Most Americans have heard of Medicare and Medicaid, but many people aren’t aware of the differences between these two government programs. In today’s blog post, I present an overview of each program, as well as their eligibility requirements.
Definitions and Distinctions
Medicare is a federal program that provides health coverage for Americans age 65 and over and those of any age who have a severe disability. Medicare coverage is available regardless of the recipient’s income level. The program is administered by the Centers for Medicare & Medicaid Services and has a network of nearly 778,000 health care professionals and more than 6,000 hospitals across the United States.
Medicaid is an income-based program that provides health coverage to people with very low income levels. The states administer Medicaid according to federal requirements, and it is funded jointly by states and the federal government. Income thresholds and specific coverage vary by state. Low-income seniors often receive health care through both Medicare and Medicaid, which work together to offer comprehensive benefits.
Medicaid and Long-Term-Care Controversy
Medicaid planning can be controversial because it has by default become the long-term-care insurance of the middle class. With the help of attorneys, some seniors needing long-term care impoverish themselves to qualify for Medicaid while preserving their savings for a healthy spouse or children. It can be argued that it’s highly unethical to transfer funds to family members simply so that the government will foot the bill for a person’s health care.
In addition to the ethical considerations, here are some other facts to consider: Medicaid typically pays for a semiprivate room in a nursing home, but not all nursing homes take Medicaid. In many states, it is not easy to get Medicaid to cover home care services or pay for assisted-living facilities. Many seniors want to stay at home, but with Medicaid, they may not be able to. For this reason, Medicaid may not be the best strategy for long-term care. For more information, please read my blog post “Long-Term-Care Insurance: Myths, Misunderstandings, and Considerations.”
Getting the Most from Medicare
The key to using Medicare effectively lies in understanding the system and options. Medicare can leave eldercare caretakers and their caregivers confused about the choices, and it is only getting more complicated. Caregivers of loved ones need to keep abreast of changes in coverage and reimbursement rates so they can make sure their senior relative receives the health care coverage that they need.
Medicare has four parts: Part A, Part B, Part C, and Part D. The first two parts make up what is frequently termed “Original Medicare” and are administered by the federal government. Here is a quick overview of the four parts of Medicare:
- Medicare Part A is hospital insurance, covering everything from general hospital stays to rehabilitation in a nursing home for acute illnesses.
- Medicare Part B is medical insurance, covering services ranging from doctors’ visits and outpatient hospital care to physical and occupational therapy and even some home health care.
- Medicare Part C refers to what is known as Medicare Advantage Plans. Part C is not a separate benefit; rather, it is a private insurance plan that provides the hospital and medical coverage that would typically be offered through Parts A and B. Medicare Advantage Plans frequently offer additional benefits, such as vision, dental, and hearing coverage; and some even include prescription drug coverage. Services are often restricted to network providers like HMOs and PPOs.
- Medicare Part D provides outpatient prescription drug coverage and is offered only through private insurance companies who have contracted with the government. Many people who have Original Medicare opt to purchase stand-alone Part D plans to cover the cost of their medications.
It’s important to remember that Medicare is not forgiving. Seniors who don’t act during the initial enrollment period may find themselves without health insurance for a significant length of time. Should a person miss their six-month enrollment window, the wait to enroll in Medicare Part B could be long (until the following enrollment period—January 1 through March 31 of the following year). In contrast, enrollment in Part A is usually automatic. Coverage would then begin the following July.
The above is just a basic overview of Medicare, but there is a lot to know about this program and its potential “gotchas.” For more information, please refer to the following online resources: