Medicare and Medicaid Demystified

medicare blog

The two program names sound the same, they are both run by the government, and they are related to health care…but what’s the difference? The fact is they are very different programs designed for different populations and needs.

Medicare is a health insurance program run by the federal government for people who are 65 or older, under 65 with certain disabilities or who are of any age and have End Stage Renal Disease (ESRD) or amyotrophic lateral sclerosis (ALS). There are four different parts of Medicare that help cover specific services.

Medicare Part A (Hospital insurance): Part A covers inpatient hospital stays, care in a skilled nursing center, hospice care and some home health care. Starting at age 65, you usually won’t have to pay a monthly premium if you or your spouse paid Medicare taxes while working and are eligible to receive Social Security or Railroad benefits. However, there are some exceptions.

Medicare Part B (Medical insurance): Part B covers certain doctor services, preventive services, outpatient care and medical supplies.

Medicare Part C (Medicare Advantage Plans): Part C is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all of your Part A and Part B benefits.

Medicare Part D (Prescription drug coverage): Part D provides outpatient prescription drug coverage. It is provided only through private insurance companies that have contracts with the government, and is not provided directly by the government.

Original Medicare is the way most people get their Medicare, and is Part A and Part B. Most people are enrolled in Parts A and B automatically when they turn 65. The cost varies depending on the coverage you choose.

Medicaid is a joint federal and state program that helps pay health care costs for certain people and families with limited income and resources. It is the single largest source of health care coverage in the United States. Each state creates its own Medicaid program that follows federal guidelines. There are mandatory benefits and some optional benefits. Some of the mandatory benefits include; care and services received in a hospital or skilled nursing center, care and services received in a federally qualified health center or rural health clinic, and more. Costs for Medicaid depend on income and the state-specific rules. Some groups are exempt from most out-of-pocket costs.

Some people are considered “dual eligible” and qualify for both Medicare and Medicaid. If you qualify and enroll in both programs, the two often work together to cover most of your health care costs.