Many seniors confuse Medicare and Medicaid. A large portion of Americans don’t even know the difference between them. This can lead to a lot of misinformation and sometimes costly insurance mistakes. Here’s a basic overview of each program:
Medicare: Federal Health Coverage for (Mainly) Seniors
Medicare is health insurance that the federal government pays for. It covers seniors aged 65 and older, certain younger people with disabilities, and people with end-stage renal disease. Medicare is directly linked to your Social Security benefits. One example of that is that seniors who are already receiving Social Security checks by the time they reach their 65th birthday will be automatically enrolled in Medicare.
There are four “parts” of Medicare: A, B, C, and D:
- Medicare Part A: covers hospital stays, inpatient rehabilitation, and skilled nursing care (with conditions).
- Part B: covers medical expenses such as outpatient care, medical equipment, and ambulance services.
- Medicare Part C: optional private insurance that administers your Medicare benefits. You may know this as Medicare Advantage.
- Part D: optional prescription drug coverage. These plans are also administered through private insurers.
Eligibility for Medicare depends on your—or your spouse’s—working record. If you’ve worked at least 40 quarters in your lifetime, you are eligible for Medicare. That translates to just about 10 years. Assuming you or your spouse has worked the minimum requirement for eligibility, your Medicare Part A coverage is free. However, unlike Medicaid, Medicare is not nearly free. While there is no Part A premium, Part B and D do have premiums. Plus, both Part A and B have deductibles you must pay before coverage kicks in. You will also have to pay co-payments on virtually every medical expense and procedure.
Medicare also has limits on how much they’ll pay for specific services—for example, Medicare will only pay up to 100 days of skilled nursing care. In addition, there are some services, such as vision or dental, that they won’t pay at all. Many seniors opt for supplemental insurance, either in the form of Medicare Advantage plans or an official Medicare secondary plan, called Medigap.
Medicaid: State Health Coverage for Low-Income Individuals
Each state administers their Medicaid program based on broad Federal guidelines. As such, specific coverage may vary from state to state. Medicaid provides health insurance for low-income adults, pregnant women, and children. There are many requirements, including income level, that go into determining your eligibility.
Medicaid covers all doctors visits, hospital services, mental health services, medications, and preventive care. New Jersey Medicaid also offers dental benefits, some home-based care, and vision care. Basic Medicaid coverage is free, although some services may have very low co-payments attached.
Because Medicare leaves significant gaps in its coverage, particularly long-term care coverage, many seniors find it difficult to pay their Medical bills. Seniors who own a home, have a retirement account, or other assets are not eligible for Medicaid. They will be required to exhaust all their assets until they reach the level of eligibility. This process is called “spending down,” and should not be done without expert advice.
Low-income seniors who are on both Medicare and Medicaid have “dual eligibility.” In New Jersey, you have the option to enroll in a D-SNP plan that manages and coordinates all your benefits.