Medicaid or Medicare for Seniors? Here’s How to Decide
Curious about medicare for seniors, or learning about alternatives to medicare for seniors? Understanding the various healthcare programs that exist for seniors, how they differ, and who each one serves specifically is important in choosing the one that’s best for you, or for your loved ones.
Whether you’re looking to learn more about your own healthcare options, or you’re searching on behalf of someone you care about, we’re here to help demystify the entire process.
Is Medicare for Seniors?
Medicare is a federal health insurance program for seniors living in the United States. Eligible seniors are 65 years of age or older and have had a full-time job for at least 10 years.
Medicare receives its funding through taxes (mandatory 2.9% payroll tax for employees and employers), monthly premiums of enrolees, and the federal government. People who earn more than $200,000 per year (or $250,000 for couples) contribute an additional 0.9% each year.
There are four components to Medicare:
- Part A: If you are eligible for Medicare, Part A is usually free. It covers costs associated with hospitalization, nursing facility care, hospice care, and some home care services.
- Part B: This part covers outpatient services like doctor’s visits, lab tests, preventative care, medical equipment or supplies, mental health care, and some surgeries. You usually have to pay for Part B, around $100 per month.
- Part C: Another name for this type of plan is Medicare Advantage. You can find Medicare Advantage plans through a private insurance company, often for a better price than Original Medicare Part A & Part B. These plans combine the benefits of Part A and Part B, vision and dental care, and prescription drug coverage.
- Part D: This helps cover the cost of prescription drugs. You can opt-out, but there may be penalties if you sign up late.
The cost associated with Medicare depends on:
- The individual’s plan
- The type of care needed and/or services used
- How much the doctor charges vs. how much Medicare will pay for
- If you have other insurance plans (like Medicare Advantage or Medigap) alongside Original Medicare coverage
What is Medicaid?
Medicaid is a health insurance program for low-income individuals, families, and seniors. It is a state-run program that receives some funding from the federal government. Coverage may vary between states but generally, Medicaid helps pay for:
- Nursing home care
- Homemaker services
- Personal care
- Home care
- Home delivered meals
- Assisted living supports
Medicaid has strict financial requirements, which means you might be required to spend a certain amount of money each month on medical costs before Medicaid “kicks in”.
Medicare vs. Medicaid (Benefit comparison)
Medicare and Medicaid are similar programs in that they can both help seniors pay for their healthcare and medical expenses. The main difference between programs is that Medicare is federally-run and has an age requirement to qualify (65 years or older) whereas Medicaid is state-run and based on financial need.
Original Medicare can be limited depending on your health needs, but you can help fill in coverage gaps using options like Medigap, Medicare Advantage, and Medicare Part D (prescription drug coverage)
Since Medicaid is based on financial need, anyone can apply regardless of age. Benefits vary between states, but Medicaid generally covers the same things as Original Medicare with two exceptions: Custodial (personal) care and nursing home care, both of which are not covered by Original Medicare.
Medicare or Medicaid? You might be eligible for both
Medicare and Medicaid are not mutually exclusive, meaning you may qualify for both programs. This is usually referred to as dual eligibility.
If you are enrolled in both programs, Medicare is the primary payer meaning it will be used first to cover medical costs whereas Medicaid is the secondary payer and will be used to cover the remaining portion as needed.
Medicaid will cover some of Medicare’s out-of-pocket expenses like premiums and co-payments for eligible services. If you don’t qualify for Medicaid, Medicare has programs for low-income seniors that you may be eligible for.
Medigap: What is it?
Original Medicare doesn’t cover everything, but you can opt for Medigap, an optional supplemental insurance plan.
Medigap policies are available through private insurance companies and help cover things like out-of-pocket expenses including deductibles, co-payments, and coinsurance. Medigap is not the same as Medicare Advantage, so it doesn’t include benefits like vision and dental or prescription drug coverage.
Medigap is only available to seniors with an Original Medicare plan (Part A and Part B). You may be denied coverage or pay a higher premium if you sign up after the six month period following your 65th birthday.