Decoding Medicare and Medicaid

Many consumers mistakenly interchange the terms Medicare and Medicaid. Because the programs are closely related, it is easy to misunderstand how they differ unless one has a full working knowledge of each program. While both programs were signed into law in 1965, there are significant differences in eligibility requirements and benefits received.

Medicare is the insurance program most people refer to when discussing Social Security benefits. Eligibility for this program is based on whether or not a person, or their spouse, is insured for benefits. Specifically, a person must be age 65 or older, under 65 and disabled, or suffering from End-Stage Renal Disease (ESRD). It is referred to as an “entitlement program” because participation is not based on need. Medicaid eligibility, however, is based on an individual’s income or financial need. It is called a “needs-based program.” It is interesting to note that a person can be eligible for one or both programs, and eligibility for one program does not guarantee eligibility for the other program. While both Medicare and Medicaid are federal programs, Medicare benefits and rules are the same everywhere in the country and individuals can get further information at their local Social Security office. Medicaid, on the other hand, is under the jurisdiction of each individual state, and benefits. Information on this program is normally found at county social services offices.

Medicare coverage encompasses sub-programs that provide individuals with medical benefits. Part A, or Hospital Insurance (HI), helps pay for in-patient hospital stays, home healthcare, and skilled nursing facility care. Individuals normally do not pay a monthly premium. Payroll taxes that have been paid during employment covers this cost. Part B, or Supplemental Medical Insurance (SMI), helps pay for doctor visits, outpatient hospital care, and things like durable medical equipment, dialysis, x-rays and testing, and ambulance transportation. Enrollment is voluntary as participants must pay a monthly premium and meet a yearly deductible. If beneficiaries choose not to enroll during their initial enrollment period, the next opportunity for enrollment is during open-enrollment season which is normally mid-November to the end of December. Part C, or Medicare Advantage Plan, lets beneficiaries evaluate their needs and create an insurance plan that best suits them. These are private insurance companies, and coverage varies. Part D, or Medicare Prescription Drug Program, is voluntary and has a monthly premium and yearly deductible. Individuals with lower income can be eligible for the government to pay a portion or their entire premium up to a pre-determined amount. Although optional, if a person chooses not to participate, a penalty will be applied to the monthly premium for every month they could have received benefits but chose not to do so. The penalty continues as long as benefits are received.

Since Medicaid eligibility is determined by each state government, eligibility requirements can differ from state to state. Additionally, services provided and payment rates can differ. However, there are federal requirements that every state must meet in order to receive matching funds from the government, and these requirements are very specific. They include such things as inpatient and outpatient care, prenatal care, vaccination services for children, home health care for eligible individuals, family planning, and diagnostic services. Although Medicaid focuses on individuals with low incomes, requirements such as age, disability, pregnancy, and assets can be taken into consideration when determining participation eligibility. While Medicaid must offer coverage to many groups of people, more than half of citizens living in poverty are not eligible for the program. Because it is a needs-based program and the recipients did not pay a tax to receive the benefit, no money is paid directly to the individual. Instead, payments are made to healthcare providers based on a pre-determined agreement.

Medicare and Medicaid both offer medical coverage to individuals who meet participation requirements. If there is any question about which program a person is eligible to participate in, it is best to visit a local human services office or Social Security office where a representative can help determine eligibility. Both programs require the individual to apply for benefits. As with everything in life, all a person can do is find out what options are available to them, apply for those options, and wait for an answer.