I’m sometimes asked what the difference is in Medicare vs Medicaid. While I usually begin my response with something like, “When you hear the word Medicare, focus on the -care at the end, think medical ‘care’. When you hear Medicaid, think about the -aid and how that word pertains to help.” While that is not exactly what I say, it is along those lines.
Of course, depending on the audience, I go into more detail about how Medicare and Medicaid are both government-run healthcare programs and how someone may benefit from having both. Though, there are some big differences between the two. In this post, I will explain the key differences between Medicare and Medicaid. We will also discuss who is eligible for each program, who benefits from having both and how to apply. So, what are you waiting for? Read on to learn more about Medicare vs. Medicaid!
Medicare and Medicaid Are Not the Same Thing
Medicare is a government-run healthcare program that is available to eligible individuals who are 65 years of age or older, as well as those under 65 with certain disabilities. Medicaid, on the other hand, is a needs-based program that provides financial assistance to low-income individuals and families. In order to be eligible for Medicaid, an individual must meet certain income and asset requirements.
One of the key differences between Medicare and Medicaid is that Medicare is primarily funded by the federal government, while Medicaid is jointly funded by the federal government and the states. This means that each state has some flexibility in terms of how they administer their Medicaid program.
Another difference between Medicare and Medicaid is that Medicare is an earned benefit available to those who have worked and paid into the system through payroll taxes, while Medicaid is a needs-based program available to low-income individuals and families.
Medicare also covers a wide range of healthcare needs, including hospital care, skilled nursing facility care, home health care, and hospice care. Medicaid, on the other hand, covers a more limited range of health services. Although, paired together, Medicaid may pay some or all of the out-of-pocket expenses associated with Medicare.
How Do I Qualify for Medicare?
You must qualify for Medicare one of two ways. The first way is to be 65 years of age older and have enough credits earned through your or your spouse’s work history.
The second is, you may qualify for Medicare if you are disabled, regardless of your age.
Do I Have to Pay for Medicare?
Keep in mind, there are premiums for Medicare. Most people receive Part A premium-free because they or a spouse have worked and paid Medicare taxes for at least ten years, earning the needed 40 credits to qualify.
If you are disabled according to Social Security, you may receive premium-free Part A through your own work record or that of a parent in limited circumstances.
Part B has a monthly premium, which is deducted from your Social Security benefit if you receive one. If you don’t receive Social Security, you will get a quarterly bill for the Part B premiums. You may be able to set up monthly payments instead of paying quarterly. The standard Part B premium in 2024 is 174.70. If you are a high-income earner, you may be subject to an Income Related Monthly Adjusted Amount (IRMAA).
If you are otherwise eligible for Medicare based on age but did not work long enough or earn enough credit hours, you can still buy Part A. The cost for Part A is based on the number of quarters worked. If you or your spouse worked between 30 and 39 quarters, you will pay $278/mo in 2023. If you or your spouse worked less than 30 quarters, you will pay $505/mo in 2023 for Part A.
When Will My Medicare Start?
If you are eligible for Medicare based on your age and are already receiving Social Security benefits or Railroad Retirement benefits, you will be automatically enrolled in Medicare Part A and Part B upon turning 65. You will receive your red, white, and blue Medicare card in the mail about three months before your 65th birthday
If you are not receiving Social Security or Railroad Retirement Board benefits, you will need to actively enroll in Medicare Part B. Also, if you continue to work and receive healthcare insurance through your employer or are covered on another’s plan, it may still be in your best interest to enroll in Part B. Be sure you are aware of the enrollment windows and whether another plan is considered “creditable”. Missing your initial enrollment period or failing to maintain creditable coverage could cost you late penalties for the rest of your life.
If you have been receiving Social Security Disability Insurance (SSDI) or Railroad Retirement Board (RRB)disability benefits for at least 24 months, your Medicare will begin the 25th month.
Do I Qualify for Medicaid?
While someone who is not a Medicare beneficiary may qualify for Medicaid, the requirements are very narrow. Because requirements to qualify for Medicaid are different for Medicare beneficiaries, I will focus on what those requirements are here.
Medicaid is run by the states, so each state has its own set of guidelines, but all must meet or exceed federal requirements. Since Medicaid is a needs-based program, your income and assets will be taken into account to determine if you are eligible.
A subset of Medicaid is Medicare Savings Programs (MSP) of which there are four:
Qualified Medicare Beneficiaries (QMB)
Specified Low-Income Medicare Beneficiaries (SLMB)
Qualifying Individual (QI)
Qualified Disabled and Working Individuals (QDWI)
The income limit varies from state to state and by program, but in general, if your income is at or below 150% of the federal poverty level, you may qualify for QMB, SLMB or QI. Resource limits must be met, as well. To qualify for any of the MSPs, you must also be enrolled in Medicare Part A and Part B.
Does It Help to Have Medicare and Medicaid?
Medicare Savings Programs are designed to help Medicare beneficiaries with low incomes and few assets pay for some or all of their Medicare premiums and other healthcare out-of-pocket costs. These costs include Medicare Part A premiums some people are subject to, Part B premiums, deductibles, coinsurance, and copayments.
As you can see, there are major differences between Medicare and Medicaid and the two programs couldn’t be more different. Though, the point at which they work together can be very helpful for a beneficiary.
How Do I Find Out More?
If you are eligible for Medicare and think you may qualify for Medicaid or a Medicare Savings Program, you may contact your state’s Medicaid office or the Social Security Administration. Or, you can call me – I can help. I am here to answer questions and help you apply for benefits.
In a future post, I’ll talk more about the different Medicare Savings Programs, what the income and resource limits are, and how each program can help you pay for your Medicare costs.
What other questions do you have about the difference between Medicare and Medicaid? Please let me know in the comments. I’m happy to help!