Although they sound very similar, Medicare and Medicaid are very different services. In short, Medicare serves as a public insurance program primarily for those over the age of 65 or those with long-term disabilities. Medicaid is classified as an assistance program and is offered to those of all ages with low income. “It is important to know the difference between the two, as Medicare assists with physician and hospital bills, and Medicaid assists in covering nursing home charges when assets are depleted,” says Jeanie Hummer, Masonic Village at Elizabethtown admissions supervisor.
This is a federal program paid for by a payroll tax, so everyone employed pays into the program. Because it’s managed by Centers for Medicare & Medicaid Services (CMS), all state programs are very similar in how they offer services and coverage. In Pennsylvania, those who are 65 or older are eligible for Medicare coverage.
There are typically four parts to Medicare that are offered to those who qualify: Parts A, B, C and D. Parts A and B are considered Original Medicare, with Part A covering hospital stays, hospice care and some skilled nursing care with no premiums (but it can have a yearly deductible). Part B covers doctor visits, diagnostic screenings and other outpatient services, with a premium set by the federal government every year.
Part C is offered as Medicare Advantage, Medigap or as another supplemental insurance. Medicare Advantage packages Parts A, B and D and is offered through a private insurer that can manage doctor networks and specialists. Because it’s bundled through a private insurer, the federal government doesn’t set premiums and deductibles. It typically has lower out-of-pocket costs and has an annual cap on what you can pay out of pocket. Part D covers prescription drug costs and is usually paid for through a Part C plan.
Medicare can also cover those under age 65 if they have received Social Security Disability benefits for more than 24 months. Those around the age of 65 have a seven month period to sign up for a plan. There is an extra cost to signing up late. Unlike private insurance through an employer, both you and your spouse must enroll in or purchase individual policies.
While Medicaid is also a program to help with medical costs, it is classified as an assistance program because it does not offer “plans,” and only covers costs that other insurers or Medicare doesn’t cover. This program serves people at any age of low income, and the beneficiary usually pays nothing for covered services.
Medicaid services also are run by CMS, but each state works out a “state plan” with CMS to determine what, how and where services are provided. Medicaid was expanded in Pennsylvania in 2015 to allow children and adults of low income to qualify for assistance, regardless of disability or pregnancy status.
In covering medical costs, Medicaid is the last payer. This means that if a beneficiary of Medicaid has other private insurance or coverage through Medicare, those payers will cover any costs they can. If there is any remainder, Medicaid will cover it. For those without any other insurance, Medicaid will cover all costs for approved services.