Medicaid VS. Medicare: What are the Differences and how do I benefit?
Many clients are often confused about the differences between Medicare and Medicaid. There are significant differences between these two programs and it is important to understand these differences. Below is a brief synopsis of both programs.
MEDICARE
Medicare is an entitlement-based Federal program that provides health insurance for people age 65 and older, people under age 65 with certain disabilities, and people of all ages with End-Stage Renal Disease. Medicare is not a needs-based health insurance program. Benefits are the same regardless of one’s financial means. Higher income Medicare beneficiaries pay higher premiums than less-affluent Medicare beneficiaries.
There are several parts to Medicare. Medicare Part A helps pay inpatient care in hospitals, including critical access hospitals, a limited benefit for skilled nursing care, hospice and some home health care. Most beneficiaries pay no monthly premium for Part A because it has been paid through payroll withholding taxes. However, for individuals that did not participate in payroll withholding taxes for Medicare, or who were disabled (and thus received Part A), but have now returned to work, Part A can be purchased for $443 per month.
Medicare Part B covers doctors’ services and outpatient care, as well as other medical services that Part A does not cover, such as some of the services of physical and occupational therapists, and some health care. Part B pays for part of these covered services and supplies when they are medically necessary. Part B is optional and may be deferred if the beneficiary or their spouse is still working. There is a lifetime penalty (10% per year) imposed for not enrolling in Part B unless actively working. Part B coverage begins once a patient meets his or her deductible, then typically Medicare covers 80% of approved services, while the remaining 20% is paid by the patient.
Most people pay the standard premium amount for Part B coverage, which is deducted from their Social Security benefit. The Part B premium for 2011 is $96.40 per month for most existing Medicare beneficiaries. For new Part B beneficiaries, the monthly premium is $115.40 in 2011. If an individual’s income is over $85,000 (single) or $170,000 (married couple), then the Medicare Part B premium may be higher.
Medicare Part D is prescription drug coverage insurance that is provided by private companies approved by Medicare. Part D was designed to help people with Medicare to lower their prescription drug costs and to protect against future costs. Medicare Part D is an optional benefit and anyone received Medicare Part A or Medicare Part B is eligible. Most people pay a monthly premium for this coverage, which varies from provider to provider. A penalty may be assessed if Medicare Part D is an optional benefit and anyone with Medicare Part A or Part B can get this coverage.
Each company that’s part of Medicare Part D is privately-run and will vary from the next, but each must meet the standards required by the government. Since each company’s plan is different, there’s a wide variety of drugs covered in Part D health insurance that can be good (or bad) depending what the individual requires. It is important to research the various companies before choosing the one that best fits your needs.
Since Medicare pays for only 100 days or less, only about 2 percent of skilled nursing home expenses in the United States are covered by Medicare.
Medicaid is a health insurance program financed and run jointly by the federal and state governments for low-income people of all ages who do not have the money or insurance to pay for health care. Medicaid is a form of welfare. It provides a variety of medically related assistance at reduced or no cost to those who qualify. Each state sets its own guidelines, subject to federal rules and guidelines. Certain services must be covered by the states in order to receive federal funds. Other services are optional and are elected by states.
Medicaid is based on medical and financial need, with eligibility based on income. If a person has limited income and/or financial resources, Medicaid covers a broader spectrum of services than Medicare does. It covers hospitals, doctors, drugs, x-rays and long term nursing home care. Medicaid usually covers low-income children, pregnant women, families with dependent children, persons 65 or older and persons who are blind or disabled. Generally, to be eligible for Medicaid, an individual can have only nominal resources and income. Medicaid will pay for medical care after all other sources, including Medicare, have been exhausted.
There are many benefit programs which fall under the Medicaid umbrella, and each one has its own set of requirements to qualify for benefits. For the purposes of this article, only Medicaid coverage of long term nursing home care will be discussed.
In Massachusetts, Medicaid is administered by the Division of Medical Assistance (DMA). An individual will not receive coverage unless the Division of Medical Assistance (DMA) determines that the applicant’s medical condition requires nursing home care and the applicant is sufficiently impoverished under the Division’s guidelines. To be medically eligible an individual must require at least one skilled service daily or must require assistance with at least three activities of daily living (including eating, dressing, bathing, transferring in and out of bed, and toileting), one of which must be a nursing service. If an applicant does not require at least this level of care, Medicaid will not pay for his or her nursing home expenses
To financially qualify for Medicaid coverage of nursing home care, a single individual cannot own more than $2,000 in “countable assets”. For a married couple, the applicant’s spouse living in the community is allowed to keep a total of $109,560.00 (2010) in countable assets. This amount is adjusted every year for inflation and may be increased in certain circumstances as a result of an appeal.
Medicaid does not pay the entire cost of a person’s nursing home expense. The person must contribute an amount (“Patient Paid Amount”) based on his or her monthly income and then Medicaid pays the balance of the individual’s care costs. For a single individual, Patient Paid Amount is the individual’s total gross income minus $72.80 for personal needs, and any applicable health insurance premiums. For a married couple, the community spouse may be allowed a portion of the institutionalized spouse’s income to help maintain his or her reasonable standard of living.
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