Many people are confused by the terms Medicare and Medicaid, often mixing them up or thinking they are interchangeable. Both programs, Medicare and Medicaid, are national programs that provide insurance, and they have very similar names, so it is easy to understand your confusion! Medicare and Medicaid, however, are very different programs. We’ll help you understand the difference between Medicare and Medicaid.
What is Medicare?
Medicare is a federal health insurance program insurance program for people who are 65 or older and for some under 65 with specific health conditions and/or disabilities.
What is Medicaid?
Medicaid is a federal and state program that helps with healthcare costs for some people with limited income and resources.
The key difference to remember is that Medicare is an insurance program while Medicaid is a social welfare program. We’ll help you understand what each program encompasses below.
Federal vs. State Programs
Medicare is a federal program that is standardized nationwide. However, there are typically two paths one can take for Medicare coverage which affects the program benefits:
Original Medicare with a supplement (also called a Medigap)
Original Medicare and the supplement plans (also called a Medigap) are standardized, so the same policy, regardless of state or insurance carrier, covers the exact same benefits. Original Medicare and the supplement plans offer nationwide coverage with no networks. You have access to healthcare providers anywhere in the Unites States all under the federal program. You have may choose to opt out of Original Medicare and join Medicare Part C, also known as Medicare Advantage. These programs are not standardized and have restrictive networks of healthcare providers usually specific to a particular county. Medicare Advantage plans provide Medicare benefits through a private-sector health insurer that are renegotiated each year; therefore, the benefits and rules change. For a more in-depth look at the difference between Original Medicare with a supplement and Medicare Advantage, watch our video that has all the details.
Medicaid is a government-sponsored insurance program for individuals of any age whose resources and income are insufficient to cover health care. Medicaid is jointly funded by the federal government and individual states. It is operated at the state level which means that coverage and administration vary greatly from state to state. It is available only to individuals and families who meet specific income-based criteria, for free or at a low cost. Medicaid does not provide health care directly to individuals. Instead, it covers their doctor visits, hospital stays, long-term medical care, custodial care, and other health-related costs.
Individual states decide on who qualifies for coverage, the type of coverage, and the process of paying health care workers and hospitals. That's because each state is responsible to manage and administer its own Medicaid program. The federal government matches state spending and the matching rate varies by state from about a statutory minimum of 50% to a maximum of 83%. States are not required to participate in Medicaid, although all states do.
Unlike the Medicare program which covers all Americans 65 and older (that are eligible) with Medicaid, states can decide who gets coverage and what gets covered in their version of Medicaid. There are a few groups of people the federal government says states are required to cover with their Medicaid program. Those are:
- Low-income children and their parents
- Low-income pregnant woman
- Low-income seniors
- People with disabilities
Eligibility and how ‘low income’ is defined varies by state. States also get to decide what healthcare services are covered by their version of Medicaid.
Can you be covered under both Medicare and Medicaid?
Some people qualify for both Medicare and Medicaid which is called being “dual eligible.” If you have Medicare and full Medicaid coverage, most of your healthcare costs are likely covered. CMS, the Center for Medicare and Medicaid Services coordinates benefits for both programs. You can get your Medicare coverage through Original Medicare or a Medicare Advantage Plan.
So remember, Medicare is health insurance typically for people ages 65 and older, and it is a federal standardized program. Medicaid is an assistance program funded by both federal and state governments for low-income individuals of all ages.
If you’ve never used Medicare or Medicaid before, it can be confusing to know which one you’re talking about! Plenty of people confuse the two. Here at JBird Insurance Group, we are Medicare experts and specialize in helping seniors get the right coverage at a low price. We want to help you get the most out of your Medicare benefits and the key to understanding the program is knowledge!