Medicare and Medicaid– What is the Difference?
Let’s be honest; choosing the right health insurance can be a daunting task. It is crucial to seek out a trustworthy, subject matter expert who can put you on the right path to the right plan because it’s better to have it and not need it than to need it and not have it. In this blog, I’d like to discuss the differences between Medicare and Medicaid. While they both sound similar, Medicaid and Medicare are different in many ways.
What is Medicaid Anyway?
Medicaid is insurance aid that is provided by the state and federal government to individuals under the age of 65. It is for low-income adults, children, pregnant women, parents, and adults over 65 with a disability. States operate Medicaid within federal guidelines, and each state’s program is a little different. Easy! Well, there are a bit more details that go along with this.
To qualify for Medicaid, an individual must meet the Modified Adjusted Gross Income (MAGI) that has been established by your corresponding state. Ultimately, the Department of Human Services (DHS) determines whether you qualify for Medicaid and what benefits you will receive.
If enrolled in this type of assistance program, there is sometimes a small co-payment
Am I eligible for Medicaid and Medicare?
The eligibility requirements for Medicaid and Medicare are very different. To be eligible for medicaid, the individual applying generally must be a resident of the state in which they are receiving Medicaid. Otherwise, a person’s eligibility is based on their financial eligibility.
The Affordable Care Act made it easier for people to apply and enroll with their single application process across all programs. MAGI will look at taxable income and tax filing relationships to determine financial eligibility. There are also MAGI exemptions to those whose eligibility is based on blindness, disability, or age 65 and older. If you are 65+ and you have a disability, your eligibility will be determined using the income methodologies of the SSI program.
If you qualify, coverage is active either on the date of the application or the first day of the month of application. Benefits may retroactively cover any expenses incurred up to three months prior to the month of application if the individual would have been eligible during that period, he/she applied.
Caveats to Medicaid
Not all nursing homes, assisted living facilities, and other services accept Medicaid payments. Just like the eligibility requirements, different states have different rules that will determine when long-term care is medically necessary. The only consistent requirement across all states is that a doctor must certify that you need to be in a nursing facility for the cost to be covered by Medicaid.
Medicaid also requires you to contribute most of your income to your long-term care when you are living in a nursing home or receiving home health care services. While they do allow you to keep a small stash for personal needs, the remaining assets must go toward your long-term care. How much this ‘small amount’? Great question! Ultimately, the allowance is determined by your state’s rules.
Also, there are income cap states that don’t allow “spend-down.” What is spend-down? Basically, if your income exceeds the Medicaid requirements, some states will allow a person to put the excess income into a trust. However, upon death, the trust proceeds go first to pay off any long-term care that the state provided.
The income cap states (No Spend Down) are Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Nevada, New Mexico, New Jersey, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, and Wyoming.
More Caveats
Because so many people qualify for Medicaid, this can create a shortage of doctors. In some cases, people have waited up to six months for a checkup or non-emergency care.
Lastly, some procedures might not be covered because they are deemed experimental or even unnecessary.
What is Medicare?
Medicare is private insurance for individuals who are over the age of 65. Think of it this way; Medicare is similar to the health insurance your company may have offered during your employment.
There is an enrollment period during certain times of the year (just like there was when you were working). Also, there are options to choose from that best fit your needs and wants. Again, it is always best to speak to an expert before making your choice!
Generally, Medicare health plans include hospital insurance and medical insurance. There are four primary parts A, B, C, & D. I will break them all down for you.
Medicare Parts A Thru D
Part A – This is your hospital insurance. It includes inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. The premium cost for Part A can be waived if you or your spouse worked for at least ten years and paid Medicare taxes. If you or your spouse worked for less than ten years, the premium could be as much as $407/month.
Part B – This is all your preventive treatment that includes doctor visits, tests, and other services. If your income is less than $85k (not combined income), then your premium will be around $144 in 2020. How much you make/made ultimately determines how much your premium will be. You must meet a deductible of $185 each year in Part B. After you pay it, you are responsible for your coinsurance, which is 20% of your medical costs.
Part C – Also known as Medicare Advantage Plans (MAP), are health plans offered by private insurance companies but are overseen by Medicare. They typically cover Part A thru Part D, which means your out of pocket cost could only be for Part B. Have I lost you yet? Well, to qualify for Medicare Advantage, you need to have A and B.
Part D – This is all your prescription drug coverage. It subsidizes the cost of prescription drugs and any associated prescription drug insurance premiums. There is an added cost to your monthly premium that can average around $30/ month. Again, this depends on income. Each year you must satisfy your annual deductible that is determined by your income that will not exceed $415 as of 2019. Just like Part B, after you have met your yearly deductible, a co-pay or coinsurance will take over.
How Do I Know If I Am Eligible for Medicare or Medicaid?
Great question! Essentially, you are eligible for Part A if you are over 65 and you or your spouse worked and paid Medicare taxes for at least ten years. If you or your spouse did not pay Medicare taxes while you worked, you might be able to purchase Part A. Please refer to the Medicare Eligibility & Premium Calculator.
To purchase Part B, you must qualify for A. Part B is voluntary and does require a monthly premium. I want to note that it is essential to enroll during your initial enrollment period. If you wait too long, it could cause a gap in insurance, or you might even be penalized with an increased premium when you do enroll.
The cream of the crop, Part C, is eligible for purchase only when you qualify for parts A & B, and this must be done during the enrollment period.
Your prescription drug cover is eligible when either Part A or B, or both, have been retained. Enrollment is at the same time you enroll in Part A and B. Keep in mind that most Medicare Advantage plans have Part D already embedded into them.
Caveats to Medicare
Doctors can choose not to accept any or all of the Medicare Advantage Plans (MAP). Just like traditional employer-offered insurance, certain providers will and will not take your MAP. Also, some co-pays and deductibles are associated with MAP’s.
In conclusion, the topic of insurance is complicated because there is a wide variety of needs that it must satisfy. Thankfully there are options and experts to help you along in this journey. Medicaid is the aid offered to low-income households at any age, and Medicare is an insurance program for individuals 65+. Medicaid is available to all ages while Medicare is strictly for the 65+ population. Insurance is not a one size fits all. Some individuals may find more value in Medicare Advantage Plans, and some may not