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Medicare vs. Medicaid: Key Differences and How They Impact You

Updated: Nov 8, 2023

Are you confused about the functions of Medicare and Medicaid or often interchange them? It’s understandable, as both are government-backed healthcare programs with similar-sounding names.


However, Medicare and Medicaid serve distinct purposes and different groups of people. This post examines their key differences and how they impact you, equipping you to choose the right one for your needs.

Seniors Enjoying Life Thanks to Medicare & Medicaid

What is Medicare and Medicaid?

Medicare

It’s a health insurance program for people aged 65 and above. People under 65 with certain conditions, such as End-Stage Renal Disease, can also apply. Medicare is a federal government-run, which makes standards mostly similar all over the country.


Medicaid

It is jointly run by the federal and state governments, which makes most aspects different from state to state. Medicaid is a welfare program designed primarily for people of all ages with low incomes.


Coverage

Medicare

Different parts of Medicare offer coverage for different services. Part A and Part B (original Medicare) cover hospital inpatient care and outpatient care, such as doctor’s visits, medical tests, and durable medical equipment, respectively.


Part C, also known as Medicare Advantage, offers the same benefits as original Medicare. It also provides additional benefits such as prescription drugs, dental care, and wellness programs. Part D helps pay for prescription medication.


Medicaid

The benefits Medicaid covers vary between states and territories. However, there are mandatory benefits each state must provide. They include lab tests, home health services, X-rays, family planning services, and inpatient hospital services.


Eligibility

Medicare

Eligibility for Medicare is primarily age-based. Applicants must be 65 or older to be eligible. People with disabilities receiving Social Security Disability Insurance (SSDI) are also eligible, as are those with certain conditions such as kidney failure.


Medicaid

Eligibility is determined primarily by income level. To meet income requirements under the Affordable Care Act (for those below 65), your income has to be at or below 138% of the Federal Poverty Level. Pregnant people and children can also qualify.


Costs

Medicare

Part A premium is free for people who have paid Medicare taxes for at least 10 years. Part B isn’t free and is typically $174.70 (2024). There’s also a 20% co-insurance after you meet the yearly deductible.


Medicaid

Medicaid is usually free, and in cases that require cost-sharing, co-pays can be very minimal. States can also impose out-of-pocket costs, which are also limited to nominal figures.


How Do the Differences Impact You?

If you are 65 and above or have a qualifying condition, Medicare may be a great choice. Its different parts enable you to select a coverage plan that suits your health needs and budget. However, the out-of-pocket costs can be expensive. On the other hand, Medicaid is the way to go if you are a low-income earner. You get to receive comprehensive healthcare for little to nothing.


Can You Have Both Medicare and Medicaid?

Yes, if you meet the eligibility requirements for both programs. Having both Medicare and Medicaid enables you to have little to no out-of-pocket costs for healthcare services. People who receive benefits from Medicare and Medicaid are known as dual eligible.


Silvercrest Insurance

Choose the Right Program for Your Needs and Finances

Whether you are approaching 65 or have financial challenges, we can assess your unique situation and guide you in making the right decision. Call us today to get in touch with one of our expert advisors.


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