Medicare and Medicaid. Both are government programs, both relate to healthcare, both are in the news much of the time…and both begin with the letter M. It’s easy enough then to confuse the two programs. But that’s the extent of the similarities. For the most part, each program provides benefits to a different segment of the population, though there can be overlap between the two under certain circumstances.
What is Medicare?
For the most part, Medicare is a health insurance program, but one provided by the US federal government. Throughout your life you pay into the system through payroll taxes that are split between you and your employer, and when you are eligible for benefits, you will also pay a monthly premium — a relatively small one — for participating in the medical services and prescription drug portions of the program.
If you have paid payroll taxes into the program for at least 40 quarters (10 years), you will not be required to pay premiums for the hospital portion of the plan. But if you have paid in for less, there is a sliding scale on premiums, and they can be substantial.
And just as is the case with most other health insurance plans, you will have co-payments and deductibles that you will pay for medical services.
The program is primarily for people who are 65 years old and older, but it also extends to younger people who are deemed to be disabled.
What is Medicaid?
Medicaid is a healthcare assistance program. It is also a government program, but one in which funding for the plan is shared between the federal and state governments, while being administered by each state individually.
There are no premiums paid into the program since it is funded out of general federal and state tax revenues. The patient may be responsible for small co-payments, and these vary from state to state and from one treatment to another. Though it is a federal program, details can vary from state to state though the state must operate under federal guidelines established for the plan.
Medicaid is set up to provide health benefits for low income people, and you must qualify based on an income that is a percentage of the federal poverty level for your family status (but less than 200%).
Since the program is administered by each of the 50 states, each state has its own name for the program. For example, in California the program goes by MediCal, while in Massachusetts it’s called MassHealth.
Can Medicare and Medicaid be Used at the Same Time?
About 8.3 million people who are on Medicare also participate in the Medicaid program. These people are referred to as dual eligible. This includes 4.6 million seniors (65 or over), and 3.7 million people who are disabled and are a part of the Medicare program as a result.
If you are 65 or over, on Medicare, and determined to meet qualifications in having limited income and resources, you can get assistance from Medicaid for the payment of your Medicare premiums, out-of-pocket costs, prescription drugs, and eyeglasses and hearing aids. Medicaid will also cover the cost of nursing home care beyond the 100 day limit covered by Medicare.
To minimize any confusion between the two programs, here is a look at the two programs, side-by-side:
|Purpose of the program||Income supplement for eligible retirees and non-retirees with certain disabilities||A payment system for healthcare for low income families|
|Who administers the program?||The federal government through the Centers for Medicare & Medicaid Services||The program is sponsored by the federal government but administered by the individual states; federal and state governments generally split the cost of funding (federal government portion is higher for poorer states)|
|Co-payments and deductibles paid by beneficiary||$147 per year for Part B, $1,184 per benefit period (up to 60 days) for inpatient hospital stays; varying per day coinsurance payments based on number of days beyond 60 (all for 2013)||Varies from state to state; may require co-payments and deductibles for certain services|
|Annual premium||For 2013: $1,259 per year for Part B premium, plus an amount for Part D (prescription drugs) that varies based on income level; May charge premiums for hospital services if qualifications not fully met (see below)||N/A|
|Eligibility requirements||Benefits available beginning at age 65; must have 40 quarters (10 years) of payroll tax contributions. Also available for people under 65 with certain disabilities||Income-based, and varies by state; generally based on income as a percentage of the federal poverty level for family size (typically 133%)|
|Number of participants in program||48 million total in 2010, including 40 million retirees, and 8 million disabled (total beneficiaries projected to climb to 80 million by 2030)||55.7 million on average in 2011, including elderly people in nursing homes (projected to rise to 77.9 million by 2021)|
|Cost to maintain the program||$560 billion in 2010||$432.4 billion in 2011; $275.1 billion (64%) paid by the federal government, $157.3 billion (36%) paid by the states|
|Benefit payments made to:||Paid to healthcare provider, not the beneficiary||Same as Medicare|
|Coverage area||Entire US||State by state|
(Sources: Medicare 2013 Costs at a Glance, Dept of HHS 2012 Actuarial Report (for Medicaid), US Department of Health and Human Services, Wikipedia, Medicare (United States), Medicaid.gov – Seniors & Medicare and Medicaid Enrollees