You know you need government-sponsored insurance to help cover your healthcare costs, but do you need Medicare or Medicaid? And what’s the difference between the two anyway?
If you’re confused, you’re not alone. Medicare and Medicaid are often mentioned together, but their differences are rarely fully explained.
Medicare provides health coverage if you are 65 and older or have a severe disability, no matter your income.
Medicaid provides health coverage if you or your family has a very low income (in some cases, there are additional requirements; not all very low-income people qualify for Medicaid).
It’s important to fully understand the differences between Medicare and Medicaid so you can seek out the health insurance that’s right for you.
At a Glance: Medicare vs. Medicaid Key Differences Chart
|Who runs it?||The Federal Government||State and Federal Governments|
|Who is it for?||– Seniors 65 and older|
– Individuals of any age who have received Social Security Disability Income (SSDI) for two years
– Individuals of any age with end-stage renal disease or ALS
|Low- to no-income people who meet their state eligibility standards** including:|
– families and children
– pregnant women
– the elderly
– people with disabilities
– adults age 19-64 in many states that have expanded Medicaid
**Specific eligibility requirements vary from state to state
|What does it cover?||Medicare is broken into parts A, B, C, and D, each providing different areas of coverage, which include: |
– Routine and emergency care
– Preventative services
– Hospice care
– Prescription drugs
– And more
Optional benefits like Medicare Supplement or Parts C and D help pay your out-of-pocket costs. Your benefits will vary depending on the supplemental coverage you choose.
|Medicaid coverage is determined on a state-by-state basis, but each state must include the following benefits:|
– Routine and emergency care
– Family planning
– Smoking cessation programs for pregnant women
– And more.
Click this link for the full list of mandated and optional benefits.
|What services of note are not covered?||Long-term nursing home or at-home careDental, vision, hearing aids||Chiropractic services may be covered in some states Some states don’t cover dental or vision care for Medicaid enrollees.|
|What does it cost?||Medicare costs vary depending on the coverage you choose. Costs may include premiums, deductibles, copays, and coinsurance.||Medicaid costs depend on your income and the rules in your state. Medicaid may include low out-of-pocket costs. Some Medicaid expansion enrollees may have to pay premiums|
To help you better understand Medicare vs. Medicaid, let’s look into each program with a little more detail.
Medicare Is for Older and Disabled Americans:
Medicare is a national health insurance program for nearly all people aged 65 and older. It is also available for people with certain disabilities, end-stage kidney failure or ALS. Your eligibility for this program has nothing to do with your income level.
This program is divided into several parts: Medicare Part A and B (Original Medicare) plus optional elements like Medicare Supplement, Medicare Part C and Medicare Part D.
- Part A provides inpatient/hospital coverage.
- Part B provides outpatient/medical coverage
- Part C (also known as Medicare Advantage plans) are Medicare-approved private health insurance plans that replace your Part A and Part B coverage.
- Part D provides prescription drug coverage.
- Medicare Supplement plans add on to, but do not replace, your Part A and Part B.
Original Medicare (Part A and Part B):
When enrolling for Medicare, unless you choose otherwise, you will receive Original Medicare, which includes Parts A and B. Under Original Medicare, the government pays directly for the healthcare services you receive. You can see any doctor and hospital that takes Medicare anywhere in the country.
While Medicare Part A and Part B cover a variety of necessary health services, they don’t cover everything. That’s where extra coverage like Medicare Part C and Part D come in.
Extra Medicare Coverage:
Medicare Advantage (Part C)
If you’re enrolled in Original Medicare (Part A and Part B), you can choose to replace it with a private Medicare Advantage plan. They generally offer additional benefits, such as vision, dental, and hearing, although you will generally not have access to all of the providers nationwide who accept Original Medicare. Most Part C plans also include prescription drug coverage.
Medicare Supplement (Medigap)
Alternatively, you could look into one of the 10 Medicare Supplement plans. (Note that there are far more than 10 plans available for purchase in most areas, because multiple insurers offer coverage. But in nearly every state, plans are standardized according to one of 10 plan designs). These plans pay your Original Medicare out-of-pocket costs – including your 20 percent outpatient copayment and your inpatient hospital coinsurance (most also pay the inpatient deductible). They do not replace your Original Medicare. Keep in mind that Plans C and F are no longer available to newly-eligible enrollees, so they only have access to eight plans, plus the high-deductible version of Plan G.
Part D Prescription Drug Plans
If you don’t get prescription drug coverage elsewhere you can choose to sign up for a Part D plan. This will help to cover the cost of your medications, although you’ll still have out-of-pocket costs that will vary depending on the plan you select.
It’s important to note that long-term nursing home or at-home care is not covered under Medicare. If this is an important option for you and you have Medicare or most other types of coverage, you may want to consider a separate long-term care insurance policy.
Medicaid is For Lower-Income Americans:
Medicaid is a joint federal-state health insurance program that provides health coverage for certain low-income people, families and children, pregnant women, the elderly, and people with disabilities. Often, Medicaid is chosen by those without the ability to access other healthcare resources.
Since Medicaid is administered on the state level, each state sets its own rules for eligibility and coverage. Depending on which state you live in, you may qualify for Medicaid based on your income, household size, disability, family status, and other factors.
Regardless of which state you live in, the following Medicaid benefits are mandatory under federal law:
- Inpatient hospital services
- Outpatient hospital services
- Early and periodic screening, diagnostic and treatment Services
- Nursing facility services
- Home health services
- Physician services
- Rural health clinic services
- Federally qualified health center services
- Laboratory and X-ray services
- Family planning services
- Nurse-midwife services
- Certified pediatric and nurse practitioner services
- Freestanding birth center services (when licensed or otherwise recognized by the state)
- Transportation to medical care
- Tobacco cessation counseling for pregnant women
Medicaid offers many optional services as well such as prescription drug coverage, physical therapy, and hospice care, but it is up to each state to decide what is included in your coverage.
Dual Eligibility: What if You Qualify for Both Medicare and Medicaid?
In some cases, you may be eligible for coverage under both Medicare and Medicaid. This is called “dual” or “dual eligible.” There are Medicare Advantage plans specifically available for people who are eligible for both Medicare and Medicaid; they’re called Dual Special Needs plans, or DSNPs. DSNPs often cover benefits not offered by Medicare, such as routine hearing, vision and dental coverage. They’re available to dual-eligible beneficiaries, but so are other Medicare Advantage plans or just Original Medicare plus Medicaid.
Some dual eligible Medicare beneficiaries are eligible for full Medicaid benefits, while others are eligible for Medicaid-funded benefits that help to cover their Medicare premiums and cost-sharing. You can learn more about dual eligibility in this booklet from the Centers for Medicare and Medicaid Services.
Medicare Disability vs. Medicaid Disability:
If you’re disabled, the question of whether Medicare disability or Medicaid disability is right for you may feel even more complicated because there are a few more steps and rules to consider.
Essentially, if you’re disabled and are approved for Social Security disability insurance (SSDI) benefits, you will be eligible to receive Medicare, but not until after you’ve received 24 months of payments. So while your SSDI eventually gives you access to receiving Medicare benefits, it may be two years before that’s a legitimate option for you.
However, if you’re approved for Supplemental Security Income (SSI) you’ll be immediately eligible to receive Medicaid. There is no waiting period for SSI recipients to receive Medicaid. In most states, once you’re determined to be eligible for SSI, you’ll automatically be enrolled in Medicaid.
Take the Next Step
Medicare and Medicaid target two different groups: older and/or disabled Americans, and lower-income Americans, respectively — although about 12 million Americans are eligible for both.1 Now that you understand the differences between Medicare and Medicaid a little better, you can move forward with the plan that’s right for you.
Understanding Medicare: If you’re interested in signing up for Medicare, you can enroll in Part A and B online. For extra coverage, you can learn more about Medicare Supplement and Medicare Advantage.
Getting Medicaid: If you’re interested in signing up for Medicaid, use our health insurance search below. It will either alert you if your yearly income qualifies for Medicaid. Or, it will calculate your Affordable Care Act tax subsidy if you’re just over the income limit for Medicaid eligibility.