Medicare and Medicaid – What’s the Difference?
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe words Medicare and Medicaid are very similar, and in fact, the services they provide do have some similarities. However, the types of services in each of these programs and qualification for benefits are distinctly different.
Medicare Explained
Medicare is a government-funded health insurance program for individuals age 65+. Those with certain disabilities or who have permanent kidney failure also qualify. The Social Security Administration handles the enrollment for Medicare Parts A and B (hospital and medical insurance, respectively).
Medicare has several additional health plan options that provide coverage beyond Parts A and B. These plans are optional but highly recommended. For example, the Medicare Advantage Program (sometimes called Part C) is where all health care services and prescriptions are covered through one Medicare-approved insurance provider.
Also, there are currently several supplemental (or Medigap) plans to choose from (Part G, K, L, M, and N). These plans essentially cover and pay for all health-related expenses that Parts A and B do not. Additionally, Part D is the prescription drug plan (not needed for those who enroll in the Advantage Plan). Supplemental Medicare coverage is available through Medicare-approved private health insurance companies, such as Anthem or United Health Care.
Many ask whether Medicare covers long-term care. It does not. Medicare does provide limited coverage for short-term care, noted below:
- 100% of the first 20 days in a Medicare-approved skilled nursing facility after a three-night minimum inpatient hospitalization
- 80% of days 21-100 in a Medicare-approved skilled nursing facility
- Short-term rehabilitation care at a nursing home after a hospitalization
- And in some cases, rehabilitation services and in-home therapy are covered
Medicaid is a “Needs-Based” Program
Medicaid is a joint federal and state-run program that assists those who don’t have the financial resources to pay for health care. Eligibility requirements and programs will vary by state. However, the government requires that all states assist those with disabilities and certain populations. Medicaid.gov reports that over 72.5 million Americans receive Medicaid-provided health coverage.
Medicaid expansion (created under the Affordable Care Act (ACA)) provides coverage to those with low income or limited access to an employer health plan. States do have the ability to opt-out of the expansion program, and today, twelve states have.
As mentioned, Medicaid assists with healthcare costs and expenses associated with assisted living communities, nursing homes, and care received in the home. In addition, Medicaid may cover:
- Respite care
- Inpatient and outpatient hospital services not covered by Medicare
- Home health services
- Physical, occupational, or speech therapy
- Hearing aids
- Eyeglasses
- Hospice
- Prescriptions
- Personal care services
It’s common for those age 65+ to apply for Medicaid to cover the cost of long-term care. In this case, they’ll be required to prove eligibility, both medically and financially.
Medicaid Qualification
Medically: Any individual who requires long-term care and doesn’t have the resources to pay for care. This includes children, young adults, and the elderly. The care must be deemed medically necessary, and each state has its own rules as to qualification. However, all states require a doctor’s certification indicating the need for long-term custodial care to receive Medicaid.
Financially: Income that is equal to or less than 300% of the monthly Supplemental Security Income (SSI) limit ($783 this year); that’s $2,349 per month. This is the case for most states, but not all. Some are more flexible with income qualifications.
For those with significant medical needs (and expenses) but don’t qualify under the income guidelines, Medicaid will provide support through the “spend down” process. This is where you must personally pay for medical and long-term care costs until your income and assets are reduced to levels that enable qualification.
- Today, that amount is $2,000 of assets for one person or $3,000 for married couples where both are receiving care. (If one spouse requires long-term care, the healthy spouse has some “asset protection.” Asset limits range between $25,000 and $130,000.)
- If you remain in your home or intend to move back in, your home is excluded from spend-down (equity limits are applied and will vary by state).
Summary
The information shared is just a peek into the entire Medicare and Medicaid programs. To learn more, check out these websites: medicare.gov, medicaid.gov, usa.gov/medicaid, hhs.gov, and shiptacenter.org. When you’re ready to apply for benefits, I recommend that you work with a qualified professional to ensure you obtain coverage customized for your need.
Kathy Hower is a Senior Wealth Advisor with Bedel Financial Consulting Inc., a wealth management firm located in Indianapolis. For more information, visit their website at www.bedelfinancial.com or email Kathy at khower@bedelfinancial.com.