Medicare and Medicaid Health Insurance

What Is the Difference Between Medicare and Medicaid?

With similar-sounding names, it’s 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.

Original Medicare is a federal health insurance program that provides health care coverage for Americans aged 65 and older, as well as those with certain disabilities, like blindness, or illnesses, like chronic kidney disease, and ALS (amyotrophic lateral sclerosis).

Medicaid is a jointly-funded federal and state health insurance program that covers Americans with a limited income and their dependents. Seniors and other qualifying adults who meet their state’s eligibility criteria may be covered by both programs.

What Is Medicare?

Medicare subsidizes health care costs for Americans aged 65 and older, and some people under 65 with certain disabilities or conditions. It’s the primary form of health insurance for seniors. While Medicare certainly helps reduce medical expenses, it doesn’t cover everything. Let’s look at the plans and benefits that make up Medicare.

Original Medicare consists of two parts:

• Medicare Part A (Hospital Insurance)
• Medicare Part B (Medical Insurance)

As mentioned earlier, Original Medicare covers some health care costs, but not all of them. For example, there’s no yearly limit on what you pay out of pocket with Original Medicare.

The good news is that enrollees have additional options that may reduce out-of-pocket expenses. These programs allow individuals to add additional benefits and cost savings through private insurance companies that contract with Medicare:

• Medicare Part C (Medicare Advantage)
• Medicare Part D (Prescription Drug Plan)
• Medicare Supplement Insurance (Medigap)

We’ll go into detail about the different parts of Medicare a little later on.

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

Who Qualifies for Medicare?

To qualify for Medicare coverage, you must be a United States resident and either a U.S. citizen or a lawfully admitted alien who has lived in the U.S. for five continuous years. You also must meet at least one of the following criteria:1

• You’re 65 or older
• You’ve been disabled for over 24 months
• You’ve been diagnosed with end-stage renal disease
• You have Lou Gehrig’s disease (ALS)

Medicare Enrollment Options

Every day, nearly 10,000 Americans age into the Medicare program.2 Despite the large number of people who qualify for Medicare, there are only certain times throughout the year when seniors and other eligible beneficiaries can enroll. We’ll touch on the six options for enrollment below. 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.

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 and ends three months after your 65th birth month. It is best to enroll during this time to avoid being charged late enrollment penalties.
2. Annual enrollment period: Medicare’s annual open enrollment is from Oct. 15 to Dec. 7. During this time, you may be able to join, drop, or switch to another plan. This includes Medicare Advantage (Medicare Part C) and Medicare Part D Prescription Drug Plans.
3. General enrollment period: If you miss your initial seven-month window, you may be able to enroll during the general enrollment period, which starts on Jan.1 and ends on 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.
4. Special enrollment period: Individuals aged 65 and older who are employed or have an employed spouse 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 your current plan, or during the eight-month period after your coverage ends. The special enrollment period is applicable to seniors who are 65 and working but thinking about retirement.
5. Medicare Advantage open enrollment period: If you’re enrolled in a Medicare Advantage (Part C) plan, you can switch to a different Medicare Advantage plan or to Original Medicare, plus a separate Medicare drug plan once from Jan.1 to March 31 each year.
6. Medigap open enrollment period: Medigap’s six-month open enrollment period begins on the first day of the month in which you are 65 or older and have enrolled in Medicare Part B. If you don’t enroll in a Medigap plan at that time, you may pay a larger monthly premium for the life of your plan. You may also be denied coverage completely, and unable to buy a plan in some instances.

How to Enroll in Medicare

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

If you aren’t yet receiving Social Security benefits but would like to enroll in Medicare, you can do so by creating a my Social Security account and applying through the Social Security Administration (SSA) benefits page.

If you’d prefer to enroll by phone, you can call the SSA toll-free at 800-772-1213. If you have hearing loss, call the toll-free TTY number at 800-325-0778. Representatives are available from 7 a.m. to 7 p.m., Monday through Friday.

>> Further Reading: Medicare helplines

What You Don’t Know About Medicare Can Hurt You (And Your Bottom Line)

Medicare is a complicated program; however, once you’re equipped with the right information, you can enroll knowing you’re getting the most out of your Medicare plan. Before you enroll, watch the video below with Jeff Hoyt as he covers what you might not know about Medicare that could hurt you.

What Does Medicare Cover?

If you’re unsure why we have Medicare Part A and Part B or wondering what the difference is between Medigap and Medicare Advantage, we have the answers! Read on to find out the main purpose of each part of Medicare and what they cover.

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. Even though emergency rooms are typically found in hospitals, they’re not covered by Part A. Services you receive as an outpatient in an ER are covered by Part B (more on that below).

Adults aged 65 and over are eligible for premium-free Medicare Part A at no cost if:

• You’re already receiving retirement benefits from Social Security or the Railroad Retirement Board
• You’re eligible to receive Social Security or Railroad benefits but haven’t filed for them yet
• You or your spouse had Medicare-covered government employment

You may not be eligible for premium-free Part A, on the basis of age, if neither you nor your spouse was employed for 10 years (40 quarters of coverage), and did not pay Medicare taxes (FICA).

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

Anyone who is eligible for Medicare Part A is also eligible for 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, your Part B premium will automatically be deducted from your monthly check. If you’re not receiving Social Security benefits yet, you’ll get a quarterly bill for your Medicare Part B premium in the mail.

Preventative and medically necessary services covered by Medicare Part B5:

• Screenings, such as those for colon cancer and breast cancer
• Vaccinations
• Annual wellness visits
• Ambulance transportation
• Durable medical equipment (DME)

Medicare Advantage Plans (Medicare Part C)

If you would like a plan that covers items Original Medicare doesn’t cover, you can opt for a Medicare Advantage (Part C) plan instead. These plans are sold by private companies that contract with Medicare to provide the same level of coverage as Original Medicare, plus some extras.

Medicare Advantage plans fold in Medicare Part A, Part B, and often, Part D (prescription drug) coverage. A considerable number of Medicare Part C plans also offer dental, vision,, and hearing coverage, as well as gym memberships.

If you get a Part C plan, you’ll most likely still need to pay the monthly Part B premium. A few Part C plans, however, cover this monthly cost.

Part C plans typically require you to see health care providers within their own network. Many plans provide limited coverage for out-of-network providers as well.

Medicare Advantage Plans vary by state, county, and zip code, so check with your local carriers to determine what plans are available in your area. You can also use Medicare’s Find a Plan tool to help you compare Part C plans side by side.

Medicare Part D

As you research your Medicare options, keep in mind that Original Medicare doesn’t cover prescription medications. These out-of-pocket costs can derail your budget, especially if you’re living on a fixed income.

Medicare Part D is optional and provides coverage for prescription drugs. During your initial enrollment period, carefully consider a Medicare Part D plan (even if you don’t need prescriptions now). Late enrollment results in a permanent penalty that is added to your monthly premium that lasts for the life of your plan.

Some Medicare Advantage Plans already offer prescription drug coverage. If you have Original Medicare, you can compare Medicare Part D plans and make selections by logging in to your Medicare.gov account.

Did you know you may be able to save money on prescription drugs? Jeff Hoyt, shares essential information on the Medicare Extra Help program and State Pharmaceutical Assistance Programs in the video below.

Medigap (Medicare Supplement Health Insurance)

Medigap is different from Medicare Advantage. Both types of supplemental plans are designed to enhance your health care coverage, but they do so in different ways:

• Medigap only provides coverage for the things Original Medicare pays for. For example, Original Medicare typically covers 80 percent of your medically-necessary needs, such as hospitalizations and doctors visits. Medigap covers the left-over 20 percent. Medigap does not cover prescription drugs or other line items that Original Medicare won’t pay for.
• Medicare Advantage provides coverage at varying levels for everything Original Medicare covers. It may also cover “extras” like prescription drugs and dental visits. Your out-of-pocket costs for Part C vary by plan.
• By law, you can’t have both a Medigap and a Part C plan.

Medigap can help cover copays for Medicare Part A and Part B, as well as deductibles. If you spend a lot of time out of the country, Medigap may cover health care costs you accrue overseas, whereas Original Medicare does not Remember, Medigap doesn’t cover vision, dental, or long-term care. If you’re in the market for dental coverage, check out Senior Living’s picks for Medicare dental supplement plans.

Interested in a Medigap plan but don’t know where to begin? Take a look at our top 10 picks for Medigap plans for seniors or visit our beginner’s guide to Medigap insurance.

What Is Medicaid?

Medicaid is a jointly-funded federal and state program that provides health coverage to low-income individuals in the U.S. In 2023, over 93 million Americans were enrolled in the program.6 Medicaid is administered at the state level. States are required by law to stay within federal guidelines, but Medicaid services and coverage vary greatly by state.

Who Qualifies for Medicaid?

Your first step in qualifying for Medicaid is to be a U.S. citizen or a lawful permanent resident to be eligible for full benefits. Eligibility for Medicaid is based on income.

Whether you have a qualifying disability, your family’s size, and your age also factor into your eligibility. These qualifications vary by state. Your assets and income will be taken into consideration, no matter where you live, when you apply for Medicaid. Some older adults may qualify for both Medicare and Medicaid.

Medicaid qualifications can change from year to year. Even if you didn’t qualify in the past, you’re urged to reapply, rather than go without healthcare coverage. If your financial situation changes or your state expands Medicaid, you may qualify now or in the future. Unsure if you meet the eligibility requirements for Medicaid? Help is just a phone call away through your state’s Medicaid agency.

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 HealthCare.gov.

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.

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

Your state may provide additional benefits or offer expanded Medicaid eligibility. Check with your local agency to see what Medicaid benefits are available where you live.