Health costs in the United States are typically covered in one of three ways: Medicaid, Medicare, or private insurance. Which is right for you depends on many different factors, including income and age, and you may utilize all of them at one point or another in life.
Though it’s easy to confuse Medicaid and Medicare in particular, the differences between the three options are clear when laid out.
Put most simply, Medicare vs Medicaid is:
- Medicaid covers low-income people of any age.
- Medicare covers seniors over 65 and some disabled individuals.
- Private insurance can be purchased by anyone.
Here are the details on Medicare vs Medicaid vs private insurance.
Medicaid
Medicaid is a federal and state assistance program designed to serve people who have a low income. It covers nearly all medical services a person might need and usually leaves little for its users to pay out of pocket. Because it’s a program that has both state and federal oversight, how it’s run varies from state to state. The federal government establishes guidelines and then state and local governments operate within those guidelines, with the ability to choose particulars as they see fit.
Who Is Eligible?
Individuals with low income, pregnant women and children, and people who have disabilities or are 65 or older may all qualify for Medicaid. Guidelines for Medicaid vary from state to state and are based on a number of factors, the primary being household income or how much money all members in a home are bringing in.
In California, for instance, a family with four members could not have a household income that exceeds $33,534 in order to qualify for Medicaid. In Texas, an individual could not have an income that exceeds $25,503 to qualify. Check with your state agency to see what the income guidelines for your area are.
For children whose household income is too high for Medicaid but too low for traditional insurance, the Children’s Health Insurance Program or CHIP covers costs of medical and dental care for uninsured children up to the age of 19.
How Can You Apply?
To apply for Medicaid, you need to contact your state Medicaid agency where you are a resident, or you may fill out an application online through the Health Insurance Marketplace. Protocols may vary between areas and ways of applying.
If you decide to apply in person, your state agency may be called the Department of Social Services, the Department of Health, the Department of Insurance or another name entirely depending on where you reside. Some states require that applicants apply in person, while others allow you to submit your application through the mail, over the telephone, online or even at other organizations in the community such as health centers.
Regardless of how you apply, you will likely be asked for several pieces of documentation. These can vary between states and situations, but a typical list includes:
- Proof of the applicant’s date of birth, such as a birth certificate
- Proof of the applicant’s U.S. citizenship or legal residence, such as a driver’s license, passport, birth certificate, green card or employment authorization
- Proof of income earned and unearned, such as pay stubs, retirement benefits and Supplemental Security Income
- Proof of resources and assets, such as bank statements, stock statements, property and life insurance policies
Your agency may require other documentation, so check beforehand to make sure you have the proper papers with you to apply.
If you are using the Health Insurance Marketplace to apply, you may do so over the phone or online. When you use one of these means of applying, you can get your results back very quickly.
You can also complete a paper application and send it in. If you choose to do this, though, you will have to wait a period of two weeks or more to hear back about eligibility.
Also, there are only certain periods of the year when the Marketplace is open for enrollment. If you need health insurance because of a significant change such as a job loss, though, there are special enrollment periods you can qualify for that allow you to enroll outside of the typical period.
What Does Medicaid Cover?
As a state-administered program, what services are covered under Medicaid vary from state to state. Those that are fully covered in one state may be only partially covered in another or unavailable entirely.
Some benefits are mandatory within the federal guidelines. These include physician services, both inpatient and outpatient hospital services, home health services, and X-ray and laboratory services. Examples of benefits that are optional are prescription drugs, physical and occupational therapies and case management.
Typically, Medicaid users pay no costs for medical expenses, although in some cases a small co-payment may be necessary.
Medicare
Unlike Medicaid, which is a governmental assistance program, Medicare is a national health insurance program that was established in 1965 intended for senior Americans and people with certain disabilities.
Who Is Eligible for Medicare?
Medicare is designed to provide health insurance for those who are 65 and older. There are, however, exceptions to this age minimum for people who qualify for disability with certain medial conditions. This includes those with amyotrophic lateral sclerosis or ALS and end-stage renal disease or ESRD.
How Can You Apply?
You first become eligible to enroll for Medicare three months before your 65th birthday. Some people are automatically enrolled in Medicare, but most need to contact the Social Security Administration to sign up. When you sign up, you will be given a choice of what plan or plans you wish to enroll in.
Medicare Part B may only be signed up for at certain times, including when you first become eligible at age 65. If you do not enroll at that point in time, you may have to wait to be enrolled and pay a penalty for late enrollment each month.
You can sign up for Medicare by contacting your local SSA office or by enrolling online on the SSA website. Before you sign up, you need to create a My Social Security account.
You may also enroll by calling the SSA at 1-800-772-1213. 1-800-325-0778 is the number for TTY users.
For those who are retired from the railroad or whose spouse worked for the railroad, you may contact the Railroad Retirement Board at 1-877-772-5772.
What Does Medicare Cover?
The full costs of healthcare are rarely covered through Medicare alone. Most individuals who have Medicare also have supplemental private insurance or opt to include an additional Medicare supplement plan. Medicare is divided into four separate plans that can be used together or separately.
What Are the Different Medicare Plans?
Medicare has four different parts:
- Part A: Part A is hospital insurance. It is intended to cover the costs of inpatient care in hospitals and skilled nursing facility care. It also can be used for hospice care and home health care.
- Part B: Medicare Part B is used to pay for the services rendered by doctors and other providers, as well as outpatient care. It may also be used for home health care and preventative services, including shots or vaccines, screenings and annual wellness visits. Qualifying durable medical equipment such as walkers, wheelchairs, hospital beds and other items may also be paid for through Part B. With this plan, you can use any provider or hospital in the U.S. that accepts Medicare, so you don’t have to worry about staying in-network.
- Part C: Also known as Medicare Advantage, Part C is different from traditional Medicare plans. Instead of getting insurance through Part A and B, those with Part C use a Medicare-approved plan that is run by a private insurance company. With Part C, enrollees may have lower costs out of pocket, but they will likely need to solely use doctors who are in the network of their company to have expenses covered.
- Part D: Part D is drug coverage. It helps to cover prescription drug costs, including various shots and vaccines. If you have Medicare Parts A and B, sometimes referred to as “Original Medicare,” then you can join Part D with it, or you may enroll by joining a Medicare Advantage Plan or Part C with drug coverage. Those plans that allow you to enroll in Medicare drug coverage follow the rules established by Medicare but are run by private insurance companies.
Insurance
Health insurance is a private system that helps people pay for medical expenses that may arise due to illness or injury. Typically, those enrolled in insurance pay a monthly fee and in turn, the costs of any health services they may need are partially or fully covered by the insurance company. Most people receive their insurance through their job or their spouse’s employer, and sometimes employers pay toward a person’s insurance costs as one of the job’s benefits. Some jobs even offer health insurance that can be retained through retirement. Medicare is a form of insurance, and many of those who are enrolled in Medicare plans also retain private insurance to supplement Medicare.
Navigating Medicaid, Medicare and insurance can be tricky at first, but with the right information, understanding is easy.
References
https://www.medicaid.gov/about-us/learn-how-apply-for-coverage/index.html
https://www.medicare.gov/basics/get-started-with-medicare/sign-up/how-do-i-sign-up-for-medicare