Medicare & Medicaid
Both Medicare and Medicaid are government-sponsored programs that provide health care insurance to defined groups of people in the United States. Both programs were created by a 1965 amendment to the Social Security Act of 1935, which President Lyndon B. Johnson signed into law. Medicaid funding and Medicare benefits began in 1966.
The Medicare program is a federally funded and administered health insurance program for retirees, disabled workers, and their spouses and dependents. In contrast, Medicaid is a jointly funded, Federal-State health insurance program that provides free or low-cost health and long-term services to federally recognized groups of low-income families and individuals. Medicaid covers children, pregnant women, elderly adults, people with disabilities, and others who are eligible to receive federally assisted income maintenance payments. Each state, as well as U.S. territories and the District of Columbia, operates its own Medicaid program within federal guidelines. Federal guidelines allow for great flexibility in designing and administering the individual programs.
It’s easy to confuse the two programs since they are both government programs that pay for health care. While both were created by the same congressional act and are administered by the same agency, there are important differences between each program.
Medicare originally consisted of two parts: Hospital Insurance, also known as Part A, and Supplementary Medical Insurance program, which is also known as Part B. Today, the Medicare program consists of four related health insurance plans. The original Part A and Part B, often referred to as “Original Medicare” along with two additional plans, Medicare Advantage (Part C) and prescription drug coverage (Part D).
In general, Medicare Part A helps pay for inpatient care received in a hospital and mental health services received as an inpatient in a psychiatric or general hospital. Skilled Nursing facilities are also covered for a limited period of time when skilled nursing or rehab services are needed on a daily basis after a 3-day hospital stay for a related illness or injury. Home Health Care and Hospice Care are also covered.
Medicare Part B helps cover physician’s services received at a hospital, doctor’s office, clinic, or other health facility. Home Health Care; chiropractic care; outpatient mental health care; and medically-necessary outpatient services such as physical, speech, and occupational therapy services are also covered under Part B. Additionally, Part B covers emergency ambulance services; diagnostic tests and X-rays; select prescription drugs that are typically administered by a physician; and medically necessary durable medical equipment and/or supplies. Care that a patient receives in the hospital when they are “under observation” and not as an officially admitted inpatient is also covered under Part B. Some preventative and screening services such as Flu shots; Pneumococcal shots; Mammograms; Pap Smears, Colorectal Cancer Screenings, Diabetes self-management training and tobacco use cessation counseling are also covered services.
There are some services that neither Part A nor Part B cover. These include long-term care (also called custodial care); eye exams related to prescribing glasses; most dental care; dentures; cosmetic surgery; hearing aids or exams for fitting them; and routine foot care.
Medicare Part C is a program that offers an alternative method of providing “Original Medicare” coverage. Part C went into effect in 1999 and offers plans through Medicare-approved private insurance companies and are also known as Medicare Advantage Plans. Medicare Advantage Plans are paid a fixed amount per person to provide Medicare benefits. Plans must provide all of Part A and Part B services offered by Original Medicare, except for hospice care (which Medicare Part A continues to cover). Advantage Plans can provide services with different rules, costs, and restrictions that can affect how, when and where an enrollee receives service. Many Medicare Advantage plans include additional benefits, such as vision, hearing, dental, and health and wellness programs. Prescription drug coverage (Part D) is provided by most Medicare Advantage plans.
Part D plans are similar to Part C plans, in that they are also provided by Medicare-approved private health insurance companies. Medicare drug plans cover generic and brand-name drugs that are specified on their formulary. There are some prescription drugs that Part D plans do not cover, such as drugs used to help grow hair, medicines to help gain or lose weight, prescription vitamins or over-the-counter medications.
While the Centers for Medicare and Medicaid (CMS), administers the Medicare program, the Social Security Administration (SSA) decides who qualifies for Medicare. Each part of Medicare has its own rules to determine eligibility, but in general, the SSA designates two main ways people with the necessary citizenship status qualify for Medicare benefits: by age or disability status.
To be entitled to coverage under any part of Medicare, a person must first: Be a U.S. citizen, or A person who has been a legal resident for at least 5 continuous years, and Be entitled to receive Social Security benefits, or Receiving retirement benefits from the Railroad Retirement Board, or Have a sufficient period of Medicare-covered Federal, State, or local government employment by virtue of their own, or spouse’s employment.
Social Security benefits are paid to workers eligible to retire, survivors of workers eligible to receive these benefits, and disabled workers. Traditionally, the full benefit age was 65; however, Social Security’s full-benefit retirement age is gradually increasing and is dependent on the year a person was born. The full retirement age is 66 for those born from 1943 to 1954 and continues to gradually increase for those born from 1955 to 1960 until it reaches age 67. For anyone born in 1960 or later, full retirement benefits are payable at age 67. Once a person reaches age 62, while they are eligible for early retirement benefits, they do not become eligible for Medicare until they reach the age of 65, unless they meet eligibility criteria because of a special condition or disability.
A person under the age of 65, who has either a physical or mental condition that prevents them from working may be eligible for Social Security benefits. After a 24-month qualifying period, they would become eligible to receive Medicare. In contrast, people with End Stage Kidney Disease or Amyotrophic Lateral Sclerosis, do not need to collect social security benefits for 24 months before becoming eligible for Medicare. There are additional rules and regulations about ongoing eligibility for Medicare if a disabled person returns to work.
Enrollees who are age 65 or older and are receiving retirement benefits from Social Security, the Railroad Retirement Board, or Medicare-covered Federal, State, or local government employment are eligible for premium-free Part A. A person who has earned less than the required number of Social Security credits is not eligible to receive premium free Medicare Part A benefits without paying a monthly premium. Social Security credits are “earned” when you work in a job and pay Social Security taxes.
Individuals who elect retirement at age 62 are not eligible for Medicare until they turn 65, even if they qualify for Social Security benefits earlier.
Anyone eligible for Part B must pay a monthly premium for coverage. The monthly premium for Part B is deducted from the Social Security or retirement check; and for those who do not get any of these payments, Medicare sends a bill for the premium.
To be eligible for Medicare Part C and/or Part D, a person must already be enrolled in Original Medicare and must continue paying Part B premium, along with any premium the Medicare Advantage plan may charge. They must live within the plan’s network, and in most cases are not eligible if they have end-stage renal disease.
Now let’s look at Medicaid in more detail. Remember, Medicaid is a jointly funded, Federal-State health insurance program that provides free or low-cost health and long-term services to groups of low-income families and individuals. Medicaid covers children, pregnant women, elderly adults, people with disabilities, and others who are eligible to receive federally assisted income maintenance payments. Each state, as well as U.S. territories and the District of Columbia, operates its own Medicaid program within federal guidelines. The amount of Federal payments to a State for medical services depends on two factors. One is the actual amount spent qualifying Medicaid expenditures; and the other is the Federal Medical Assistance Percentage (FMAP), which is an annually determined rate used to figure the federal government’s share of the cost of covered Medicaid services.
In order to receive federal funding; states had to cover certain “mandatory” populations. Before 2014, Medicaid coverage was generally limited to a few specific groups:
- pregnant women in extreme poverty
- low-income parents of an ill child 18 years of age or younger
- low-income persons over 65; the blind, disabled,
- those who need long term custodial care in a nursing home, and
- U.S. citizens that are terminally ill and need hospice services.
However, the Affordable Care Act (ACA) expanded Medicaid eligibility as of 2014. Initially, this was intended to be the case in every state, but a Supreme Court ruling made Medicaid expansion optional, and not every state has chosen to “expand” Medicaid.
Other than Medicaid’s financial eligibility, most states require an individual to be either a citizen of the United States or a certain qualified non-citizen, such as a lawful permanent resident; although some states offer emergency Medicaid for people who do not qualify for standard Medicaid based on citizenship or immigrant status.
Once a determination is made that a person is eligible for Medicaid, coverage usually becomes effective on the first day of the month they applied and continues until the end of the month in which the person no longer meets eligibility requirements. Benefits may be awarded retroactively for up to three months prior to the month of application, if the individual would have been eligible during that period of time, had they applied.
All states participating in the Medicaid program are required to provide certain mandatory benefits. These mandatory benefits, according to Medicaid.gov, generally include services from the following: Inpatient and outpatient hospitals; Nursing Facilities; Home Health; Physicians; Nurse Midwife, Certified Pediatric and Family Nurse Practitioners; Rural health clinics; State Licensed Freestanding Birthing Centers; Federally qualified health centers; Preventive Screening and comprehensive health; Laboratory and X-ray; Family planning; Transportation to medical care and Tobacco cessation counseling for pregnant women.
In addition to these mandatory benefits, states may also choose to provide Medicaid coverage for optional benefits like prescription drugs; physical or occupational therapy; speech and hearing services; respiratory care, private duty nursing, and case management.
There is an overlap of some benefits available under both Medicaid and Medicare; however, some mandatory services provided by the Medicaid program are not included under Medicare, such as long-term care services in nursing homes; personal care services, transportation, or family planning services. Additionally, depending on the state, some optional services provided by Medicaid but not covered under Medicare include adult day care, homemaker services, personal emergency response services and home modifications such as wheelchair ramps, stair-lifts, automatic door openers and environmental aids for lighting.
That was a lot of information, so let’s do a quick recap – both Medicare and Medicaid are government-sponsored programs that provide health care insurance to people in the United States. The Medicare program is a federally funded and administered health insurance program for retirees, disabled workers, and their spouses and dependents. In contrast, Medicaid is a jointly funded, Federal-State health insurance program that provides free or low-cost health and long-term services to federally recognized groups of low-income families and individuals.
Thanks for watching this overview of Medicare and Medicaid! See you next time!