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Medicare vs. Medicaid—Know What’s Right For You

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Chris Smith Chris is a writer with an expertise in Medicare subjects. Having undergone a triple bypass and cardiac rehabilitation under the Medicare umbrella, Chris brings the voice of firsthand experience to his writing.
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The Major Differences Between Medicare and Medicaid: What You Need To Know

While their objectives are similar, Medicaid and Medicare are separately managed healthcare plans with different eligibility requirements and different types of healthcare coverage. Understanding the differences can help you determine which may work for you. 

It’s important to learn how these federal government programs compare in terms of cost and coverage so you can get the right one for you and your family.

Let’s start with the basics of each healthcare program and then drill down to the specifics.

The Basics

  • With Medicare, just like traditional insurance, your medical bills are covered out of a trust funded by premiums (earnings) paid into the system by people who enroll in the program. Eligibility for Medicare is limited to the following: people age 65 and older, disabled individuals under 65, patients with End Stage Renal Disease (ESRD) and patients with Lou Gehrig’s disease (ALS). Your family income is not a consideration in qualifying for Medicare.
  • Medicaid, on the other hand, is designed to help low income people and families get the healthcare they need when they can not afford traditional healthcare so there is an income requirement prerequisite to be eligible. There is no age requirement. For most participants, all covered medical treatments are covered at 100%. One thing to be aware of: it’s funded by the federal government but administered by state and local governments so some rules may vary from state to state.  

A Closer Look

Now that we’ve outlined the general differences between the two, you’ll want to take a deeper dive to learn which one works for your specific situation.

Eligibility

  • Medicare is available to U.S. citizens and lawful permanent residents age 65 and older who have contributed to the plan for at least 10 years through payroll deductions. Medicare is also available to anyone receiving Social Security disability benefits and anyone facing either End Stage Renal Failure or ALS, regardless of their age. 
  • Medicaid is available to anyone who earns less than the federal poverty level. As we said earlier, the program is administered by state authorities so do check with your state if you have any doubts or questions about whether you are eligible for Medicaid. 

Cost

  • Medicaid is free.

 

Family Coverage

  • Medicare is an individual health insurance plan. It does not cover family members. However, a spouse who meets all eligibility requirements except for the 10 years of premium contribution, can use a spouse’s employment history to qualify. 
  • Medicaid on the other hand, is only concerned with income levels. Singles, couples, younger people, and families can all qualify for Medicaid based on their income. There are also these two components to look out for:
    • For Children – Children’s Health Insurance Plan (CHIP), an associated program, provides medical insurance to over 35 million qualifying kids. 
    • Dual Eligibility – For older adults, If you are over 65 and eligible for Medicare and also have a low enough income to qualify for Medicaid, This is called being “dual eligible”. Often seniors in a nursing home can receive benefits from both programs.

Medicare and Medicaid, a Proud Part of American Life

Open Enrollment season for Medicare is October 15 to December 7. This is when you’ll see a ton of ads and hear your friends discussing the pros and cons of Medicare Advantage and Medigap (Supplement), as well as the cost of prescription drug plans that are being offered.

It can get confusing. A program run by the government with over 44 million enrollees is bound to have hiccups but on the other hand, it’s pretty great: 44 million seniors have health care insurance at a time in their life they most likely to need it thanks to Medicare.

While Medicare is big, Medicaid is bigger. Nationwide there are 74 million people receiving health care thanks to Medicaid. Roughly 40% of that number are children. Medicaid helps lower income individuals get the help they need. While it’s a federal program, states contribute to it as well and have the right to amend eligibility requirements. Also, unlike Medicare, covered medical treatments and services can vary from state to state.

Combined, these programs touch over a third of the country’s population and cost over $1.3 trillion annually. Both programs are essential to our national healthcare. If you are eligible for one or both, do yourself and your family a favor and apply.

 

 

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