Medicare vs. Medicaid

How Medicare and Medicaid work together and separately to provide affordable healthcare

Most Americans have heard of Medicare and Medicaid but may confuse one with the other or think they're the same. While both are government programs, were created at the same time, are run by the Center for Medicare and Medicaid Services (CMS), and sound similar in name, Medicare and Medicaid are two entirely separate programs. 

In a nutshell, the difference between Medicare and Medicaid is that Medicare is a federally run program that provides an affordable health insurance option for older Americans while federal and state governments jointly run Medicaid to provide affordable healthcare insurance to low-income Americans. In some cases, individuals may be "dually eligible," meaning they can have both Medicare and Medicaid at the same time. If you want to learn more about how Medicare and Medicaid work together and separately, read on. We'll start with brief explanations of both.

What is Medicare?

Medicare was created to provide affordable healthcare coverage to older Americans. As a group, seniors were underserved by the existing health insurance market, which centered around employer-linked plans. The program is incredibly popular, and an overwhelming majority (94%) of Americans over 65 have enrolled—that’s over 54 million seniors who have chosen Medicare for their health insurance. In addition to seniors, Medicare is also available to some Americans with certain disabilities and health conditions, which brings the number of Medicare beneficiaries up to about 64 million. 

Part of what makes Medicare popular is the incredible value it provides, yet some are unable to afford their monthly Medicare costs. The good news is there are ways to save on Medicare. One option is to switch to a plan that better fits your needs. Chapter Advisors are able to help you search through every plan available to find one that’s best for your health and financial situation. We’ve saved Medicare beneficiaries thousands of dollars! Medicaid is another way that those eligible can save on Medicare costs. 

What is Medicaid?

Medicaid is a joint federal and state program that offers healthcare coverage to eligible individuals, including low-income families, pregnant women and children, and those receiving Supplemental Security Income. While the program is subject to federal standards, states are responsible for administering Medicaid, and each state’s Medicaid program varies. 

Medicaid, like Medicare, is widely popular. It’s currently covering over 80 million Americans! For those eligible, many healthcare services are free, which helps the underprivileged Medicaid community get the healthcare it needs.

Medicaid vs. Medicare - What are the Key Differences?

When it comes to their original purpose, Medicare and Medicaid are similar. Both provide affordable healthcare coverage to underserved Americans. As a result, their names share some commonalities, they were created at the same time, and they’re run by the CMS. 

While alike in both name and purpose, they work very differently. Let’s dive into how Medicare and Medicaid compare in terms of eligibility, cost, and coverage.

Medicare and Medicaid Eligibility

To be eligible for either Medicare or Medicaid, you must be a US citizen or permanent resident—otherwise, eligibility for the programs is entirely different. 

Medicare eligibility is determined primarily by age. When Americans turn 65, they are eligible to receive Medicare. Some younger Americans will also be eligible due to certain disabilities or health conditions. 

Eligibility for Medicaid varies by state but is determined primarily by income. If you are eligible due to income, you simply have to be a resident of the state where you apply for Medicaid. 

The Cost of Medicare and Medicaid

Both Medicare and Medicaid were created with the intent to provide underserved Americans with access to affordable health insurance—but their cost structures differ.

Medicare costs can vary drastically, depending on your choices as a beneficiary. Part A is free to Americans who have worked and paid Medicare taxes for ten years (or whose spouse has done so). Part B costs $170.10 (as of 2022) for most Americans but can cost more for high-income individuals. Medicare only covers about 80% of healthcare costs and doesn't cover prescription drugs, but there are plans available to help cover the gaps in coverage—Medicare Supplement plans, Medicare Advantage Plans (Part C), and Prescription Drug Plans (Part D). The premiums for these plans vary, in addition to their out of pocket costs. Get an estimate for how much your Medicare will cost.

Medicaid is free. However, states can institute out of pocket costs, including premiums, deductibles, copayments, and coinsurance. Out of pocket costs can also vary by individual. Some individuals are exempt, and others (above the federal poverty level) may pay more. 

Medicare and Medicaid Coverage

Original Medicare (Part A & Part B) covers inpatient and outpatient care, including hospital care, skilled nursing care, regular doctor visits, preventative services, and medically necessary services. Beneficiaries have the option to add to their coverage with Medicare Supplement plans, Medicare Advantage Plans (Part C), and Prescription Drug Plans (Part D). 

Each state determines the types of services its Medicaid program covers. All Medicaid programs are required to provide inpatient and outpatient hospital services, physician services, nursing facility services, and home health services. Optional benefits and coverage, which vary by state, include prescription drugs, physical therapy, dental care, optometry, and chiropractic services.

How Medicare and Medicaid work together

Medicare and Medicaid serve two different groups, but it’s possible for someone to fit into both. Americans who are eligible for both are called "dually eligible" and can be enrolled in Medicare and Medicaid at the same time. As dually eligible beneficiaries, they'll most likely get full Medicaid benefits, but some may receive partial benefits through a Medicare Savings Program. 

Another option available to dually eligible beneficiaries is coverage under a dual eligible special needs plan (D-SNP). D-SNPs are a specific type of Medicare Advantage plan that coordinates care between Medicare and Medicaid. They also often provide benefits not usually covered by Medicare, but available through Medicaid. 

On top of significant cost savings and additional coverage options, dually eligible individuals have more enrollment periods than beneficiaries only on Medicare. Each of these periods is an opportunity to get the most out of your Medicare plan, but searching through all the plans and benefits takes time. Our licensed advisors search through all the plans available to you and work with you to find the one that best meets your healthcare needs—giving you the freedom of choice without the time spent searching. Give us a call to save time and maximize your healthcare benefits.