Medicare and Medicaid: What's the Difference?

 

A comparison between Medicare and Medicaid and explanations of both types of coverage.

Medicare and Medicaid are very different. Medicaid is a federal program for low-income, financially needy people, set up by the federal government and administered differently in each state.

Eligibility for Medicare, also a federal program, is not tied to individual need. Rather, it is an entitlement program; you are entitled to it because you or your spouse paid for it through employment or self-employment taxes. Medicare was created in an attempt to address the fact that many older citizens have medical bills significantly higher than the rest of the population, while it is much more difficult for most seniors to continue to earn enough money to cover those bills.

Although you may qualify for and receive coverage from both Medicare and Medicaid, there are separate eligibility requirements for each program: Being eligible for one program does not necessarily mean you are eligible for the other. Also, Medicaid pays for some services for which Medicare does not. If you are eligible for Medicaid, Medicaid can pay Medicare deductibles and the Medicare premium.

The following chart summarizes the differences between the two programs.

	Medicare	Medicaid
Who Is Eligible	Medicare covers almost everyone 65 or older, certain people on Social Security disability, and some people with permanent kidney failure.	Medicaid covers low-income and financially needy people, including those over 65 who are also on Medicare.
Who Administers the Program	Medicare is a federal program whose rules are the same all over the country. Medicare information is available at your Social Security office.	Medicaid is administered by the 50 states; rules differ in each state. Medicaid information is available at your local county social services, welfare, or department of human services office.
Coverage Provided	Medicare hospital insurance (Part A) provides basic coverage for hospital stays and post-hospital nursing facility and home health care. Medicare medical insurance (Part B) pays most of basic doctor and laboratory costs, and some of out-patient medical services, including medical equipment and supplies, home health care, and physical therapy. It does not cover currently cover prescription drugs unless you pay an added premium, though in 2006, drugs will be partly covered, and in the meantime, drug discount cards are available.	In many states, Medicaid covers services and costs Medicare does not cover, including prescription drugs, diagnostic and preventive care, and eyeglasses.
Costs to Consumer	You must pay a yearly deductible for both Medicare Part A and Part B. You must also pay hefty copayments for extended hospital stays. Under Part B, you must pay 20% of doctors' bills and sometimes an additional 15%. Part B also charges a monthly premium.	Medicaid can pay Medicare deductibles and the 20% portion of charges not paid by Medicare. Medicaid can also pay the Medicare premium. In some states, Medicaid charges consumers small amounts for certain services.

 

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