Medicare and Medicaid Differences

Medicare and Medicaid are two government programs that have some similarities, but are distinctly different and were created to serve different groups of people.

Medicare is a federal government program. It was created to give senior citizens a health care safety net and has since expanded to include certain other groups of people as well. Every American citizen automatically receives Medicare coverage at age 65, no matter when they retire. There is a common misconception that Medicare coverage is tied to retirement, but it isn’t. If you retire at 62, it will be three years before Medicare coverage begins. This is why many people keep working until 65 even if they could otherwise financially retire earlier; they would have to pay for their own health insurance.

There are two other sets of circumstances under which people are eligible for Medicare coverage under age 65. People who are on Social Security Disability are also eligible. This is not the same as short or long term disability insurance from a private company. Social Security Disability has very strict standards and often requires a very lengthy filing process. It is also important to note that an individual receiving SSD may be disqualified from it and will thereby lose Medicare coverage. The second set of people who are eligible under age 65 are people who have End Stage Renal disease, which is permanent kidney failure requiring dialysis or a kidney transplant.

Medicare has two parts. Part A is Hospital Insurance, and most people do not have to pay for this coverage. Part A also pays for skilled nursing facilities (not custodial or long-term care), hospice care, and some home health care. Part B is Medical Insurance, and most people do have to purchase it. The current premium is $96.40 per month. Part B generally pays Doctors’ services, outpatient hospital care, and some other medical services that Part A doesn’t cover, such as the services of physical and occupational therapists, and some home health care. More recently Medicare has also added an optional prescription drug benefit, otherwise known as Medicare Part D.

Medicaid, on the other hand, is a program created to provide basic health care to people of any age who qualify. It is a state program, so in reality, there are 50 different Medicaids, each with its own set of eligibility requirements and regulations. There are some generalizations that can be made, however.

All states are required to include certain types of individuals or eligibility groups under their Medicaid plans and they may include others. States’ eligibility groups will be considered one of the following: categorically needy, medically needy, or special groups.

Categorically needy is the easiest one to define, as it is basically people of certain income level. A few of the basic qualifications of categorically needy are as follows:

* Families who meet states’ Aid to Families with Dependent Children (AFDC) eligibility requirements in effect on July 16, 1996.
* Pregnant women and children under age 6 whose family income is at or below 133 % of the Federal poverty level.
* Children ages 6 to 19 with family income up to 100% of the Federal poverty level.

After that, generalities become difficult. Not all states have medically needy or special groups coverage. The medically needy have too much money (and in some cases resources like savings) to be eligible as categorically needy. About half the states have this coverage. Only a handful of states have coverage for special groups and the qualifications vary greatly. If you think that you or a family member may be eligible for Medicaid, it is best to check with whatever agency in your state administers it.

Can a person have both Medicare and Medicaid? The answer is most certainly yes. While the two programs were designed to cover distinctly different groups of people, the eligibility sometimes overlaps. Most commonly this happens in cases where a person is under age 65, permanently disabled and thus unable to work. Medicare would cover them because of Social Security Disability and Medicaid would cover them because of their income level.

This has been the most basic overview of the topic. Vast amounts of information on Medicare are available on its website The different state Medicaid programs can be found with an internet search of the state name followed by “Medicaid.”