What are the Differences Between Medicaid and Medicare?

Health insurance is an important resource for individuals and families, but the options are sometimes confusing. When trying to figure out the right insurance program, people need to first understand what programs are available and how they work. Medicaid and Medicare are two different health coverage programs that are available to qualified individuals and families.

Eligibility for Medicaid or Medicare depends on things like age, income, or existing disabilities. It is important to learn the difference between these programs to apply for enrollment in the right plan.

What is Medicare?

Medicare is a federal health insurance program mainly designed to provide coverage to individuals age 65 and older. It also covers people under 65 who have certain disabilities, end-stage renal disease, or ALS.

Medicare has different parts to cover general medical care, hospital care, prescription drugs, and supplemental benefits. People are eligible for Medicare once they turn 65, and they will be automatically enrolled in some parts while having to actively enroll in other parts. There may be penalties for not enrolling in Medicare during a specific eligibility period.

Is Medicare a federal program?

Medicare is a federally funded program. This means that it is paid for by taxes, and no one who meets the eligibility criteria can be denied coverage. If someone worked for at least 10 years before becoming eligible for Medicare, they will not have to pay a premium for Medicare Part A, which is the hospital coverage part of Medicare. There are premiums for individuals who do not meet the work requirement, and there are also premiums for Medicare Part B, which is the regular medical coverage.

Medicare administration is handled by the federal government under the Department of Health and Human Services. The office of Centers for Medicare & Medicaid Services (CMS) is the federal agency that manages both Medicare and Medicaid.

What is Medicaid

Medicaid is run by both the federal and state governments as a health insurance option for individuals and families below a certain income level and people with disabilities. The federal management of Medicaid is run by CMS, while every state has its own Medicaid program. The states must follow federal requirements in their Medicaid administration, but they are permitted to expand their coverage to more than what the federal government mandates.

Medicaid covers low-income adults, pregnant women who do not otherwise have coverage, children, low-income seniors, and people with disabilities. Medicaid is designed to cover a range of healthcare needs, including hospital care, general medical care, diagnostic tests, home health services, and more.

What does Medicaid cover for adults?

Adults who rely on Medicaid for healthcare coverage will receive all of the benefits that are required by the federal government. Additionally, every state can offer more coverage according to its own laws.

Mandatory coverage includes:

• General medical care at doctor offices and health clinics
• Inpatient and outpatient hospital care
• Laboratory, X-ray, and screening tests for diagnostics
• Family planning, prenatal, midwife, and birthing services
• Home health and other treatment services

In Pennsylvania, Medicaid recipients will also be covered for:

• Prescription drugs
• Vision and dental care
• Physical therapy
• Home health and hospice services
• Mental health and substance abuse care

Medicaid is administered in Pennsylvania by the Department of Human Services (DHS). Many health clinics, including LCH, have information about what is covered under Medicaid.

Key Differences Between Medicare and Medicaid

Although they are both government health insurance programs, Medicare and Medicaid are not the same. They are two distinct services that are designed to cover different segments of the population. In some cases, an individual may be eligible for both Medicare and Medicaid. 

Eligibility criteria: age vs. income level

To be eligible for Medicare, an individual must be age 65 or over. Younger individuals can be eligible for Medicare if they have ALS, end-stage renal disease, or are receiving Social Security Disability payments. Income is not a factor for Medicare enrollment eligibility.

Medicaid eligibility does have income requirements in most cases. The Modified Adjusted Gross Income based on household size is a factor in determining eligibility for most applicants. The exceptions to this are individuals over age 65, people who are blind, people who are receiving long-term care, and people who have disabilities that require home and community-based services.

Dual eligibility, or eligibility for both Medicare and Medicaid is available in certain circumstances. Most commonly, elderly low-income adults qualify for Medicaid to cover the out-of-pocket costs of Medicare.

Coverage specifics and limits

Because Medicare and Medicaid are both health insurance plans, much of what they cover is the same. Both plans are intended to cover general medical care, inpatient and outpatient hospital care, various diagnostic services, and skilled nursing care.

With Medicare, dental and vision plans are optional benefits that individuals can add to their overall coverage for a premium. With Medicaid, states determine whether or not to include dental and vision care under their benefits. Pennsylvania’s Medicaid plans do include these plans.

Prescription drug coverage is optional in some cases for Medicare participants, depending on what private coverage they have. In Medicaid, this coverage also varies from state to state, and it is one of Pennsylvania’s benefits. 

Administrative control: federal vs. state involvement

The federal government applies Medicare requirements equally across all 50 states and manages the entire program at the federal level.

The federal government also sets minimum standards for Medicaid, but it shares control of the program with each state. As long as the states maintain federal standards, they can customize other aspects of eligibility and benefits that work best for their government and residents. Because control of the program is shared, funding is also shared. The government uses a formula to determine what the states will pay and it will pay for healthcare services under the plan.

Who Qualifies for Medicaid?

Medicaid eligibility is determined by income, household size, and availability of other coverage in the case of children, pregnant women, parents and caretakers of children, and adults who have incomes less than 133% of the federal poverty level.

For individuals over age 65, those who are blind and/or disabled, workers with disabilities, and individuals receiving long-term care or home and community-based services, income is not a factor. Instead, eligibility is determined based on household size and resources or limits to resources. In other words, these individuals may have financial support or assets that are not income, but must still be evaluated for qualification purposes.

Who Qualifies for Medicare?

Individuals who are at least 65 years old, receive Social Security Disability payments, have end-stage renal disease, or have ALS are eligible for Medicare. Medicare consists of four parts, all of which have different enrollment methods.

Medicare Part A is hospital insurance, and eligible participants are automatically enrolled.

Medicare Part B is medical insurance, and eligible participants need to enroll themselves during an enrollment period.

Medicare Part C is called Medicare Advantage, and it bundles Parts A, B, and sometimes D with other optional coverages like dental and vision. Participants need to enroll themselves in an Advantage plan during their enrollment period.

Medicare Part D is prescription drug coverage, and participants must already be enrolled in Part A and B to enroll in this coverage.

Medigap is an optional coverage to help pay the out-of-pocket costs associated with other Medicare plans. Participants must enroll in a Medigap plan within 6 months of enrolling in Part B if they desire this coverage.

Learn more about Medicare enrollment in this Comprehensive Guide to Medicare.

Comparing Costs and Coverage

While Medicare is designed to be affordable health coverage for older Americans who may no longer have insurance options through an employer, Medicaid is intended to provide adequate health coverage for low-income and disabled individuals. Therefore, the costs for participants are much different between the two programs.

Out of pocket expenses in Medicare vs. Medicaid

Medicare charges premiums for Parts B, C, and D. Individuals who did not work for at least 10 years will pay a premium for Part A. Additionally, participants pay deductibles and copays when they use their Medicare benefits. They may also have to pay medical expenses that exceed the Medicare coverage limits.

Medicaid recipients do not pay any copayments if they are under the age of 18, pregnant, residents of a long-term care facility or other institution, on hospice, or in the foster system. There are also many services for which no copayment is required of any Medicaid participants. For adults who receive Medicaid benefits, there are low copayments for prescription drugs, hospital stays, mental health services, diagnostic tests, and some other general services. These copayments are very low to be affordable, and they help states offset the costs of maintaining Medicaid programs.

Choosing Between Medicare and Medicaid

Enrolling in either Medicare or Medicaid requires an application, certain forms, and identifying information. Individuals are not always sure which program they are eligible for, or if they are eligible for both. To ensure that you enroll in the program that is right for your circumstances, we encourage you to visit our West Grove and Oxford locations. Our Certified Application Counselors can review your information, answer your questions, and help you get enrolled in Medicare, Medicaid, or both. Call us at 610-444-7550, or visit either location to learn more about Medicaid and Medicare eligibility and enrollment.