Figuring out how government healthcare programs work can feel overwhelming, yet it’s incredibly important. Among the most frequently mentioned options are Medicaid and Medicare—two vital programs that support millions across the country. Though they both offer health coverage, they cater to different groups and have distinct purposes. Knowing how they differ can empower you or your family members to choose the right healthcare path with confidence.
What is Medicare?
Medicare is a federal program that primarily serves people over 65, regardless of income, and younger disabled individuals and dialysis patients. Established in 1965, Medicare is designed to provide health insurance to those who have fewer options for private health insurance.
Medicare Structure
Medicare is divided into four parts, each covering different aspects of healthcare:
- Part A (Hospital Insurance): Covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
- Part B (Medical Insurance): Covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
- Part C (Medicare Advantage Plans): Offers all benefits and services covered under Part A and B through private health insurance companies approved by Medicare.
- Part D (prescription drug coverage): Adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service plans, and Medicare Medical Savings Account Plans.
Eligibility for Medicare
Eligibility for Medicare is primarily based on age and disability status. Individuals 65 years or older, younger individuals with disabilities, and people with End-Stage Renal Disease are eligible for Medicare.
What is Medicaid?
Medicaid, on the other hand, is a state and federal program that provides health coverage to eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities. Established in 1965 alongside Medicare, Medicaid is administered by states according to federal requirements. The program is funded jointly by the state and federal government.
Medicaid Structure
Medicaid does not have a uniform structure like Medicare. Instead, it varies significantly from state to state, as states have the flexibility to design their own programs within federal guidelines. However, there are certain benefits that all Medicaid programs must cover, such as:
- Inpatient and outpatient hospital services
- Physician services
- Laboratory and x-ray services
- Home health services
States can also choose to cover other services like physical therapy, dental care, and vision services.
Eligibility for Medicaid
Medicaid eligibility is primarily based on income. The Affordable Care Act expanded Medicaid eligibility in many states to cover all adults with income levels up to 138% of the federal poverty level. However, some states did not expand their Medicaid programs. Eligibility can also depend on other factors, including household size, pregnancy, and disability status.
Key Differences Between Medicaid and Medicare
1. Coverage Scope and Eligibility
Medicare is generally available to all U.S. citizens and permanent residents over age 65, regardless of income, as well as to younger individuals with specific disabilities. Medicaid is aimed at providing coverage to low-income individuals and families, with eligibility varying by state.
2. Cost to Beneficiaries
Medicare beneficiaries typically pay a portion of costs through deductibles and co-insurance. They also pay premiums for Part B and Part D unless they qualify for low-income subsidies. Medicaid beneficiaries may have minimal costs, with many services provided free or at a low cost.
3. Administration
Medicare is a federal program, with standardized rules across the United States. Medicaid is a state-administered program, which means coverage can vary significantly depending on where a person lives.
4. Benefits
While Medicare provides a broad base of coverage designed primarily for older adults, it does not cover long-term care. Medicaid does cover long-term care, both in nursing facilities and through community-based services aimed at keeping people in their homes.