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Monday, April 20, 2015

Medicare vs. Medicaid: Two Different Government Programs With Confusingly Similar Names

Medicare vs. Medicaid: Similarities and Differences

With such similar sounding names, many Americans mistake Medicare and Medicaid programs for one another, or presume the programs are as similar as their names. While both are government-run programs, there are many important differences. Medicare provides senior citizens and the disabled with medical benefits regardless of their income or assets. Medicaid, on the other hand, provides healthcare benefits for those with low income and minimal non-exempt assets.

Overview of Medicare
Medicare is a public health insurance program administered by the federal government for Americans who are 65 or older or disabled. While we are working, both we and our employers pay Medicare premiums to the federal government as part of our payroll taxes, and Medicare health insurance is funded by these premiums. Medicare is a self-funded single-payer health insurance program that covers tens of millions of retired or disabled Americans. Although Medicare is funded by payroll taxes paid by working Americans, they are not allowed to participate in the Medicare program until they reach age 65 or become disabled.

Medicare does not cover long-term care, but can cover payments for certain rehabilitation treatments. For example, if a Medicare patient is admitted to a hospital for at least three days and is subsequently admitted to a skilled nursing facility, Medicare may cover some of those payments. However, Medicare payments for such care and treatment will cease after 100 days.

In summary:

  • Medicare provides health insurance for those aged 65 and older and the disabled regardless of financial need
  • Medicare is regulated under federal law, and is applied uniformly throughout the United States
  • Medicare pays for up to 100 days of care in a skilled nursing facility
  • Medicare pays for hospital care and medically necessary treatments and services
  • Medicare does not pay for long-term care
  • To be eligible for Medicare, you generally must have paid into the system
  • Most Medicare recipients also enroll in either a Medicare supplement or a Medicare Advantage plan from a private insurer to cover health care costs that Medicare does not

Overview of Medicaid
Medicaid is a state-run program, funded by both the federal and state governments, that is intended to provide health care to people who lack the resources to pay for their own medical care or health insurance. Because Medicaid is administered by the individual states, the requirements and procedures vary across state lines and you must look to the law in your area for specific eligibility rules. In states that have not expanded Medicaid under the Affordable Care Act, eligibility for Medicaid is sometimes limited to young children, their mothers, and the poor over age 65. The federal government issues Medicaid guidelines, but each state determines who will be eligible and how the federal guidelines will be implemented. Since Medicaid is intended to provide health benefits to the poor, it is funded from the government's general tax revenue as a welfare benefit, rather than being self-funded through payroll taxes like Medicare.

In summary:

  • Medicaid is a health care program based on financial need
  • Medicaid is regulated under state law, which varies from state to state
  • Medicaid will cover long-term care
  • When long-term care is required, many middle-class older adults seek to become eligible for Medicaid with the assistance of an elder law attorney
     

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