Medicare vs Medicaid.
They’re both government programs and they both have similar names. But they aren’t interchangeable.
Look closer at these federal health insurance coverage programs and you’ll find some key differences. Read on to learn everything you need to know about Medicare and Medicaid.
Medicare vs Medicaid: What’s the difference?
Medicare is chiefly aimed at senior citizens, although younger people with disabilities or who receive dialysis treatment may also be eligible.
As we said above, it’s taxpayer-funded. Some of the taxes you pay each year go to keep Medicare running, although Medicare patients still need to pay deductibles and premiums like they would with private insurance.
Medicaid, meanwhile, is a health insurance program for lower-income people, open to anyone below a certain income threshold, typically anyone with less than $2,000 to $3,000 in assets.
While it’s technically a federal program, each state has its own version of Medicaid with its own rules. Medicaid recipients don’t normally pay premiums, except in some states that require a low copay.
Medicare vs Medicaid: What’s covered?
Medicare has four distinct areas:
Medicare Part A, which provides hospital insurance and covers things like hospital service, limited home health care and hospice care
- Medicare Part B, which deals with outpatient medical services like doctor appointments, medical equipment, lab tests and some prescription drugs.
- Medicare Part C, which allows you to receive the benefits of Parts A and B through Medicare-approved private insurers.
- Medicare Part D, Medicare’s prescription drug plan.
Both part C and part D (prescription drug coverage) are paid for by the patient, although their connection to Medicare means patients pay less than they would with private insurance.
Medicaid, meanwhile, covers services your doctor deems “medically necessary.” This includes:
- Clinic treatments
- Diagnostic and treatment services and nursing facility services for patients under 21
- Birth control
- Medically necessary dental surgery
- Pediatric care
Medicare vs Medicaid: Dental and vision care
Medicare Part A and Part B do not cover dental care, while Medicaid does pay for preventive dental care and treatment, depending on the state, and covers children’s dental care. In some cases, Medicare Part A could pay for dental care received in a hospital outside of your standard dental care.
Vision services such as eye exams, glasses and optometry care may be covered by Medicaid in most states, while Medicare can include a standard vision test in Medicare Part B coverage.
Medicare vs Medicaid: Can I combine them?
Roughly 17 percent of people receiving Medicaid also get Medicare, according to 2018 government figures. Many are seniors who need long-term care in a nursing home, something Medicare won’t pay for, but Medicaid will.
But to become eligible for Medicaid, seniors need to spend most of their assets to meet the program’s income requirements.
That doesn’t mean you can just give your children all of your assets one day and sign up for Medicaid the next. Most states – Pennsylvania included – have a five-year look-back period that considers asset transfers made during that time and can penalize seniors for trying to divest their income improperly.
There are legal ways to get rid of assets, including buying an annuity. But it can be a complex process, which is why you may want to speak with a financial adviser or elder law attorney before attempting to spend down your assets.
The health insurance world can be complicated, as anyone who’s ever tried to figure out a plan or spent months wrestling with red tape can tell you.
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