high cost of long term care expenses and nursing home care. It’s never too early to get started–we can help you.