People frequently confuse Medicare and Medicaid, especially as available options for seniors or individuals in need of long-term care following a sudden disability. Though both are federal programs and may sound similar in name, Medicaid and Medicare, in written form, work very differently.
Both Medicare and Medicaid were started in 1965 under Lyndon B. Johnson’s administration in response to the inability of older and low-income people to purchase private insurance. Medicaid is an assistance program that pays for health care services provided to low-income individuals. Medicaid is funded federally but administered by each state according to its own plan that fits federal guidelines â€“ which means Medicaid programs typically vary in some way from one state to the next. Medicaid is available to anyone who meets the income requirements regardless of age. Because Medicaid eligibility is needs-based, both regular income and existing assets or resources are counted when determining eligibility.
Medicare, on the other hand, is a federal insurance program that provides health care coverage automatically for people aged 65 and over, typically replacing the individualâ€™s prior health care insurance. Though Medicare is mostly provided to those aged 65 and over, Medicare is available to individuals under the age of 65 who suffer a severe disability, usually after a period of other benefit payment. Medicare is available to anyone aged 65 and over regardless of income.
Both Medicare and Medicaid cover a broad range of health care services, including hospital stays and physician office visits, yet ONLY Medicaid will cover nursing home care, in-home care services, long term care, and transportation to receive medical care. For many, this is counterintuitive given that Medicare is available to the elderly automatically, but in fact only Medicaid will cover long-term care needs. It is possible to qualify for dual coverage, which means both Medicare and Medicaid will work together to provide health care coverage and lower costs.
Medicaid in most instances is free of costs, though a small copay may be required depending on the stateâ€™s plan. Medicaid also may collect expenses paid for an individual from assets in a recipientâ€™s estate after his or her death. Medicare, however, is not free. Medicare usually requires monthly premiums as with other private insurance plans as well as co-payments for certain services.
Medicaid, unlike Medicare, provides long-term care benefits for individuals who meet the eligibility requirements â€“ and these requirements differ significantly from â€œtypicalâ€ needs-based Medicaid in important ways. Individuals may become eligible for Medicaid benefits by relocating assets or diverting income to special trusts that allow preservation of legacy for loved ones instead of payments to skilled nursing facilities. Contact us to learn more about how these federal programs work together and how we may secure the maximum benefits for you and your family.