Exploring the Differences and Determining What’s Right For You
What’s in a name? Great question. Medicare and Medicaid sound very similar, but their names give little in the way of answers. When it comes to insurance, the fine print can often make heads spin. Even if you still have health coverage through your employer or your spouse, it is important to know how these programs may relate to you now or in the future.
You may already be eligible for some of these services, you may have been paying into these services each tax year, or maybe you are already enrolled but want a few more details to make sure you’re in the right place. Learning more about these two programs will hopefully point you in the right direction and encourage you to make sure you have the coverage that fits your needs.
Medicaid vs Medicare 101
So what is the difference? Medicare is a federal program that offers coverage to adults aged 65 and over, as well as individuals with certain disabilities. Medicaid is a state and federal program, offering free or low-cost health care to low-income individuals and families. These programs are very different but can be used simultaneously, independently, or not at all depending on your preferences and needs.
All adults become eligible for Medicare when they turn 65. You may automatically be enrolled if you are already getting Social Security benefits or if you have been receiving disability benefits for 24 months. If you are automatically enrolled, you will receive your card in the mail when eligible and will be enrolled in Part A and Part B. You will need to contact Medicare if you don’t want Plan B coverage, as there are often premiums attached that you will be responsible for.
If you aren’t automatically enrolled, you will need to enroll during your enrollment window unless you are still covered by another policy. Joining or amending your policy outside of these dates may not be possible or may incur penalties. You can enroll online, in person, or over the phone with your local Medicare office.
Medicare is an individual policy. Many spouses have shared insurance policies throughout their lives and may make the assumption that one spouse being enrolled means the other is covered as well, which is untrue. Please be sure that you are actually enrolled if you are counting on Medicare as your coverage.
Medicare has several different parts, allowing you to customize for your needs. Part A is mainly hospital cover but also can cover short-term skilled nursing care, hospice, and home healthcare.
If you or your spouse have been paying into Medicare through your employer for a minimum of 10 years, Part A is completely free. If you haven’t been paying into Medicare, there will be premiums attached. You can use this calculator to determine what your expected premiums could be. Depending on the size of their premiums, some people opt not to use Medicare for their coverage.
Part B covers medical services like ambulance service, medical equipment, doctor’s visits, and outpatient care. It also covers preventative medicine like vaccinations or diagnostic testing.
Most people will opt to have at least Part A and Part B coverage when using Medicare, but keep in mind that you will likely have to pay a premium for Part B services. There are often co-pays and deductibles to meet with Part B services as well. These can be offset by Medicaid if you qualify or by purchasing Medigap insurance. If your needs change, add or remove Part B during open enrollment in order to avoid penalty fees.
Part D is for prescription drug coverage. This is an optional add-on that covers you for, you guessed it, prescription drugs. This policy will also include monthly premiums, which can vary quite a bit. If you do elect to add this on, be sure to do it during open enrollment to avoid penalty fees.
Medigap is offered through private companies, and it helps pay for some of the extras not covered by Medicare like copayments, coinsurance, and deductibles. Some even can include health coverage while you travel outside of the States! They don’t usually cover those extras like vision, dental, or hearing aids, and they never include prescription drugs.
Keep in mind that you must have Medicare Part A and Part B in order to have a Medigap policy. You pay a monthly premium in addition to your Part B premium for the service.
Medicare Advantage Plans or Part C
Medicare Advantage Plans are offered by private companies as an all-in-one bundle. Medicare pays these companies for your care, and in exchange, they follow a host of rules in covering you. These companies are approved by Medicare and their policies include the benefits of Part A, Part B, and often Part D. Some will cover the extras like vision and dental as well.
As these plans are offered in the private market, some different rules about coverage can apply. It is best to learn the ins and outs of your policy, your fees, and your coverage and keep on top of them as they can change year to year. One rule that is true across the board, however, is that you cannot have a Medigap policy with a Medicare Advantage Plan. If anyone tries to sell you this, please report them as it is illegal.
Medicaid offers insurance coverage for low-income earners at any age. Since it is funded and run at both the state and federal level, the strict income requirements for eligibility vary by state. These programs are generally free or at least come at a low cost, variables which are decided by your income level and state of residence. You can apply for Medicaid through the Health Insurance Marketplace during open enrollment or through your own State Medicaid agency.
Typically, Medicaid covers hospitalization, lab services, clinic treatment, pediatrics, x-rays, and family planning. Each state can decide if it wants to cover extras like vision, dental, prosthetics, and physical therapy. You can check online for a more comprehensive list of coverage details as it relates to your state.
Once you turn 65, if you were already covered by Medicaid you may still qualify for coverage even after you join Medicare. Medicaid would then pay your Plan B premiums or possibly still offer you full benefits. It also can be used to cover long-term care for patients with depleted savings.
No matter where you fall in the insurance spectrum, it’s important to remember to check your policy each year. Laws have been changing rampantly in the insurance space. But also as you approach each new phase of life, you may find your own needs or financial situation changing each year as well. And if you have a Medicare Advantage Plan, rules can change annually. Keep on top of your needs and make sure that you are still being covered by the program that is right for you from year to year.
And, most importantly, it is impossible to be an insurance expert unless you are an insurance expert. There is no shame in hiring one to help you navigate the choices you need to make when deciding on a coverage. Insurance is undoubtedly complicated, however, it is also immensely important through all stages of life. Knowing the basics helps you ask smart questions and can move you in the right direction, but an expert hand may be on order to make sure your confidence in your coverage is where you want it to be.