Differences Between Medicare | Medicaid

Simply put, Medicare is a federal health insurance program for people age 65 and older, certain people under 65 with disabilities and certain people with kidney disease. Medicaid, which is administered by the states, is a program of health coverage for certain people with low incomes or very high medical bills. Eligibility for Medicare depends on age or disability only; eligibility for Medicaid depends on age, disability or family status and on an individual’s (or family’s) income and resources.

Coverage Differences Between Medicare & Medicaid:

Medicare. Medicare covers inpatient care, in hospitals, skilled nursing facilities and other institutions under Part A, and outpatient services, physician services, medical supplies and equipment under Part B. Home health care is covered to differing extents under both Part A and Part B. While Medicare thus covers many health care services required by its beneficiaries, it does not cover certain types of care that are important to older people and people with disabilities. The two most glaring gaps in Medicare coverage are prescription drugs and non-skilled, or “custodial” long-term care.

Medicaid. Each state designs its own Medicaid program, which consists of both mandatory and optional eligibility groups, and mandatory and optional services. Each state Medicaid program must cover inpatient and outpatient hospital services, laboratory and x-ray services, physician services, nursing facility services (which is broader than Medicare’s skilled nursing facility coverage), home health services, services of a nurse-midwife and a certified pediatric nurse practitioner for certain groups of people. In addition to the required services, states can include many optional services in their programs. Every state program includes some prescription drug coverage.

Generally, Medicaid covers a broader scope of services than Medicare; however, Medicaid is means-tested and Medicare is not.

Eligibility Differences Between Medicare & Medicaid:

Medicare. Individuals age 65 and older with sufficient work history in the Social Security system, individuals under age 65 who have received Social Security disability benefits for two years and certain individuals with end-stage kidney disease are entitled to inpatient coverage, Part A, premium-free; others who are 65 or older can purchase Part A.(Beginning July 1, 2001, individuals under 65 receiving benefits because of amyotrophic lateral sclerosis (ALS) qualify for premium-free Part A without waiting two years.) Virtually all beneficiaries pay a monthly premium for coverage under Part B.

Medicare eligibility is never based on how much money a beneficiary has, the value of other assets owned or whether the beneficiary has given money away at any time. Medicaid is means-tested and does consider an applicant’s assets and, in some instances, whether assets were given away to qualify for Medicaid.

Medicaid. To be eligible for Medicaid, an individual must fit into a category of persons eligible for Medicaid and must have income and resources under a threshold set in part by the federal government and in part by the states. Categories of people who can receive Medicaid include people age 65 and older, people under 65 with disabilities, children, parents of children in certain instances, and pregnant women.

NOTE: The Special Rules

Special rules apply to people seeking to have Medicaid pay for long-term care, whether in a nursing home or in the community. These rules address 1) penalties for transferring assets for less than fair value, 2) income and resource protections for the spouse, and 3) estate recovery.

Transfer of Assets. The Medicaid agency will ask if the applicant has given any money away in the past three, or in some cases, five, years. If an individual gave something away without getting fair value for it, she or he will be penalized by being denied Medicaid eligibility for a period of time. Gifts to certain people, especially spouses and disabled children, do not generally subject the individual to penalty. The rules apply to both nursing home and to certain community based long-term care services.

Spousal protections. These rules protect income and resources for the spouse still in the community when an individual goes into a nursing home (and, in some states, even when the individual remains at home to receive services). The amounts of income and resources set aside for the at-home spouse are greater than those generally allowed to be kept by other categories of people eligible for Medicaid. Though the rules are intended to prevent impoverishment of the community spouse, they are often referred to as the spousal impoverishment rules.

Estate Recovery. Generally, states must recover, from the estate of deceased Medicaid beneficiaries, Medicaid payments made for most long-term care services provided to beneficiaries age 55 and older and may recover from those same beneficiaries payments for other services. Recovery cannot occur while a spouse or dependent or disabled child is living, nor can a home be recovered against while certain relatives live there.

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