There is a very good chance that you will need help covering healthcare costs not covered by private insurance at some point in your lifetime. When you find yourself in that position, you will likely turn to Medicaid and/or Medicare for help. Contrary to what many people think, Medicaid and Medicare are not interchangeable. Although there are some similarities, Medicaid and Medicare are very distinct programs with different eligibility criteria and available benefits for those who qualify. To better help you understand the two programs, consider the following Medicaid vs. Medicare comparison.
What Is Medicare?
Medicare is essentially a federally governed healthcare program for individuals who are over age 65, and for a select few under age 65. Medicare is what is referred to as an “entitlement program” because participants are entitled to benefits from the program without having to prove need. Instead, you will have effectively paid all your “premiums” for Medicare through Medicare payroll withholding during your working years. People younger than 65 may also be eligible for Medicare if they:
- Have received at least 24 months of Social Security disability benefits or a disability pension from the Railroad Retirement Board (RRB).
- Have permanent kidney failure and need routine dialysis or a kidney transplant.
- Have amyotrophic lateral sclerosis (Lou Gehrig’s disease).
Basic Medicare is cost-free; however, the benefits available under Medicare come in four parts. Some of those additional parts require payment of a monthly premium similar to private health insurance. The four parts of Medicare include:
- Part A – Hospital care – Covers the cost of being in a medical facility.
- Part B – Covers doctors, medical tests and procedures – basically, anything done to you. There is a monthly premium for Part B coverage.
- Part C – Medicare Advantage – Part C is an alternative to traditional Medicare coverage. Coverage often includes Parts A, B and D. Medicare Advantage plans are administered by private insurance companies.
- Part D – Prescription drug coverage – D is administered by private insurance companies, and you are required to have it unless you have coverage from another source. Part D requires you to pay a monthly premium in most cases.
What Is Medicaid?
Medicaid is also a healthcare program that is predominantly funded by the federal government; however, individual states may supplement the funds provided by the federal government. In addition, Medicaid is administered by the individual states and, as such, there may be slightly different eligibility guidelines and benefits offered from one state to the next. One major difference between Medicare and Medicaid is that Medicaid is a “needs based” program, meaning that an applicant must demonstrate a financial need for the benefits offered by Medicaid. Although states may offer additional services and benefits, each state is required by the federal government to provide certain benefits to Medicaid participants, including:
- Certain inpatient and outpatient hospital services
- Early and Periodic Screening, and Diagnostic, and Treatment (EPSDT) services for children
- Nursing facility services
- Home health services
- Doctor’s services
- Rural health clinic services
- X-ray and laboratory services
- Family planning services
- Midwife services
- Freestanding Birth Center services
- Certified pediatric and family nurse practitioner services
- Tobacco cessation counseling for expectant mothers
Medicaid vs. Medicare – Long-term Care Benefits
One of the most important differences between the benefits provided by Medicaid and Medicare is in the area of long-term care (LTC). Medicare does not cover LTC expenses except under very limited circumstances, and even then only for a very short period of time. Medicaid, on the other hand, will help pay for LTC expenses if you qualify for benefits. Qualifying for benefits, however, can be problematic for seniors who failed to plan ahead and may put valuable assets at risk. It is for this reason that incorporating Medicaid planning into your estate plan prior to entering your retirement years is recommended.
For more information, please download our FREE estate planning worksheet. If you have questions or concerns about the differences between Medicaid and Medicare, or you wish to get started on Medicaid planning, contact an experienced estate planning attorney at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.