The Key Differences Between Medicaid and Medicare
by Crystal L. Welton, J.D., LL.M.
Medicare and Medicaid are both government sponsored programs that assist with the cost of healthcare. Because the two programs have similar names, people often confuse how they work and the services they provide. While both programs are funded by taxes and were created by the federal government in 1965, the programs and the coverage they provide are very different.
Medicaid is a joint program between federal and state governments that provides medical and long-term care to low income individuals and families. The federal government provides up to 50% of the funding for each state’s Medicaid program with more affluent states receiving less from the federal government than less affluent states. Because of the partnership between the federal government and each state, there are essentially 50 different Medicaid programs.
Unlike Medicare, Medicaid, which is also known as Medical Assistance in Pennsylvania, is federally mandated to serve the poor and has very strict eligibility requirements, including income and resource limits. Medicaid offers insurance, Waiver programs, and long-term care. For coverage other than long-term care, the Medicaid resource limit is $2,000.00 for an individual and $3,000.00 for a couple, and the Medicaid Long-Term resource limit is dependent upon the individual’s income. In 2014, if an individual has monthly income less than $2,163.00, the resource limit is $8,000.00, which includes general Medicaid resource limit of $2,000.00 as well as a $6,000.00 disregard, and if an individual has net income of $2,550.00, the resource limit is $2,400.00.
Individuals who qualify for Supplemental Security Income (SSI) through the Social Security Administration are automatically eligible for the insurance (as opposed to Waivers and Long-Term Care) portion of Medicaid. Individuals can apply for Medicaid any time throughout the year even if they do not receive SSI.
Medicare is a federal program and is run by the Centers for Medicare & Medicaid Services. Because it is run by a federal agency, it is basically the same everywhere in the United States. Medicare is an insurance program, which individuals pay into during their employment; it is not an entitlement program. At such time as an individual is eligible for Medicare, medical bills are paid from Medicare trust funds which those covered have paid into. It primarily serves people over 65, regardless of their income and serves younger disabled people and dialysis patients.
Medicare hospital insurance (Part A) provides basic coverage for hospital stays and posthospital nursing facility and home health care. Medicare medical insurance (Part B) pays most basic doctor and laboratory costs, and some outpatient medical services, including medical equipment and supplies, home health care, and physical therapy. Medicare prescription drug coverage (Part D) pays some of the costs of prescription medications. Medicare recipients pay a portion of the cost of Medicare through deductibles for hospital and other costs as well as monthly premiums.
For some individuals, including those approaching their sixty-fifth birthday or those receiving Social Security Disability Insurance (SSDI) for at least twenty-four months, Medicare Part A and B are automatically available. There are a few limited circumstances in which an individual may have to apply for Medicare Part A and B benefits. No one is automatically enrolled in Medicare Part D. The Centers for Medicare & Medicaid Services specifies certain times throughout the year when an individual can sign up for Medicare after his initial enrollment period.
It is important to note the differences between these programs, and it may be necessary to meet with an attorney to determine whether an individual is accessing the proper healthcare benefits and to insure techniques are properly utilized to allow an individual to become financially eligible for Medicaid.