Medicare and Medicaid are federal U.S. government-sponsored programs designed to help cover healthcare costs for American citizens. Established in 1965 and funded by taxpayers, these two programs have similar-sounding names, which can trigger confusion about how they work and the coverage they provide.
This full articleprovides insight and clarity on these important programs. Below is a summary of each program and the key differences.
Medicare helps provide healthcare coverage to U.S. citizens who
are 65 years of age or older, as well as people with certain disabilities.
- Medicare Part A provides free hospitalization coverage to individuals who are 65 years or older, regardless of income.
- Medicare Part B covers medically necessary services and equipment, including doctor’s office visits, lab work, x-rays, wheelchairs, walkers and outpatient surgeries.
- Medicare Part C: Supplemental Insurance, also known as Medicare Advantage, refers to private insurance plans and participants generally pay out-of-pocket for the associated services. In addition to providing coverage offered by Parts A and B, Part C also offers vision and dental coverage.
- Medicare Part D: Prescription drug coverage. Participants pay for Part D plans out-of-pocket, and must pay monthly premiums, yearly deductible and copayments for certain prescriptions. Those enrolled in Medicare Part C are typically eligible for Part D
Medicaid is a joint federal and state program that helps
low-income Americans of all ages pay for the costs associated with medical and
long-term custodial care. Children who need
low-cost care, whose families earn too much to qualify for
Medicaid, are covered through the Children’s Health Insurance Program (CHIP), which has its own
set of rules and requirements.
Those covered by Medicaid pay nothing for
covered services. Unlike Medicare, which is available to nearly every American
of 65 years and over, Medicaid has strict eligibility requirements which vary
by state. However, because the program is designed to help the poor, many
states require Medicaid recipients to have no more than a few thousand dollars
in liquid assets in
order to participate. There are also income restrictions. For a state-by-state
breakdown of eligibility requirements, visit Medicaid.gov and BenefitsCheckUp.org.
The following statements illustrate the chief differences
between Medicare and Medicaid:
- Medicare is the primary medical coverage provider for many persons ages 65 and older and for those with a disability.
- Eligibility for Medicare has nothing to do with income level.
- Medicaid is designed for people with limited income.
- Often, Medicaid is a program of last resort for those without access to other resources.
- Eligibility for Medicaid is determined on a state-by-state basis.
The Bottom Line
Healthcare is a costly burden for retirees. Fortunately,
Medicare and Medicaid work together to provide medical coverage to the elderly
and to individuals with limited means. Politicians, special interest groups and
voters will ultimately influence how these programs change in the future.
Written by: BY JAMES
MCWHINNEY; Updated Mar 11, 2019.