What are the key differences between Medicare and Medicaid?
To keep the distinction between the two programs, use this rule of thumb: Medicare has the letter R like Retirement—just as Medicare tends to be a part of a retiree’s life.
While the names are similar, they are two very distinct suite of programs. In general, Medicare provides healthcare for those over 65 years old; and Medicaid is an assistance program to help people regardless of age, beyond just healthcare. Although Medicare, can under certain circumstances pay for long-term care, Medicaid is the primary method by which most individuals pay for long-term care if over the age of 65. Medicare does not have income and asset limits in general, whereas Medicaid has strictly enforced income and asset limits for any and all of its programs. Medicare is an independently funded federal Trust-based initiative that is MANDATORY for everyone to contribute into AND join at the age of 65. Medicaid is part of the federal block-grant program and comes to the states as a large source of funding with rules for its dispersal. Those dispersal rules for Medicaid are a mixture of both federal law and state law. That contrasts with Medicare which is solely the concern of the federal government. That’s where things can get complicated, as Medicare is governed by one set of laws and Medicaid is governed by BOTH federal AND state laws.
2. How does it work when people are eligible for both Medicare
and Medicaid? Can you have both? If so, how does that work?
Yes, people can be eligible for both Medicare and Medicaid—just as people can be eligible for both the first-time homeowner tax credit and the mortgage interest deduction. For this analogy Medicare is like the first-time homeowner’s credit and Medicaid is like the mortgage interest deduction: Medicare enrollment can happen only once, and Medicaid can happen multiple times throughout one’s life.
The two can work simultaneously to assist the beneficiary. The most common example is when Medicaid pays for Medicare premiums, as well as Medicare Part B premiums. Medicare would be the primary healthcare insurer, and in most circumstances, the beneficiary would not also have Medicaid as an insurer. Therefore, if you are over the age of 65 and qualify for Medicaid, your Medicare premiums will likely be paid by Medicaid.
Typical Medicare concerns four parts (Medicare goes all the way to Part M). Keep in mind you are automatically enrolled in Parts A and D only and therefore, should talk to a Medicare specialist about enrolling in Parts B and C, as well as, any other applicable Parts, such as F and K. Part A typically covers emergencies. Part B covers age-related equipment that is NOT required as part of a medical emergency, such as hearing aids, walkers, shower transfer benches, and glasses. Part C is typically a Medicare Advantage Plan that offers benefits beyond Part B and focuses more on specialty care. Part D is easy to remember because it covers drugs—prescription drugs. Coverage for Medicare Part D is not 100%. It covers a percentage of prescription costs up to a certain amount, phases out, and then once you hit another threshold, it phases back in—thereby creating the famous Medicare donut hole. That hole can be filled with Medicare supplemental coverage—more specifically a Medicare Advantage Plan (Part C).
3. What is the difference between Medicare Advantage and an
individual health plan you’d get from a marketplace or a group
policy you’d get through work?
A typical group policy through work is a plan that considers the cost of healthcare for a small group of individuals. The plans assume that the pool of employees consists of individuals both under the age of 65 AND earning enough to not be Medicaid-eligible. Of course, reality is different for each individual.
If the person is under 65 and qualifies for Medicaid, their primary healthcare insurer should be Medicaid.
If the person is under 65 and does not qualify for Medicaid, then they can use the healthcare marketplace if it is still available in their state.
If the person is over 65 and qualifies for Medicaid, their primary healthcare insurer will be Medicare, but their Medicare premiums will be paid for by Medicaid.
If the person is over 65 and does not qualify for Medicaid, then their primary healthcare insurer will still be Medicare, but they should consider enrolling in an advantage plan. At a minimum, they should sign up for Part B at the time of their enrollment.
Medicare is not optional. You MUST sign up for it during the enrollment period immediately following your 65th birthday. Otherwise you are permanently fined 1% of the cost of Medicare per year you failed to enroll.
Medicare Advantage is typically not tethered to your employer. Some group policy plans will offer a buy-in option, but it is relatively uncommon. Medicare Advantage programs must be approved by Centers for Medicare & Medicaid Services [CMS] and meet minimum standards of coverage. These advantage plans come in a wide variety and can be customized to your needs. For example, if you are or are likely to experience hearing loss and require a hearing aid, you can enroll into an Advantage Plan that offers you the best hearing coverage.