Medicare vs. Medicaid: What Are the Differences?

A lot of people get Medicare and Medicaid confused. It’s not a surprise. After all, Medicare and Medicaid are both government-run programs designed to help cover healthcare costs. While they may sound similar, they serve different purposes and have unique eligibility requirements. But what are Medicare and Medicaid? What are the differences between them? Keep reading to find out more!

What Is Medicare?

Medicare is a federal program that provides health coverage for individuals aged 65 or older or with certain disabilities. Additionally, according to Medicare.gov, people with end-stage Renal Disease (permanent kidney failure requiring dialysis) may also qualify.

The Four Parts of Medicare

Medicare expert Toni King broke down the various parts of Medicare on her podcast. Medicare is divided into four parts: A, B, C, and D. Each part covers something different, such as hospital insurance and prescription drug coverage. Keep reading to find out more about the different parts of Medicare.

Medicare Part A (Hospital Insurance)

Medicare Part A is the in-hospital part of Original Medicare. Most people do not have to pay for Medicare Part A. You or your spouse must have worked at least 10 years (40 quarters), paying into the Social Security system, to receive Medicare Part A premium-free. 

What does Medicare Part A Pay for?

There is more covered than just in-patient hospital stays. For instance, if you have surgery, a skilled nursing stay, or need blood, then that is covered under Medicare Part A. Your chronic condition might require home health care or hospice. That is covered under Medicare Part A also.

Medicare Part A Covers:

• Blood 
• Home health care
• Hospice care 
• Skilled nursing facility 
• Most importantly, it covers in-patient hospital stays 

Medicare Part B (Medical Insurance)

Medicare Part B pays for medically necessary services, such as doctors’ services, office visits, a doctor performing surgery, outpatient hospital care, and home health care that Medicare Part A does not cover. It also helps pay for preventive services 

What does Medicare Part B pay for?

• Medical and other services (outpatient surgery, surgeon, doctor visits, anesthesiologist, pathologists, second surgical opinion, etc.). 
• Clinical laboratory services 
• Home health care 
• Durable medical equipment 
• Blood 

• Medicare Part A (Hospital Insurance): Covers hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
• Part B (Medical Insurance): Covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
• Part C (Medicare Advantage): An alternative to Parts A and B, Part C often includes additional benefits and may include prescription drug coverage.
• Part D (prescription drug coverage): Covers the cost of prescription drugs, including shots and vaccines.

Medicare Part C (Medicare Advantage Plan)

Private insurance companies, approved by Medicare, manage Medicare Part C. These Medicare Advantage plans must cover medically necessary services but can charge different co-payments, co-insurance, or deductibles for these services. 

While there are a variety of Medicare Advantage Plans available, each has different pros and cons, depending on your medical needs. It’s important to recognize that you need to review each of these plans to determine the one that will fit your needs. What is included in a Medicare Advantage Plan? Always ask your medical provider or facility if they are accepting what plan you wish to enroll in.

Medicare Part D (Prescription Drug Plan)

Medicare Part D helps cover prescription drugs and can be especially important if you deal with chronic conditions requiring multiple prescriptions. This coverage helps to lower your prescription drug costs. You are only required to have Medicare Part A to be eligible for a Medicare Prescription Drug Plan. 

Most people enroll in both Medicare Part A and Part B when they become eligible for Medicare, but some will wait until later to get Medicare Part D. There are many reasons for delaying Medicare Part D, such as having group benefits, still working, or having VA benefits. Medicare does not force you to enroll in a Medicare Prescription Drug Plan. However, there is a catch if you fail to enroll when you are first eligible, you will face a penalty of 1% per month that you wait to enroll. 

Listen to the Full Episode of Medicare Moments Now!

For more information, visit Medicare.gov.

What Is Medicaid?

Medicaid, on the other hand, is a state and federal program that provides health coverage for some low-income people, families and children, pregnant women, the elderly, and people with disabilities. The exact rules for who is eligible vary from state to state.

Unlike Medicare, Medicaid coverage includes a wider range of services. Many of its beneficiaries do not pay any premiums, though some states may charge small amounts. Medicaid can also cover long-term care costs, something Medicare doesn’t typically cover.

What Does Medicaid Cover?

Medicaid beneficiaries can access a spectrum of care, ranging from hospital visits and doctor appointments to prescription medications. Medicaid covers a variety of preventive services, such as vaccinations, screenings, and check-ups to help maintain overall health and detect potential health issues early. While coverage varies from state to state, other common services that Medicaid covers include:

Maternity and Newborn Care

Medicaid provides coverage for prenatal care, childbirth, and postpartum care, including hospital stays for both the mother and the newborn.

Laboratory and X-ray Services

Medicaid covers necessary diagnostic services, including laboratory tests and X-rays.

Physical and Occupational Therapy

Medicaid covers rehabilitative services, including physical and occupational therapy, to help individuals regain or improve their physical abilities.

Mental Health Services

Finally, Medicare offers coverage for mental health services, including counseling, therapy, and inpatient mental health treatment.

For more information, visit Medicaid.gov.

What Is Duel Eligibility?

“Dual eligibility” refers to individuals who qualify for both Medicare and Medicaid. This means they meet the eligibility criteria for both of these government-sponsored healthcare programs in the United States. The term “dual” comes from the dual coverage provided by being enrolled in both programs simultaneously.

Dual eligibility can provide more comprehensive coverage, as Medicaid may help cover some of the costs that Medicare doesn’t, such as certain out-of-pocket expenses, long-term care services, and prescription drugs. Dual-eligible individuals often face complex healthcare needs. Coordination between Medicare and Medicaid is crucial to ensure they receive appropriate and comprehensive care.

What is the Biggest Difference between Medicare and Medicaid?

The most significant difference between Medicare and Medicaid is the demographic they serve and the eligibility criteria.

Demographic

• Medicare: Primarily serves individuals aged 65 and older. It also covers certain younger individuals under 65 with disabilities, end-stage renal disease (ESRD), or amyotrophic lateral sclerosis (ALS).
  
• Medicaid: Primarily serves low-income individuals and families. Eligibility is based on income, household size, and other factors, and it includes a broad range of populations, such as pregnant women, children, and people with disabilities.

Funding Structure

• Medicare: Funded through payroll taxes, premiums paid by beneficiaries, and general revenues.
  
• Medicaid: Jointly funded by federal and state governments. The federal government sets certain requirements and provides a majority of the funding, while states have flexibility in determining specific benefits and eligibility criteria within federal guidelines.

The Differences Between Medicare and Medicare: A Chart

Bottom Line

While on the surface Medicare and Medicaid may seem similar, they each have distinct purposes and serve different segments of the population. Medicare primarily focuses on providing health coverage for seniors and certain individuals with disabilities. Meanwhile, Medicaid is a crucial safety net for low-income individuals and families, offering a wide range of healthcare services beyond what Medicare covers. Understanding the differences can help you make an informed decision and get the coverage that you need!

Looking for more? Then check out these articles before you go!

• Does Medicare or Medicaid Cover Hospice?
• Medicare vs. Medicaid: Which One Pays for Assisted Living?
• Does Medicare Send Me a Bill?
• The Shocking Truth About Medicaid and Long-Term Care All 55+ Adults Should Know
• 5 Things Medicare Does NOT Cover
• Does Medicare Cover Shots for My Condition?