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Andrew Smith

Andrew Smith

Medicare vs. Medicaid

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Medicare vs. MedicaidUnlike Medicaid, which is a financial assistance program, Medicare is a health insurance plan. Everyone 65 and older is eligible for Medicare, regardless of their income. All low-income Americans, regardless of age, are eligible for Medicaid. However, some persons may be eligible for Medicare and Medicaid coverage.

Key Takeaways

  • Government-sponsored health insurance programs, Medicare and Medicaid, cover a wide range of people.
  • For people 65 and over, Medicare is a federal health insurance program that offers coverage irrespective of one’s income level.
  • Health care benefits are provided to low-income individuals through Medicaid, a state and federal program.
  • Medicare and Medicaid benefits may be available to some persons.

What Is the Difference Between Medicare and Medicaid?

Both Medicare and Medicaid are controlled by the federal government. Some people may be eligible for both, although it’s more common for one or the other.

Both are handled by the U.S. Centers for Medicare & Medicaid Services, which receives funding from several parts of the government.

Those 65 and older and those under 65 with a disability are covered by Medicare, the federal health insurance program, regardless of income.
Medical insurance is provided to low-income individuals through Medicaid, a state and federal assistance program.
Having the Ability to Apply for Both Federal and State Funds For those who qualify, the two programs work in tandem to provide health insurance and cut health care expenses.

What Does Medicare and Medicaid Cover?

Medicaid eligibility varies from state to state, although Medicare eligibility is the same across the United States. Medicaid is funded in part by the federal government and in part by the individual states. Rules vary from state to state.


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Examples of What Medicare and Medicaid Cover

ServiceMedicareMedicaid
Basic hearing careOnly through some Medicare Advantage plans.Varies from state to state.
Basic vision careOnly through some Medicare Advantage plans.Varies from state to state.
Dental careOnly through some Medicare Advantage plans.Varies from state to state.
Doctor visits✅✅
Home health care✅✅
Hospice care✅✅
Hospital inpatient care✅✅
Hospital outpatient care✅✅
Long-term care✅✅
Prescription drugsOnly with a Medicare Part D plan.Varies from state to state.
Preventative care and services✅✅
Transportation assistanceGenerally, no. But it may cover certain nonemergency ambulance transportation to and from your health care provider.✅

Who Qualifies for Medicaid?

According to the U.S. Centers for Medicare & Medicaid Services, Medicaid offers health care coverage for 63.9 million people. Elderly and disabled people account for two-thirds of all Medicaid spending.

Because Medicaid is co-funded by the federal government and the states, the eligibility standards differ from state to state. ‘

Medicaid recipients in certain states may be able to pay copayments and other expenses out of their own pockets. In most cases, however, these expenses do not apply to those in institutions such as children’s homes or nursing homes.

medicare vs medicaid vs medicalExamples of Who May Qualify for Medicaid

65 years of age or older, blind or disabled This group is eligible for Medicare benefits. If they have low incomes, they can apply for both Medicaid and Medicare, or choose Medicaid if they can’t afford the higher expenditures of Medicare.
Low-wage Earner
If you income between 100 and 200 percent of the federal poverty level (FPL), you’re eligible in most states if you meet other requirements, such as being old or disabled or having a minor child.
AssetsMost states establish a maximum of $2,000 per individual or $3,000 per married couple for countable assets. These include investments in equities, bonds, checking and savings accounts, as well as additional automobiles.

Each state’s Medicaid application process is different. It can take weeks or months to find out if you are eligible for benefits after you apply. Your health and financial history may also be requested by some states, as well as a physical examination.

Income Requirements

Depending on the number of people in your household, you can estimate how far below the poverty line you and your family are. The more children you have, the more money you can make and still qualify for assistance.

A new federal poverty level is established each year by the federal government. The 48 contiguous states have the same levels. There are different levels in Alaska and Hawaii.

2022 Federal Poverty Levels

Persons in HouseholdFPL for 48 Contiguous States & D.C.FPL for AlaskaFPL for Hawaii
1$13,590$16,990$15,630
2$18,310$22,890$21,060
3$23,030$28,790$26,490
4$27,750$34,690$31,920
5$32,470$40,590$37,350
6$37,190$46,490$42,780
7$41,910$52,390$48,210
8$46,630$58,290$53,640

Those who live in families with more than eight individuals are required to pay an extra fee for each additional person.

FPLs for Households of Eight or More

In the 48 contiguous states, each extra family member costs $4,720, whereas, in Alaska, each additional member costs $5,900.
Each additional individual in Hawaii costs $5,430 in state funds.

prescription drug coverageMedicaid Costs

Depending on where you live, Medicaid costs can vary greatly. Due to Medicaid’s focus on low-income individuals, most states are forbidden from charging premiums to anyone making less than 150 percent of the Federal Poverty Level (FPL).

All out-of-pocket payments must not exceed five percent of family income. States, on the other hand, can’t force particular groups of people to pay more for certain medical treatments they get.

Allowable Cost Sharing Amounts for Adults in Medicaid by Income

Service or ProductLess Than 100% of FPL100% to 150% of FPLGreater Than 150% of FPL
Outpatient servicesUp to $4Up to 10% of the state’s costUp to 20% of the state’s cost
Nonemergency ER useUp to $8Up to $8No limit
Prescription drugs

Preferred: Up to $4

Nonpreferred: Up to $8

Preferred: Up to $4

Nonpreferred: Up to $8

Preferred: Up to $4

Nonpreferred: Up to 20% of the state’s cost

Inpatient servicesUp to $75 per stayUp to 10% of the state’s costUp to 20% of the state’s cost

However, some states have received exceptions from the federal government that allow them to charge higher premiums or make customers pay more of the expenses of services.

Medicare and Medicaid Dual Eligibility

The term “dually eligible beneficiaries” refers to those who are both enrolled in Medicare and Medicaid.

There are four Medicare Savings Programs that give financial support and/or cost sharing, so you may be eligible for dual eligibility if you are eligible for Medicare and Medicaid.

prescription drugsMedicare Savings Programs

Part A and B premiums are paid for by the Qualified Medicare Beneficiary ProgramQMB.
Selected Low-Income Medicare Beneficiary ProgramSLMB provides assistance with the cost of Medicare Part B premiums.
On a first-come, first-served basis, the Qualifying Individual ProgramQI assists to pay Medicare Part B premiums.
Qualified Individuals with Disabilities Working Program
A portion of QDWI’s Medicare Part A premiums is paid for certain disabled or working beneficiaries under 65, those who do not receive Medicaid, and those whose income and resources fall within state income and resource guidelines.

Dual Eligible Special Needs Plans

A Dual Eligible Special Needs Plan, or D-SNP, may be available to those who qualify for both Medicare and Medicaid.

Medicare Parts A and B, as well as Part D prescription medication coverage, are all included in any D-SNP. However, on top of that, they frequently include additional coverage.

Dental, hearing, and vision coverage, as well as aid in purchasing health-related products and transportation to and from a health care provider, are examples of additional benefits.

In the event that you currently have a Medicaid plan, a Dual Eligible Special Needs Plan will not affect your eligibility for Medicaid.

Medicare and Medicaid for SSI and SSDI Recipients

To qualify for Medicare, you must receive Social Security Disability Insurance (SSDI) benefits. Medicaid is available to those who receive Supplemental Security Income (SSI) benefits.

After two years of receiving SSDI compensation, individuals are eligible for Medicare benefits. In addition, they may be eligible for Medicaid coverage while receiving Social Security Disability Insurance (SSDI). For the first two years, they’ll be covered by Medicaid, and then their Medicare premiums will be paid for by Medicare Savings Programs.

SSI recipients can’t get Medicare until they’re 65 or have end-stage renal illness, but they can get Medicaid. To begin collecting Medicare benefits, they will need to submit a “Uninsured Medicare Claim.” If they get SSI benefits, they may also be required to sign up for Medicaid separately. State laws differ on this.

children's health insurance programHow Medicare and Medicaid Are Each Funded

Taxpayers support both Medicare and Medicaid. However, the funding mechanisms for each are different.

How Medicare Is Funded

According to the Kaiser Family Foundation, Medicare accounts for 21% of all US health care spending and 12% of the government budget.

The federal government, FICA payroll taxes, and Medicare premiums paid by recipients all contribute to the cost of Medicare.

In addition to taxes on Social Security income and state-level payments, Medicare is supported by these sources.

Primary Funding Sources for Medicare, 2019

Medicare PartPrimary Funding Sources
Medicare Part A hospital insurance
  • Medicare payroll tax (88%)
Medicare Part B medical insurance
  • General revenues (72%)
  • Beneficiary premiums (27%)
Medicare Part D prescription drug insurance
  • General revenues (71%)
  • Beneficiary premiums (17%)
  • State Medicaid payments for dual eligibility beneficiaries (12%)

A source of funding for the project. The Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund are the two trust funds established by Medicare.

Medicare Part A expenditures are covered by the HI fund, whereas Part B and Part D costs are covered by the SMI fund. Medicare’s administrative costs are also covered by each subscriber.

The money in the trusts can only be used to pay for the government’s health insurance program, Medicare.


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How Medicaid Is Funded — Federal Medical Assistance Percentage

It’s a cooperative effort between the federal government and the individual states to provide Medicaid coverage.

Medicaid services are paid for by the federal government at a certain percentage by each state. “The Federal Medical Assistance Percentage” is the term for this figure (FMAP).

Each state’s average per capita income is compared to the national average in order to determine the FMAP. Each state’s Medicare expenditures are covered at least half by federal funds, regardless of the state’s Medicaid budget.

States must demonstrate that they are able to meet their portion of the Medicaid costs.

While states have the freedom to set their own rates for paying doctors, hospitals, and other service providers, those rates must nonetheless meet federal standards. Changing how states pay providers requires prior approval from the Centers for Medicare & Medicaid Services (CMS).

CARES Act and COVID-19 Relief for Medicare and Medicaid

The Centers for Medicare & Medicaid Services (CMS) got $200 million through the CARES Act for the agency’s COVID-19 response in 2020.

The CARES Act is a $2.2 trillion economic stimulus measure in response to the COVID-19 epidemic. On March 27, 2020, it became legislation. Coronvirus Aid, Relief, and Economic Security (CARES) appears in the title of this act of Congress.

Some of the CARES funds have to be spent on nursing home inspections, with a focus on nursing homes in areas where the coronavirus is often transmitted in the general public.

Highlights of CMS funding from CARES Act, 2020

  • Virtual health care services are being expanded in the Medicare program
  • Expansion of home health care services under Medicare and MedicaidMedicare patients treated with COVID-19 are eligible for increased compensation to hospitals.
  • People on Medicare and Medicaid can get their vaccinations and tests paid for.
  • In states that have not extended Medicaid coverage, Medicaid programs were able to cover uninsured people who had a need for it services of COVID-19

However, even though the CARES Act money was intended to be temporary during the COVID-19 epidemic, items like enhanced telehealth services have been popular enough for CMS to explore making them permanent..

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What Is Medicare?

What Is Medicare?

All adults over 65 and those with impairments or kidney failure are eligible for Medicare coverage under the federal government’s health insurance

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