Both Medicare and Medicaid programs provide valuable benefits for millions of Americans. But there’s a lot of questions about them: What they offer and cover, how much they cost, and who is eligible.
There are several important differences between these two programs, which mainly involve the way in which you qualify for coverage, and who is responsible for running the program.
Medicare and Medicaid also sound similar, but they’re actually very different. Let’s review the basics of both programs and explain how it works when you qualify for both Medicare and Medicaid.
Medicare, developed in 1966, is a government program that was created to help retired Americans get affordable health insurance. The basic program is now known as Original Medicare. Original Medicare is split into two “parts.”
Part A covers you for inpatient services and procedures, including:
You can think of Part A as coverage for when you’re admitted to a facility for care for longer than one day.
When you use Medicare Part A, you have to pay for certain costs out of your own pocket. The biggest expense under Part A is the inpatient hospital deductible. For 2021, the deductible is $1,484. This is your share of costs for the first 60 days of Medicare-covered inpatient hospital care. for the first 60 day. After 60 days, your share will be $371 per day.
. This means that you have to pay the first $1,408 of your Part A bill before Medicare will start covering your costs.
But the Part A deductible isn’t like the deductible you might have with private insurance. With Original Medicare, you could pay the deductible more than once during a year - which could happen if you go to the hospital more than once in a year, or if you need skilled nursing several times.
If these events are separated by more than 60 days, you’ll pay the deductible more than once.
Medicare Part B provides covers certain day-to-day medical expenses, including:
Like Part A, you’ll pay some costs out of pocket for Part B services. The two most common expenses are:
An important fact to keep in mind is that there is no cap on the amount you could pay in a year. If you go to the hospital several times, or have a major illness, you’ll pay out of pocket the whole year. This is not how most other health insurance works. Most Medicare Health Plans like Medicare Advantage have an out-of-pocket maximum limit. Once you hit the limit, the plan pays for everything as long as it’s a covered service.
Many people worry about spending too much money on Medicare. The lack of a spending cap and prescription drugs are two reasons people often add additional coverage.
You have options in how you get your Medicare coverage: Original Medicare or Medicare Advantage. Original Medicare doesn’t cover prescriptions. Most Medicare Advantage health plans and all Medicare prescription drug plans do offer prescription drug coverage. Medicare Advantage plans also offer additional benefits, coordination of benefits, and often more predictable costs. Therefore, many Medicare recipients join Medicare Advantage plans. However, many individuals prefer Original Medicare and enrollees can also enroll in standalone prescription drug plans(Medicare Part D), or buy Medicare Supplement (“Medigap”) insurance policies to fill gaps in coverage.
In addition to annual spending caps, both Medicare Advantage and Medigap plans help pay for the costs you’d normally pay under Original Medicare:
Medicare is health insurance for:
To be eligible for Medicare, you must be a United States citizen, or a permanent legal resident. If you’re a permanent legal resident, you must have lawfully lived in the United States for at least five consecutive years.
If you receive Social Security or disability income for two consecutive years, you’ll enter Medicare automatically, as long as you qualify based on citizenship or residence.
Unlike Medicare, Medicaid is based on income and asset levels rather than age.
There are two types of Medicaid coverage: traditional and expansion. But we will only cove the basics of traditional Medicaid since most people with Medicare are not eligible for expansion Medicaid.
Eligibility for traditional Medicaid is based on your income, family size, and asset level. Each State can set its own requirements, but the income limit is generally 133% of the Federal Poverty Level.
In addition to having a low income, you must have limited assets. The limit for most individuals is $7,730, but it doesn’t include certain assets like your home or car.
In general, for Americans aged 65 or over, Medicaid is designed for people who are:
When you’re on Medicaid, your state will re-verify your eligibility every year. But you may lose your eligibility if your income and asset levels increase.
If you qualify for Medicaid, you’ll receive low-cost health insurance from your state, which may cover you for:
Benefits can vary by state, but Medicaid covers vision, dental, and hearing services in many cases. You may have a small deductible to pay each year, and you might have very low copayments or coinsurance.
Yes, it’s possible to be covered by both programs. A person who is eligible for both programs is called dual-eligible (you might also encounter the term “medi-medi”).
When you have both Medicare and Medicaid, you need to know that Medicare is your primary insurance. Medicaid is the secondary, or backup, coverage. This means Medicare pays most of the cost for services, and Medicaid pays the rest.
In many cases, dual-eligible beneficiaries will receive services but have no out-of-pocket cost. But they must use doctors and facilities that accept both Medicare and Medicaid patients.
One of the most valuable benefits of being dual-eligible is the Medicare Savings Program (MSP), which is based on a range of income levels.
If you qualify for the MSP, your state will cover all or a portion of your Medicare premiums. Depending on your income levels, you could get help with Part A premiums, Part B premiums, or both Part A and Part B premiums. Or you may have no premium payment for your health insurance coverage.
If you have dual-eligibility for Medicare and Medicaid, you can receive discounts on prescription drugs because dual-eligible beneficiaries participate in a program called Part D Low-Income Subsidy Program, or often referred to as Part D “Extra Help”.
With Part D Extra Help, your cost for medications could cost as little as $9.20 for brand name drugs, and $3.70 for generics.
You also must enroll in a Medicare Part D prescription drug plan. In fact, you will automatically be enrolled in a plan if you don’t choose one yourself, but you have the freedom to change plans if needed, though there may be time restrictions on when you can make the change.
If you’re dual-eligible, you can get a private Medicare Advantage plan. Medicare Advantage plans can combine several types of coverage into one plan:
Many insurance companies also have plans designed specifically for dual-eligible people. These plans have the lowest out-of-pocket costs of any Medicare Advantage plans. They can also provide other benefits like transportation to and from medical appointments.
Being eligible for both Medicare and Medicaid can be a valuable benefit. Your costs will be capped for all kinds of services and procedures, and your prescription drug costs will be much less than if you only qualify for Medicare.
To understand your options, call 800-620-4519 or you can find and compare Medicare Advantage plan online using our plan comparison tool. Just enter your zip code to get instant Medicare quotes for available plans in your area.
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