Medicare and Medicaid may sound similar, but they are very different programs that serve very different needs. Although Medicare and Medicaid were both established by the Federal Government in the 1960s during the Johnson administration, that’s pretty much where the similarities end.
MEDICARE is a federal health insurance program that is paid for out of a trust fund to which employees and their employers contribute. It is primarily geared toward retired people, generally 65 or over, regardless of income. It is also available for younger people with disabilities and people of all ages who have end stage renal disease and amyotrophic lateral sclerosis (ALS). Just like private insurance, people on Medicare pay for part of their health care through deductibles and premiums. People are able to supplement their Medicare coverage through Supplement Plans and Medicare Advantage (previously Medicare Part C). Medicare is divided into Part A, which covers hospital services; Part B, which covers outpatient services not covered under Part A, mainly out-patient services such as physician visits and tests; and Part D, the most recently enacted portion that covers prescription drugs.
MEDICAID, on the other hand, is a public assistance program geared for low-income people of any age. Generally, Medicaid recipients are not required to pay for covered health care services. Medicaid is a welfare program funded partially by the Federal Government and partially by the state. The program is run by the states and local governments under federal guidelines. Because each state administers its own plan, qualification and coverages vary from state to state. The two most important distinctions are the types of coverage provided by each plan and who is eligible for each plan. Medicare is better suited to provide coverage for acute injuries and illnesses, but is less effective when it comes providing coverage for chronic illnesses or conditions, e.g., Alzheimer’s Disease and dementia. Also, except to a very limited extent, Medicare does not cover longterm care costs, whereas Medicaid can cover significant long-term care expenses. Second, Medicare is available to everyone who has adequately paid into the system. Medicaid, on the other hand, is a means-tested program. Anyone can qualify for Medicaid regardless of his or her earnings history, provided the applicant’s income and countable resources do not exceed limits imposed by the government.
There are many misconceptions about Medicare and Medicaid and who can qualify for these programs. To learn more, you should speak to an experienced estate planning or elder law attorney.
This article was originally published in Senior Living Magazine.