Medicare vs. Medicaid for Older Adults

Understanding Medicare and Medicaid is crucial for caregivers navigating an older adult loved one's health care.

Medicare and Medicaid are government-sponsored programs to help people pay for health care costs. While both programs are taxpayer-funded, they have different eligibility requirements and costs. Your loved one may qualify for Medicare and Medicaid. But they must meet separate eligibility requirements for each program.

If you are a caregiver, knowing the eligibility requirements and cost differences between these two programs can significantly affect the health care options available to your loved one.

Medicare Coverage 101

Medicare is an insurance enrollment program attached to Social Security. We pay for it by paying into Social Security. It was created to address the high medical costs older people face relative to the rest of the population. You can also use Medicare Advantage Plans through private insurance companies.

Medicare is available to people 65 or older, whatever their income, younger disabled people, and dialysis patients. The federal government administers it and generally operates the same everywhere in the United States.

The four-part Medicare program includes:

  • Part A. Hospitalization coverage provides basic coverage for inpatient hospital visits, nursing facility visits, and home health care.
  • Part B. Medical insurance pays most doctor and lab costs and some outpatient medical services. That includes supplies and equipment, home health care, and physical therapy.
  • Part C. Privately purchased supplemental insurance provides more services.
  • Part D. Prescription drug coverage pays some of the costs of prescription medications.

Paying for Medicare Costs

You generally don't have to pay a monthly premium for Part A coverage if you or your spouse paid Medicare taxes while working.

If you buy Part A, you'll pay a monthly premium ($274 or $499 each month and $278 or $506 in 2023). But you can get premium-free Part A at 65 if any of the following apply:

  • You already get retirement benefits from Social Security
  • You're eligible to get Social Security
  • You or your spouse had Medicare-covered government employment

Also, most people pay the Part B premium ($170.10 each month and $164.90 in 2023). Individuals must also pay $233 (or $226 in 2023) per year as their Part B deductible.

Finally, under Part D, you'll pay a premium, yearly deductible, copayments or coinsurance, and other costs.

Medicaid Coverage Basics

The Medicaid program is an assistance program paid for by taxpayers. Medicaid is available to low-income people of all ages who fit into an eligibility group recognized under federal or state law.

Beneficiaries must have an income level at or below the federal poverty level. Eligible users can get health coverage from various healthcare providers through their Medicaid benefits. Cost-sharing payment plans or full payment coverage pay for it.

States and local governments administer Medicaid within federal guidelines. The nuances and rules can vary from state to state. Services differ, but the government mandates coverage for certain services when they are "medically necessary."

These covered services generally include:

  • Hospitalization
  • Doctor visits and basic services
  • Family planning
  • Laboratory services
  • Nursing services
  • Medical and surgical dental services
  • X-rays
  • Nursing homes and inpatient nursing facility services
  • Home health care for people eligible for nursing facility services
  • Clinic treatment
  • Pediatric and family nurse practitioner services
  • Midwife services
  • Screening, diagnosis, and treatment services for people under 21

States have the option of including more benefits, such as:

  • Prescription drug coverage
  • Optometrist services
  • Medical transportation services
  • Physical therapy
  • Prosthetic services
  • Dental services

Depending on your particular state, you may have to pay:

  • Copayments
  • Coinsurance
  • Deductibles
  • Similar charges

But, out-of-pocket costs are limited and typically only apply to groups of people with higher incomes.

Dual Eligibility for Medicare and Medicaid

The Affordable Care Act created the Medicare-Medicaid Coordination Office under the Centers for Medicare & Medicaid Services. This office coordinates care for dual-eligible people.

People who qualify for Medicare and Medicaid are "dual eligible." If you qualify and enroll in both programs, the two can coordinate to cover your health care costs.

For example, Jane is a 72-year-old woman who has been living with a disability and requires help with activities of daily living, such as dressing, bathing, and eating. She has limited income and assets. In this situation:

  1. Medicare eligibility. Jane is eligible for Medicare because she is over 65. She is enrolled in Medicare Part A (hospital insurance) and Part B (medical insurance). They cover certain hospital and medical services.
  2. Medicaid eligibility. Due to her limited income and assets, Jane also qualifies for Medicaid. It provides coverage for a broader range of health care services. They include long-term care services that Medicare does not fully cover.
  3. Dual eligibility benefits. With dual eligibility, Jane gets benefits from Medicare and Medicaid. This means that Medicare covers certain medical services, while Medicaid helps cover long-term care costs. That includes nursing home care, home-based care, and other services that support her daily living needs.

In this scenario, dual eligibility allows Jane to access a more comprehensive range of health care services. This ensures her medical and long-term care needs get addressed. Medicaid helps fill the gaps in coverage that Medicare doesn't provide. This is especially true for services needed for chronic illnesses or disabilities.

Long-Term Care and Other Considerations

Medicaid is the largest source of long-term care funding. But, long-term care isn't covered by Medicare or, often, by private health insurance policies.

As a result, many patients rely on Medicaid to help pay for their long-term care. Because Medicaid requires recipients to have virtually no assets, many attorneys specialize in helping people divest their assets to qualify for Medicaid and get long-term care.

You may have questions about the eligibility requirements for Medicare and Medicaid, the benefits involved, or any other issues related to the two programs. It's in your best interests to contact an elder law attorney. They can give you legal advice on issues ranging from estate planning and asset protection to Medicare and Medicaid planning.

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