Because many people do not have a need for the benefits offered by Medicare and/or Medicaid until they reach retirement age, there is a good deal of confusion about the two programs. In fact, Medicaid and Medicare are often used interchangeably when discussing the programs despite the fact that they are completely different programs with very different eligibility guidelines. To make sure you understand the difference between the programs, a Beverly Medicaid attorney explains the similarities and differences between Medicaid and Medicare.
Medicare is both funded and administered by the United States federal government, which, in turn, imposes a Medicare tax on both workers and employers. If you look at your paycheck stub each week you will likely see where you are paying into the Medicare system. You are paying into the system under the assumption that you will benefit from the program during your retirement years. To qualify for Medicare, you must fall into one of the following categories:
- 65 or older
- Under 65 with certain disabilities
- Of any age and have End Stage Renal Disease (ESRD) or ALS
If you are 65 or older, and you, or a spouse, worked for the required amount of time (10 years) and paid into the system, you are entitled to Medicare benefits when you reach retirement age. There are no additional eligibility guidelines. Typically, retirees are enrolled in Parts A and B automatically when they turn 65 years old.
Medicare actually comes in four parts. If you wish to enroll in Parts C and/or D you will probably need to stop by your local Social Security office to enroll. The four parts to Medicare include:
- Part A: Hospitalization coverage
- Part B: Medical insurance
- Part C: Privately purchased supplemental insurance that provides additional services and through which all Medicare services offered by Part A and Part B, and sometimes Part D, can be accessed
- Part D: Prescription drug coverage
Contrary to what many people believe, Medicare is not free, despite the fact that you paid into the program during your working years. Premiums, which vary depending on which parts you elect, are typically deducted from your Social Security benefits each month. You may also have to copays.
Medicaid is a healthcare program that is primarily funded by the United States government, although each state has the option to supplement funding as well. Although Medicaid is a federal program, it is administered by the individual states. For this reason, you will find some variation among the states with regard to eligibility guidelines and benefits offered to participants. In every state, however, Medicaid is what is referred to as a “needs based” program, meaning that an applicant must demonstrate a need for benefits.
Because Medicaid is intended to provide health care benefits to low income individuals and families, eligibility for Medicaid is determined, in part, by an applicant’s income and “countable resources.” Income limits are established on a yearly basis and are based on household size and the Federal Poverty Level (FPL) for the geographic area where the applicant lives. “Countable resources” refers to the value of an applicant’s non-exempt assets. Some assets are exempt from consideration when determining an applicant’s countable resources. Although it varies by state, most states exempt a primary residence, vehicle, and household furnishings from an applicant’s “countable resources.” The countable resources limit is typically very low — $2,000 for an individual in most states. If you are eligible to participate in the Medicaid program, you will find that Medicaid covers most basic health care expenses, such as:
- Certain inpatient and outpatient hospital services
- Early and Periodic Screening, and Diagnostic, and Treatment (EPSDT) services for children
- Nursing facility services
- Home health services
- Doctor’s services
- Rural health clinic services
- X-ray and laboratory services
- Family planning services
- Midwife services
- Freestanding Birth Center services
- Certified pediatric and family nurse practitioner services
- Tobacco cessation counseling for expectant mothers
Long-Term Care and Medicare vs. Medicaid
One of the most important differences between Medicare and Medicaid is that Medicare will not pay for long-term care while Medicaid will cover LTC expenses. It is for this reason that many seniors need to qualify for Medicaid. To ensure that you will qualify for Medicaid if you need it, be sure to include Medicaid planning in your overall estate plan.
Contact a Beverly Medicaid Attorney
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns about Medicare and/or Medicaid, contact the experienced Beverly Medicaid attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.