Orlando Harmon
Medicare and Medicaid are government-administered health insurance programs. Medicare is federal health insurance for people aged 65 and older, as well as some people under 65 with certain disabilities. On the other hand, Medicaid is a joint federal and state program that provides health coverage for people with limited income and resources. While Medicare and Medicaid are both government-administered insurance programs, they differ in covered services and cost-sharing.
| Characteristics | Values |
|---|---|
| Type of Program | Medicare: Federal health insurance program |
| Medicaid: Joint federal and state program | |
| Who is it for? | Medicare: Anyone 65 and older, and some people under 65 with certain disabilities or conditions |
| Medicaid: People with limited income and resources, including children, adults, pregnant women, people with disabilities, and seniors | |
| Benefits | Medicare: Covers prescription drugs, doctors' services, outpatient care, and other medical services |
| Medicaid: Covers nursing home care, personal care services, emergency ambulance services, dental services for people under 21, and some prescription drugs not covered by Medicare | |
| Eligibility | Medicare: Eligibility starts three months before turning 65 and ends three months after turning 65 |
| Medicaid: Eligibility requirements vary by state, generally based on income and resources, and may include residency requirements | |
| Costs | Medicare: May have premiums, deductibles, and co-payments |
| Medicaid: Generally limits out-of-pocket costs for beneficiaries, who usually don't pay anything for covered medical expenses but may owe small co-payments for some items or services |
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What You'll Learn
Medicare eligibility
Medicare is a federal health insurance program for people aged 65 and over. Some people under 65 with certain disabilities or conditions may also be eligible for Medicare. These include End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant) and ALS (also known as Lou Gehrig's disease).
Most people become eligible for Medicare three months before turning 65 and remain eligible for three months after turning 65. Some people receive Medicare automatically, while others must actively sign up. This depends on whether you start receiving Social Security benefits before turning 65.
You won't have to pay a premium for Medicare Part A if you qualify for or are already receiving retirement or disability benefits from Social Security or the Railroad Retirement Board. You will also receive Part A for free if you are under 65, or you are 65 and you (or another qualifying person) paid Medicare taxes while working for a certain amount of time, usually at least 10 years. If you don't qualify for premium-free Part A, you may be able to buy it.
You will have to pay a premium for Medicare Part B every month, even if you don't use any of the services it covers. Medicare Part B covers medical services like doctors' services and outpatient care, which are not covered by Part A. Monthly premiums for Part C and Part D coverage vary based on the plan you join and can change each year. You may also have to pay an extra amount each month based on your income.
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Medicaid eligibility
Medicaid is a joint federal and state program that provides health coverage to Americans with limited income and resources. It is the single largest source of health coverage in the United States, covering over 77.9 million people.
Eligibility for Medicaid is determined by both federal and state rules. While the federal government sets general rules that all state Medicaid programs must follow, each state runs its own program, meaning that eligibility requirements and benefits can vary from state to state.
Federal law requires states to cover certain groups of individuals. Low-income families, qualified pregnant women and children, and individuals receiving Supplemental Security Income (SSI) are examples of mandatory eligibility groups. States have additional options for coverage and may choose to cover other groups, such as individuals receiving home and community-based services and children in foster care.
The Affordable Care Act of 2010 created a new methodology for determining income eligibility for Medicaid, based on Modified Adjusted Gross Income (MAGI). MAGI is used to determine financial eligibility for most children, pregnant women, parents, and adults. It considers taxable income and tax filing relationships. Some individuals are exempt from the MAGI-based income counting rules, including those whose eligibility is based on blindness, disability, or age (65 and older).
In addition to income requirements, state residency, and citizenship or legal immigration status are also typically required for Medicaid eligibility.
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Medicaid coverage
Medicare and Medicaid are both federal insurance programs, but there are some key differences between the two. Medicare is a federal program that provides health insurance for anyone aged 65 and older and some people under 65 with certain disabilities or conditions. On the other hand, Medicaid is a joint federal and state program that provides health coverage to people with limited income and resources.
Mandatory benefits under Medicaid include inpatient and outpatient hospital services, physician services, laboratory and x-ray services, and home health services. Federal law also requires states to cover dental services for Medicaid recipients under the age of 21, with the option to extend these benefits to those 21 and older. Additionally, all states must provide uninterrupted Medicaid coverage to former foster children until they turn 26, provided they meet certain conditions.
Optional benefits under Medicaid may include prescription drugs, case management, physical therapy, and occupational therapy. Some states have expanded their Medicaid programs to cover all adults or individuals below a certain income level, regardless of other factors. However, eligibility requirements and benefits can vary, and some states may offer additional benefits beyond the mandatory ones.
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Medicare costs
Medicare is a federal health insurance program for anyone aged 65 and older and some people under 65 with certain disabilities or conditions. Eligibility for Medicare usually starts three months before turning 65 and ends three months after turning 65. Some people get Medicare automatically.
Medicare Part A covers inpatient hospital stays, care in a skilled nursing facility, and some home health care services. Meanwhile, Medicare Part B covers medical services like doctors' services, outpatient care, and other medical services that Part A does not cover.
There is no yearly limit on what you pay out-of-pocket unless you have supplemental coverage, like a Medicare Supplement Insurance (Medigap) policy, or you join a Medicare Advantage Plan. Typically, you pay a monthly premium for Medicare coverage and part of the costs each time you use a covered service. If you have a limited income and resources, you may be able to get help from your state to pay your premiums and other costs, like deductibles, coinsurance, and copays.
Medigap policies can help lower your share of costs for Part A and Part B services in Original Medicare. Some Medigap policies include extra benefits, such as coverage when you travel out of the country.
Medicare Part D is Prescription Drug Coverage. Since January 1, 2006, everyone with Medicare has had access to prescription drug coverage, regardless of income, health status, or prescription drug usage. If you have limited income and resources, you may be able to get Extra Help to pay for your plan premiums and other drug costs.
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Medicaid costs
Medicaid is a federal-state program that provides health coverage to people with limited income and resources. While the federal government has general rules that all state Medicaid programs must follow, each state runs its own program, meaning eligibility requirements and benefits can vary. As such, Medicaid costs are shared between states and the federal government, with the federal government providing a guarantee of federal matching payments with no preset limit. This percentage of costs paid by the federal government is known as the federal medical assistance percentage (FMAP) and varies across states, specific services, types of enrollees, and whether the costs are for medical care or program administration.
The FMAP is designed so that the federal government provides a match rate of at least 50% and a higher match rate for states with lower average per capita income. For example, states that have implemented the Affordable Care Act (ACA) Medicaid expansion receive a 90% FMAP for adults covered through this expansion. Administrative costs incurred by states are usually matched by the federal government at a 50% rate, but some functions, such as eligibility and enrollment systems, receive higher match rates. In the case of U.S. territories, annual federal funding for Medicaid is subject to a statutory cap and fixed matching rate.
States can impose copayments, coinsurance, deductibles, and other similar charges on most Medicaid-covered benefits, and these amounts vary with income. All out-of-pocket charges are based on the individual state's payment for that service, and while they generally apply to all Medicaid enrollees, they are limited to nominal amounts. Exempted groups from these charges include children, terminally ill individuals, and individuals residing in an institution. Additionally, out-of-pocket costs cannot be imposed for emergency services, family planning services, pregnancy-related services, or preventive services for children.
Medicaid also provides "disproportionate share hospital" (DSH) payments to hospitals serving a large number of Medicaid and low-income uninsured patients to offset uncompensated care costs. DSH payments totalled over $17 billion in FFY 2023, and while federal DSH spending is capped for each state and facility, states have discretion in determining the amount of DSH payments to each hospital.
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Frequently asked questions
Medicare is federal health insurance for anyone aged 65 and older, as well as some people under 65 with certain disabilities or conditions.
Medicaid is a joint federal and state program that provides health coverage for people with limited income and resources.
Medicare is federal health insurance for people over 65 and those with certain disabilities, while Medicaid is a joint federal and state program offering health coverage for those with low incomes. Medicaid covers benefits not usually covered by Medicare, such as nursing home care and personal care services.
Yes, it is possible to have both Medicare and Medicaid. If you are eligible for both, they will work together to provide health coverage and lower your costs.
The eligibility requirements for Medicaid vary from state to state. Generally, you must meet your state's rules for income and resources, and other rules such as being a resident of the state.
