As most of us are keenly aware during tax season, when it comes to the Federal Government, nothing is simple. And, short of the tax code, two of the most complex systems that we and our loved ones will utilize during our lifetimes are Medicaid and Medicare. If you don't know the difference between these two, and how to qualify for them, you could end up holding a really large bill during the last few years of life.
Let’s break it down and learn some of the differences.
Medicare is a health insurance program. In order to receive Medicare, a person must be 65 years old or older or have a severe disability. In order for a disabled person under the age of 65 to be eligible for Medicare, they must have received Social Security Disability Insurance (SSDI) for two years. Medicare is run and administered by the federal government, so it is uniform from state to state. If a person meets Medicare eligibility requirements, they can receive Medicare no matter their income or assets. Costs for Medicare are based on the recipient’s work history. This means that costs are determined by the amount of time a person paid Medicare taxes. These costs like all insurance include premiums, copays, and prescriptions.
Medicare has four "parts." Part A is hospital insurance, Part B is medical insurance, and Part D is prescription drug coverage. Parts A and B are covered in Original Medicare offered by the government.
Part C is unique. It is a private health plan. The Medicare Advantage Plan or Medicare Part C plan is required to include the same coverage as Original Medicare but usually also include Part D as well. It is important to do your homework on these plans to find what works best and is the most cost-effective for you.
Most importantly, however, Medicare does not normally cover the cost of long-term nursing care. As such, if you or a loved one is on Medicare, you should not count it to pay for any nursing home care.
Medicaid is a health care assistance program. Its guidelines come from the federal government, but it is administered by each state. It is based on income and assets and is available to people who belong to one of the eligible groups. Unlike Medicare, you do not automatically qualify for Medicare once you reach the age of 65. You need to plan ahead to make sure you will qualify.
Unlike Medicare, Seniors who require nursing home care can qualify for Medicaid and only pay a share of their income for the nursing home. Medicaid then pays the rest.
A person can be eligible for both Medicare and Medicaid and can have both. The two programs work together to help the recipient best cover the expenses of health care. For example, Medicare costs include premiums, copays, and deductibles. Full Medicaid benefits can cover the costs of Medicare deductibles and cover the 20% of costs not covered by Medicare. Medicaid can also help with Medicare assistance and may cover costs of premiums for Part A and/or Part B.
It is important to make sure that both of these programs are going to work for you or your loved one's benefit.