What is the Difference Between Medicare and Medicaid?

Although the words “Medicare” and “Medicaid” sound very much alike, they represent two different government programs. These two programs offer different benefits and have different eligibility requirements.  

Medicare vs. Medicaid – What are the program benefits? 

Medicare is a program administered by the federal government to provide healthcare to certain populations. Original Medicare is divided into Parts A and B.  

Medicare Part A covers hospital care, nursing home care for a limited period of time, hospice care, home health care, surgery, and lab tests.  Medicare Part A will only cover nursing home care on a short-term basis if you have had a qualifying hospital stay and you need daily skilled care, such as skilled nursing or therapy. A qualifying hospital stay means that you spent three days receiving inpatient care in a hospital (observation days do not count as inpatient days). 

Only the first 20 days of nursing home care are paid for in full by Medicare Part A.  Days 21 through 100 of care require a partial payment by the patient or supplemental insurance.  Usually any care after 100 days is not paid by Medicare Part A.  

Medicare Part B covers healthcare expenses such as outpatients visits to a doctor, preventative care, and durable medical equipment. Original Medicare does not cover prescription drug coverage; however, you can enroll in Medicare Part D for prescription drug insurance.  

Medicaid is a program intended to provide medical benefits to certain populations.  It is a joint federal-state program.  While states receive federal funding and must follow specific federal rules, each state administers its own Medicaid program.  For those that qualify, Medicaid covers a broad range of health care services. Medicaid can also  cover long-term care, such as nursing home care.  

Medicare vs. Medicaid– How is eligibility established? 

Medicare is available for people over the age of 65, younger people with disabilities, and those with End Stage Renal Disease. Most people who are eligible for Medicare A do not have to pay a premium, although some do. If you are eligible for Medicare and  have paid Medicare tax through your employment for a certain period of time, you qualify for Medicare A without having to pay a premium. If you or your spouse don’t qualify for Medicare Part A because neither of you paid Medicare tax through your employment, you may still be able to obtain Medicare Part A via paid premiums if you are age sixty-five or older. Most people who are eligible for Medicare Part A are also eligible for Medicare Part B. Medicare Part B does require a paid premium. 

Eligibility for Medicaid is needs-based.  This means that there are income and asset requirements associated with Medicaid eligibility. 

If long-term care is needed, a Medicaid applicant cannot have more than a certain amount of assets and qualify for nursing home care benefits.  However, applicants can retain an elder law attorney for help with legal planning in order to help qualify for benefits and protect assets. 

In addition to income and asset rules regarding nursing home Medicaid eligibility, there is a look-back period.  A “look-back” period means that, when you apply for Medicaid, you need to disclose if you have given away or transferred assets in the five-year period preceding the application. Suppose you had given away assets during the five-year time period before the Medicaid application was submitted. In that case, Medicaid would likely impose a penalty period whereby it doesn’t pay for nursing home care for a certain length of time. How long the period of non-payment is depends on the amount of money given away in the five-year period before application. Again, an experienced elder law attorney can help you navigate the application process to best manage any prior transfers for your benefit.  

Conclusion 

Medicare and Medicaid are two very different programs; each provides certain benefits and has certain criteria for enrollment.  Between the two, however, only Medicaid will cover long-term care expenses on a custodial basis. If you or someone in your care needs long-term care now, or may need long term care in the future, then an elder law attorney can provide you with education on the legal strategies available to you.