What’s the difference between Medicaid and Medicare? The two healthcare programs may sound similar, however, they differ quite a bit. Learn the details and your options when it comes to Medicaid vs. Medicare.
Understanding Medicaid vs. Medicare
They sound the same, but there is more than one difference between Medicaid and Medicare. The government-sponsored programs were launched in 1965 by the U.S. government and are equally funded by the taxpayer.
Designed to safeguard the health of low-income beneficiaries, Medicaid is quite dissimilar to Medicare, which was created with long-term care for elderly individuals in mind. Both programs provide the best standard of health care to certain groups of people residing in the United States, however, Medicaid serves people of all ages while Medicare serves seniors who are 65 years of age and older.
This isn’t the only difference between Medicaid and Medicare though. Recipients should be aware of the contrasts between Medicaid vs. Medicare coverage and eligibility to ensure their wellbeing. See the following topics regarding Medicaid vs. Medicare:
- Key Difference Between Medicaid and Medicare
- Being Eligible for Medicaid and Medicare
- Which program pays first?
Learn the Key Differences Between Medicaid and Medicare
Rising healthcare costs are impacting the middle class, with costs said to be rising faster than inflation. The difference between Medicaid and Medicare lies in the fundamentals of targeted audiences.
While both initiatives are aimed at helping Americans in need of health care, their similarities basically end there. Prior to determining eligibility, review the variations associated with Medicaid vs. Medicare:
- Target audience – Medicare is created for people age 65 and over. When qualifying for Medicare, income, assets and resources are irrelevant. As long as Medicare taxes are paid in employment for 10 years or more, a recipient can gain coverage. Medicaid, on the other hand, covers all ages, and all types of people for that matter. Income, assets and resources must meet eligibility standards.
- State vs. Federal – Perhaps the biggest difference between both programs is that Medicare is run by the federal government, whereas Medicaid is a joint federal and state program.
- Services included – Should Medicare not cover something, chances are Medicaid will. Examples of services that set Medicaid vs. Medicare apart include prescription drugs and medications, hospital stays and doctor visits.
Something else to keep in mind when analyzing the difference between Medicaid and Medicare is that Medicare is divided into four parts:
- Hospital Insurance – Includes inpatient hospital care, skilled nursing, home health care and hospice care.
- Medical Insurance – Includes outpatient care, durable medical equipment (DME), assistance from health care providers and doctors, as well as some preventative services.
- Private Insurance Option – Includes everything included under part A and B, as well as additional benefits and/or services for a fee.
- Outpatient Prescription Drug Insurance – Includes financing for prescription drugs and prevents future inflation on prescription drug prices.
State programs ought to be investigated to fully understand what optional benefits are available with Medicaid schemes.
Which Program Pays First?
Medicaid will fund care as a final option, in the event that the dual-eligible beneficiary requires services that are not Medicare-covered. Since Medicare is designed to afford just a portion of healthcare costs, dual eligibility is desirable. Coverage cannot be obtained through the Health Insurance Marketplace if a recipient is already covered by Medicare. This is another key difference between Medicaid and Medicare.
Unlike Medicare, Medicaid does fund long-term care, such as home and nursing home custodial care. Recipients with Medicare Advantage plans can make the most of cost-sharing, which involves Medicare paying a lump sum after a provider files a claim. The remaining amount is then paid by Medicaid. Typically, the rate is determined by the state.
Meeting Requirements for Medicaid and Medicare
In some cases, the recipient who applies for health insurance coverage may find out that he or she is a “dual eligible beneficiary.” This term is used to describe beneficiaries who are enrolled in both initiatives, or who qualify to enroll in both Medicare and Medicaid. The beneficiary will be entitled to receive hospital and medical insurance under Medicare, as well as the maximum amount of Medicaid benefits.
State residents who accept funding assistance through the “Medicare Savings Program” (MSP) may enroll. Examples of the services one might get cost sharing or premium relief for include:
- Specified Low-Income Medicare Beneficiary (SLMB) Program
- Qualified Medicare Beneficiary (QMB) Program
- Qualified Disabled Working Individual (QDWI) Program
- Qualifying Individual (QI) Program
The way in which a beneficiary claims Medicare vs. Medicaid benefits will depend on which state he or she lives in. Some recipients might receive funding assistance on a Fee-For-Service basis, and others, through Medicaid Managed Care plans.
Last Updated: March 10, 2023