Medicare? Medicaid? What’s the Difference?

You hear people talking about Medicare. You hear people talking about Medicaid. Are they the same program? What’s the difference? And does it matter which one covers your health care needs?

Medicare and Medicaid have both been around since 1965.  They were created by the same act of Congress, but were designed to make health insurance available to different people.  Both programs have changed a lot in the last 55 years, but their basic purposes have not changed.

Medicare was designed for older adults. It provides health insurance coverage for people age 65 and older. It also provides health insurance to some people who are younger than age 65 but who are too disabled to work. Work is the key to being eligible for Medicare.  If you have worked long enough and paid taxes into the Social Security system long enough to be eligible for Social Security retirement benefits, then you automatically are eligible for Medicare at age 65.  It doesn’t matter how much money you earned or how much money you have in the bank; you still get Medicare health insurance coverage. People younger than age 65 who have been receiving Social Security Disability Insurance (meaning they are too disabled to work) start getting Medicare two years after the start of their Social Disability benefits.  If you have never worked or have worked but not paid into Social Security, and you are married to someone who is eligible for Social Security, you also automatically are eligible for Medicare at age 65. You can get Medicare, even if you never paid into the system, if your ex-spouse is eligible and you were married to your ex-spouse for 10 years.

Medicaid was designed to provide health insurance coverage for people with low incomes and low resources. Medicaid, unlike Medicare, doesn’t depend on your age or on how much you worked. People of all ages can be covered by Medicaid as long as they or their families earn less than a set dollar amount and have very little savings and other resources. Some people who have Medicare also have Medicaid because they also meet the income and resource levels.

Medicare, then is for older people, and Medicaid is for people with limited income.  Both Medicare and Medicaid pay for hospital stays and doctor visits.  They both pay for preventive services like flu shots and mammograms and can pay for medicine.

There are two big differences between Medicare and Medicaid.

It’s easier to find a doctor if you are on Medicare. Almost every doctor will take Medicare, and you can use your Medicare anywhere in the country. If you live in Western Pennsylvania but want to go to a doctor in Ohio or West Virginia and have Medicare, you can use your Medicare to go to that doctor. If you are on Medicaid, however, your choices are more limited. Not every doctor in Western Pennsylvania takes Medicaid patients. And, except in very usual circumstances, your Pennsylvania Medicaid can’t be used in Ohio or West Virginia.

The other difference is how Medicare and Medicaid pay for post-hospital care. Medicare only pays for skilled nursing care for up to 100 days after a hospital stay and when you need certain skilled services like physical therapy. Medicaid pays for post-hospital care for people who don’t need highly skilled care – like people with Alzheimer’s disease – and for long periods of time, as long as they don’t have enough money to pay the full cost of their care.  

Some people, worried about needing post-hospital care when they get older, try to “spend down” their savings so they can qualify for Medicaid if they ever need it. But there are other options they can use instead of trying to qualify for Medicaid that will allow them to use facilities outside of the state of their residence unlike Medicaid.  

Long Term Care & Other Insurance Options

Long Term Care is one insurance option available but there are now many more ways than ever to utilize other insurances to cover post-hospital care such as Life Insurance, Annuities and Short-Term Care. The best thing to do is to speak to a professional like Brian Goldman Retirement Solutions to find out all of the options available to you.