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Medicare vs Medicaid – What’s the Difference?

Medicare – the U.S. Largest Health Insurance Program, Designed for Elders

When established in 1965, the Medicare program aimed its sites on the protection of our eldest members of our community who are already eligible for Social Security. As recently as 2015, Medicare provided benefits to more than fifty million Americans aged 65 and over.

Funded by payroll taxes, surtaxes, and premiums, Medicare is available for Americans that have paid into the system through their payroll taxes, but a demographic bubble, in the form of the quickly aging baby boomer generation, threatens to swamp the existing system’s resources. At the heart of the problem is not only the increased numbers of seniors moving into the system, but medical advances have extended the amount of time each person stays in the program.

The Basics of Medicare Benefits

Benefits under the Medicare program are designed to primarily pay for such medical needs as acute care, hospital stays, and doctor visits. Additionally, Medicare benefits can be used for the cost of long-term care, but it has its limitations. For instance, recipients can stay up to a hundred days in a nursing facility following a hospital stay of three or more days. To be eligible for this benefit, the nature of the care must be rehabilitative. Long-term care that requires extended nursing care or 24/7 hospice care is not covered under the program.

Another gap in coverage is found in dealing with the cost of prescription drugs. These are not covered under the basic Medicare program, and this includes needed drugs to be taken daily to combat chronic health conditions. With the vast majority of seniors suffering from at least one such condition, and a significant percentage suffer from two or three chronic diseases, lack of affordable coverage can place these life saving drugs out of reach.

As it stands, basic Medicare benefits cover approximately half the costs of associated medical expenses, so retires look to purchasing gap coverage to bridge these divides. Supplemental policies are available through the Medicare program.

Supplemental Medicare Coverage

To help cover the range of expenses that seniors can expect to contend with as they age, the Medicare program offers gap coverage to help handle specific components of their care. There are currently four Medicare supplemental plans seniors can explore.

Medicare Part A — covers the cost of hospital stays and hospice services.

Medicare Part B — helps pay for outpatient services.

Medicare Part C — allows more control over other Medicare components to optimize services.

Medicare Part D — covers the cost of self-administered drugs.

Medicare provides a much needed protection against skyrocketing medical costs, and retirees can enjoy a basic level of care regardless of the market forces driving each medical procedure through the roof. How the system will absorb the incoming baby boomers is a question yet to be answered.

Will Medicare Cover Assisted Living?

Generally Medicare will not cover assisted living or other long term care facilities, however it can sometimes cover qualified health care expenses. It is more commonly used to pay for home health care or for a skilled nursing facility.

Medicaid – A Federal & State Funded Health Insurance Program

Medicaid is a federal health insurance program designed for people with low incomes, the disabled, blind, aged and those with limited resources (usually $2,000 in assets). Each state operates its own program though funding is matched by the federal government starting at 50%. The program and its requirements vary from state to state. For those who don’t qualify for Medicaid, states have their own medical assistance. In 2008 there were 49 million people receiving Medicaid. The program cost $204 billion that year.

Background and History of Medicaid

Some historians call it the last gasp of the Franklin Delano Roosevelt era New Deal program. Indeed, President Lyndon B. Johnson viewed his presidency as an extension of Roosevelt’s far ranging vision of an America with a robust safety net to protect people through their trials and tribulations.

By the mid-1960s, two groups living on opposite sides of the demographic spectrum, children and the elderly shared a common characteristic of living in abject poverty. Johnson’s goal with the 1965 Medicaid Act was to stretch that social safety net to protect those two sections of the population. Under the program, at risk citizens who had exhausted all of their assets were offered assistance to help defray health and long-term care expenses.

A Partnership for Health

The Medicaid program is a partnership between the federal government and the states. As such, there is a wide disparity in available benefits and recipients should note their individual state’s guidelines for entry and acceptance into the program. In general, however, the federal government extends matching grants to the states with the goal of having the individual states provide medical resources to residents meeting certain eligibility requirements.

When a resident’s income and assets fail to keep up with the costs and expenses of needed medical services, the states have a resource to extend those in need. As a result, the primary source for medical insurance for the nation’s poorest sectors has become the Medicaid program.

The Basics of Eligibility

To obtain benefits under the Medicaid program, acceptance and eligibility is based on specific categories. In other words, the enrollee must be a member of a specific category, as defined by legal statute, and includes the following:

  • Pregnant women whether married or single
  • Low-Income Seniors
  • Low-Income Children
  • Parents of Medicaid eligible children

Those with documented disabilities, which would otherwise prevent them from gainful employment, are covered under the Supplemental Security Income (SSI). These recipients are offered Medicaid as a way of providing ready access to health insurance coverage.

Additionally, included under the program, Medicaid has a dental component that is mandatory for recipients under the age of 21, but voluntary for those over the age of 21. Minimum available services include:

  • Periodic screenings
  • Pain relief
  • Teeth restoration
  • Cleanings

Building Healthy Communities

A healthy nation demands healthy citizens, and that was an understanding that both F.D.R. and L.B.J. shared in common. Thanks to their understanding and efforts, seniors in the United States who have reached the end of their financial tether have a social safety net that can help them obtain the medical care they so urgently need. If you have a senior in your life in need of the financial assistance to obtain basic medical care, let them know that there is a social safety net waiting for them at the local welfare office.

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