Medicare and Medicaid Health Insurance

Understanding the differences between Medicare vs. Medicaid

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Since 1965, Medicare and Medicaid have been protecting the health and well-being of millions of Americans. Though the government programs have evolved over the years, they still provide seniors, people with disabilities, and low-income families access to affordable, quality health care.

If you're 65 or older, or nearing that age, familiarizing yourself with Medicare and Medicaid can equip you with the knowledge you need to determine if you're eligible and how these government programs can assist you in living a longer, more independent life. Here, we'll cover all the basics of Medicare and Medicaid, their differences, and how to know if you qualify for either or both.

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What Is the Difference Between Medicare and Medicaid?

With similar sounding names, it is no wonder that Medicare and Medicaid get confused sometimes! Both are funded by taxpayers; what sets these two programs apart is who they provide health care coverage for.

Medicare provides health care coverage for Americans age 65 and older, as well as those who live with a disability. Medicaid, however, covers Americans with a limited income. Seniors who are 65 and older and meet the limited income requirements may be dually covered by both programs.

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What Is Medicare?

Medicare is a program that subsidizes health care costs for Americans 65 and older. It is the primary health care insurance provider for Americans in their golden years. And though it helps with medical expenses, it does not fully cover everything. Nor does it cover most long-term care.

Medicare consists of four parts: Part A, Part B, Part C, and Part D. Each part covers different health-related expenses. More on that later!

To learn more about Medicare, watch the video below with our editor-in-chief, Jeff Hoyt.

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Who Qualifies for Medicare?

To qualify for Medicare coverage you must be a U.S. citizen and meet at least one of the following criteria:1

  • You are age 65 or older.
  • You have a disability.
  • You have been diagnosed with end-stage renal disease.

Medicare Enrollment Options

Every day, nearly 10,000 Americans enroll in Medicare.2 There are certain times throughout the year that seniors are able to enroll in Medicare. We'll touch on the four options you have for enrollment below.

  1. Initial enrollment period. You have a seven-month window around your 65th birthday to enroll in Medicare. It begins three months before your birthday month, includes your birthday month, and ends three months after your birthday month. It is best to enroll during this time to avoid being charged late enrollment penalties.
  2. General enrollment period. If you miss your seven-month window, you can enroll in the general enrolment period which is Jan. 1 to March 31 each year. If you enroll during this time, your coverage will begin July 1 of the same year. You may have to pay a higher Part A or Part B premium for missing the initial enrollment period.
  3. Special enrollment period. Individuals age 65 and older who are still in the workforce may be covered by their employer's group health plan (or their spouse's health plan). In this case, you can enroll anytime you're still covered by the group health or during the eight-month period after your coverage ends. For seniors who are 65 and working but thinking about retirement, the special enrollment period is applicable.

FYI: If you're currently receiving Social Security benefits, you'll be automatically enrolled in Medicare and should receive your Medicare card and welcome packet in the mail three months before your 65th birthday.

How to Enroll in Medicare

For seniors who aren't yet receiving Social Security benefits but who would like to enroll in Medicare, they can do so by visiting the Social Security Administration's Benefits page. If you would prefer to enroll by phone, you can do so by calling 1-800-MEDICARE.

Once you're enrolled in Medicare, you'll receive your red, white, and blue Medicare card in the mail, as well as a welcome packet.

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What Does Medicare Cover?

As we mentioned earlier, Medicare is broken down into four parts. Original Medicare includes Part A and Part B and is managed by the federal government. Medicare Part C and Part D are managed by private companies that contract with the federal government. Below, we'll fill you in on what each part of Medicare covers and what its main purpose is.

Medicare Part A

Medicare Part A, sometimes referred to as “hospital insurance,” covers hospital and hospice expenses. This includes inpatient care, hospice care, home health care, and short-term stays in a skilled nursing facility (SNF). Seniors are eligible for premium-free Medicare Part A if they are age 65 or older and worked (or their spouse worked) and paid Medicare taxes for at least 10 years.

Hospital Expenses Covered by Medicare Part A3

  • Semiprivate rooms
  • General nursing
  • Meals
  • Drugs needed during inpatient treatment
  • Other hospital services and supplies as part of your inpatient treatment

Medicare Part B

Medicare Part B covers preventative and medically necessary services. You can expect to pay a monthly premium for Medicare Part B coverage. If you're receiving Social Security, it will be automatically deducted from your check. If you're not receiving benefits yet, you'll get a bill for your Medicare Part B premium in the mail.

Preventative and Medically Necessary Services Covered By Medicare Part B4

  • Screenings
  • Vaccinations
  • Annual wellness visits
  • Ambulance transportation
  • Durable Medical Equipment (DME)

Did You Know: The average monthly Medicare Part B premium in 2021 is $148.50.5 Your premium is based on your modified adjusted gross income. You can use the Medicare premium calculator to estimate your monthly premium.

Medicare Advantage Plans (Medicare Part C)

Seniors who would like to pass on Original Medicare can opt for a Medicare Advantage Plan. These plans are sold by private companies that contract with Medicare to provide coverage. Advantage plans provide you with the benefits of Part A and B and then some. Many plans offer seniors dental, vision, drug, and hearing coverage.

The downside to Part C is that many plans require you to see doctors and use services in network, so you may be limited where you can receive health care services without paying big bucks for going out of network. Medicare Advantage Plans vary by state, so checking with your local providers is best to determine what plans are offered in your area.

Medicare Part D

Medicare Part D provides coverage for prescription drugs. You can sign up for a Part D plan between April 1 and June 30 to receive coverage beginning July 1. Keep in mind that some Medicare Advantage Plans already offer prescription drug coverage.

If you have Original Medicare, you'll want to shop and select a Medicare Part D plan by logging into your Medicare.gov account. You can compare plans and make selections there.

FYI: Most states have health insurance assistance programs to help seniors navigate Medicare and enroll in plans. The service is free to seniors and is provided by unbiased community volunteers. Find your local assistance program here.

Medigap (Medicare Supplement Health Insurance)

Medigap is different from a Medicare Advantage Plan, but it is similar in that the supplemental plan fills in where Original Medicare falls short. Medigap can help cover copays for Medicare Part A and Part B, as well as deductibles.

Quick Tip: Interested in a Medigap plan but don't know where to start? Take a look at our top 10 picks for the best Medigap plans for seniors.

Medigap doesn't cover vision, dental, or long-term care. If you spend a lot of time out of the country, Medigap will cover health care costs accrued overseas, whereas Original Medicare does not. If you are already enrolled in a Medicare Advantage Plan, you can't dually enroll in a Medigap plan.

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What Is Medicaid?

Medicaid provides health coverage to low-income individuals in the U.S. In 2020, over 70 million Americans were enrolled in the program, which is operated by states.6 States do have to stick within federal guidelines, but Medicaid services and coverage vary greatly by state. Some seniors may dually qualify for both Medicare and Medicaid.

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Who Qualifies for Medicaid?

Qualification for Medicaid is income-based. Whether you have a disability, the size of your family, and your age factor into your eligibility. Though the qualifications vary by state, both your assets and your income are taken into consideration.

Medicaid qualifications change year to year, so even if you didn't qualify in the past, it doesn't mean you never will. If your financial situation changes or your state expands Medicaid, you may qualify in the future even if you didn't previously.

How to Apply for Medicaid

There are two ways you can apply for Medicaid coverage.

  1. Contact your state's Medicaid agency.
  2. Fill out an application at www.healthcare.gov.
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What Does Medicaid Cover?

The federal government requires states to provide certain Medicaid benefits, while others are optional. Below is a list of mandatory benefits that all states are required to offer. Your state may offer additional services that are not listed below. Make sure to check with your local agency to see what Medicaid benefits are available where you live.

Mandatory Medicaid Benefits

  • Inpatient hospital services
  • Outpatient hospital services
  • EPSDT: Early and periodic screening, diagnostic, and treatment services
  • Nursing facility services
  • Home health services
  • Physician services
  • Rural health clinic services
  • Federally qualified health center services
  • Laboratory and X-ray services
  • Family planning services
  • Nurse midwife services
  • Certified pediatric and family nurse practitioner services
  • Freestanding birth center services (when licensed or otherwise recognized by the state)
  • Transportation to medical care
  • Tobacco cessation counseling for pregnant women
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Working as a waitress in college, older adults were Morgan’s favorite customers. The jokes, conversation, and wisdom they shared always made her days at the restaurant a little brighter. When she landed her first job out of college as a copywriter for… Learn More About Morgan Redding

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Citations
  1. U.S. Department of Health & Human Services. (2021). Who is eligible for Medicare?

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  2. CNBC. (2019). The 2020 Medicare enrollment season brings fierce competition for baby boomers among insurers.

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  3. Medicare.gov. (2021). Inpatient hospital care.

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  4. Medicare.gov. (2021). What Part B covers.

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  5. Medicare.gov. (2021). Part B costs.

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  6. Medicaid.gov. (2021). Medicaid.

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