Although their names are confusingly alike, Medicaid and Medicare are quite different programs. Both programs provide health coverage, but Medicare is an “entitlement” program, meaning that everyone who reaches age 65 and is entitled to receive Social Security benefits also receives Medicare. (Medicare also covers people of any age who are permanently disabled or who have end-stage renal disease.)

Medicaid, on the other hand, is a public assistance program that helps pay medical costs for individuals with limited income and assets. To be eligible for Medicaid coverage, you must meet the program’s strict income and asset guidelines. Also, unlike Medicare, which is totally federal, Medicaid is a joint state-federal program. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state’s Medicaid costs. (The state picks up the rest of the tab.)

Medicare is a federal program for older adults, people with disabilities, and individuals with end-stage renal failure. Medicaid is federal-state assistance for those with limited incomes.

History of Medicaid and Medicare

Congress amended the Social Security Act in 1965, creating health care programs for older adults and those receiving public assistance.

  • Providing health care aid for low-income people, Title XIX formed Medicaid.
  • Title XVII established Medicare, offering public health insurance for people aged 65 and older In 1973, the legislature widened the scope of Medicare to help certain disabled persons and individuals with kidney disease.

Roles of States and the Federal Government

The states and federal government play different roles in administering Medicare and Medicaid, according to the U.S. Department of Health and Human Services.

Medicare

Medicare is a federal program that the Centers for Medicare & Medicaid Services runs, so it is consistent across states.

Funding for Medicare comes from general federal revenues, payroll tax revenues, and beneficiaries’ premiums.

Medicaid

Although the federal government sets the general rules for Medicaid, states administer the program, leading to variability across jurisdictions. For Medicaid, states can establish different qualification requirements within federal guidelines.

States and the federal government jointly subsidize Medicaid, per Medicaid.gov. Federal Medical Assistance Percentages determine how much money the federal government matches each state in support of Medicaid.

Qualifying for Medicare

Generally, after paying income taxes for 10 years, a person and their spouse can enroll in Medicare upon turning 65.

Qualifying individuals with disabilities do not have to wait until retirement age to enroll in Medicare. For example, people eligible for Social Security Disability Insurance can also receive Medicare after a two-year waiting period. Those with end-stage renal disease can obtain Medicare at any age if they, their spouse, or their parent if they are a dependent child, have worked the required amount.

Qualifying for Medicaid

Medicaid primarily benefits people with limited earnings. As states run Medicaid, the enrollment requirements can vary by state. Review the eligibility requirements for your state using Medicaid.gov’s state overview feature.

There are multiple pathways to Medicaid, as the Kaiser Family Foundation explains. States must allow low-income parents, children, and those who are pregnant to qualify for Medicaid if their income falls below a certain threshold. This threshold is calculated using the Modified Adjusted Gross Income (MAGI) financial method. Those who received foster care as children can get Medicaid regardless of income.

The basis for eligibility can stem from enrollment in other programs, such as Supplemental Security Income or the Breast and Cervical Cancer Treatment and Prevention Program. States can also allow older people and individuals with disabilities to qualify for Medicaid, imposing both income and asset limits.

In some states, those with medical expenses greatly diminishing their net incomes can qualify for Medicaid under the Medically Needy Program. People with income exceeding the threshold for Medicaid but with medical expenses that reduce their net income below Medicaid’s limit can receive coverage for the costs they cannot afford.

Does Medicaid or Medicare Fund Long-Term Care?

The most significant difference between Medicare and Medicaid in the realm of long-term care planning, however, is that Medicaid covers nursing home care, while Medicare, for the most part, does not. Medicare Part A covers only up to 100 days of care in a “skilled nursing” facility per spell of illness. The care in the skilled nursing facility must follow a stay of at least three days in a hospital. And for days 21 through 100, you must pay a copayment. (This is generally covered by Medigap insurance.)

In addition, the definition of “skilled nursing” and the other conditions for obtaining this coverage are quite stringent, meaning that few nursing home residents receive the full 100 days of coverage. As a result, Medicare pays for less than a quarter of long-term care costs in the U.S.

In the absence of any other public program covering long-term care, Medicaid has become the default nursing home insurance of the middle class. Lacking access to alternatives such as paying privately or being covered by a long-term care insurance policy, most people pay out of their own pockets for long-term care until they become eligible for Medicaid. Medicaid planning can avoid complete impoverishment in this circumstance. This is why consulting with an elder law attorney is so important.

The fact that Medicaid is a joint state-federal program complicates matters, because the Medicaid eligibility rules are somewhat different from state to state, and they keep changing. Both the federal government and most state governments seem to be continually tinkering with the eligibility requirements and restrictions.

It’s possible to qualify for both Medicare and Medicaid. Such recipients are called “dual eligibles.” Medicare beneficiaries who have limited income and resources can get help paying their out-of-pocket medical expenses from their state Medicaid program. In addition, Medicaid recipients will receive the full income subsidy under their Medicare Part D (prescription drug) program, eliminating most co-payments and the dreaded “donut hole.”

How our Indianapolis Medicaid Attorneys Can Help

Medicare is a limited benefit when it comes to long-term care. Most people will at some point require the assistance of Medicaid for their long-term care costs. Medicaid does not require complete impoverishment, but a legal plan is required to protect assets. Before starting a Medicaid plan, you should consult an elder law attorney who can outline those options that best meet your goals. Contact us today if you or your loved one’s Medicare covered long-term care is coming to an end. We can assist you in accessing valuable Medicaid benefits for you or your loved one and protect assets.

 

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