Understanding Medicare vs. Medicaid

Two of the most well-known government programs, Medicare and Medicaid, have been providing health care benefits and assistance for people who qualify since 1965. These health care programs have names that sound alike, but they are quite different in regards to how they provide coverage, and to whom they provide coverage. 

Today in this country there are over 61 million people with Medicare coverage, over 80 million who have Medicaid, and more than 12 million people who qualify as dual-eligibles with both Medicare and Medicaid health care benefits. 

With so many people in the U.S. getting health care insurance from one or both of these government-sponsored programs, it’s important to have an idea of the similarities and differences between Medicare and Medicaid. 

What are the differences between Medicare and Medicaid?

Medicare is a federally-run government program that provides standard health care benefits to those who meet eligibility requirements. Medicare is funded by taxpayers and employers who have paid into the program throughout their working life. 

Original Medicare insurance has two parts: Part A is hospital insurance, and Part B is medical insurance. Medicare beneficiaries have the option to enroll in a Medicare Advantage plan, known as Medicare Part C, as an alternative to Original Medicare. They can also purchase additional coverage for prescription drugs with a Medicare Part D plan.  

Medicaid is a government assistance program that helps those living on a low income, no matter what their age is, cover their medical expenses. Medicaid is a federal and state-run government program, so coverage and eligibility may vary from state to state. 

Eligibility differences

To be eligible for Medicare in general, a person must be 65 or older, have a qualifying disability, or have end-stage renal disease. Your eligibility for Medicare isn’t dependent on your income as it is with Medicaid.

To be eligible for premium-free Medicare Part A, enrollees or their spouses must have worked and paid into the Medicare program for at least 40 quarters, or 10 years. They must also be United States citizens or legal residents who have lived in the country for at least five years. 

Eligibility for Medicaid is a bit more complicated and varies depending on your state of residence. In all 50 states, Medicaid provides health care assistance for individuals, families, children, pregnant women, seniors, and people with disabilities who live on a qualifying income level.

You may qualify for this assistance program if you:

• Meet federal and state residency requirements, immigration status requirements, and/or citizenship requirements
• Meet federal and state income limits
• Have a qualifying disability such as blindness, etc.

Coverage differences

Original Medicare

Original Medicare Part A covers most hospital, skilled nursing, home health, and hospice care, up to coverage limits. 

Part B covers medically necessary outpatient services, doctor’s visits, durable medical equipment, mental health care, physical therapy, occupational therapy, lab exams, and some medications. It also covers the cost for many preventive services within plan limits. 

Original Medicare Parts A and B don’t cover prescription drugs, or routine vision, hearing, and dental care. Many Medicare Advantage plans do cover these additional benefits. 

Medicare beneficiaries are responsible for paying monthly premiums, coinsurance, and deductibles for their coverage.  Costs and coverage may vary depending on your plan.

Medicaid

Medicaid coverage varies according to the state, but there are some benefits that every state program must include. These are:

• Hospital stays
• Outpatient hospital care
• Doctor’s visits
• Lab and X-ray services
• Family planning services
• Nursing facility care
• Home health care services
• Transportation to and from medical care

Many states also include these optional benefits:

• Prescription drug coverage
• Physical therapy
• Occupational therapy
• Speech, hearing, and language therapy
• Respiratory care
• Vision care
• Dental care

What is a D-SNP Dual-Eligible Special Needs Plan?

The 12 million people in the country who are eligible for both federal Medicare coverage and state Medicaid assistance, may be able to enroll in a D-SNP dual-eligible special needs plan for their health care benefits. 

D-SNPs cover hospitalization, outpatient medical care, and prescription drugs at a lower cost to the enrollees because they get additional federal and state government support not provided by Medicare alone.