What's the Difference Between Medicaid and Medicare?

by Team eLocal
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Healthcare insurance is essential, but many people struggle to afford private coverage. Medicare and Medicaid are two programs that aim to improve access to healthcare for certain groups.

There are significant differences between Medicare and Medicaid, and knowing how each program works can help you access the right coverage.

What Is Medicare?

Medicare is a federal healthcare insurance program that provides affordable coverage for people aged 65 or older. You may also be eligible to enroll in Medicare if you have end-stage renal disease or some disabilities.

If you're eligible for Medicare and have paid Medicare taxes for at least 10 years, you'll usually get Medicare Part A free. Medicare Part A covers hospital services, and you can purchase coverage if you can't demonstrate sufficient tax contributions.

Meanwhile, Medicare Part B covers outpatient services and durable medical equipment. You'll have to pay a premium for Part B coverage, which Medicare bases on your gross annual income. Beneficiaries can choose to enroll in Part A only if they prefer.

Medicare only covers medically necessary services. You'll pay an annual deductible and 20% of the Medicare-approved amount for your treatment.

What Is Medicaid?

Medicaid is a federal-state partnership that provides public health coverage for people with low incomes. Each state administers its Medicaid problem following federal standards, meaning coverage and eligibility can vary depending on where you live. Around 20% of Americans are Medicaid beneficiaries.

States can choose to impose out-of-pocket costs (such as deductibles or copayments), but they are generally nominal amounts. However, federal standards forbid states from charging beneficiaries for certain essential services, such as emergency healthcare.

Medicare Vs. Medicaid: What Are the Main Differences?

One of the primary differences is that Medicare is a federal insurance program. Meanwhile, Medicaid is an assistance program administered in partnership by the federal government and the state. Therefore, Medicare covers the same treatments and services regardless of where you live, and Medicaid coverage varies across states.

Another critical difference between Medicaid and Medicare is who is eligible. Unlike Medicare, there are no age or health status requirements to enroll in Medicaid if you meet the monetary eligibility criteria.

Finally, enrollees must pay monthly premiums and out-of-pocket costs for Medicare coverage. Meanwhile, Medicaid enrollees don't pay premiums and don't usually pay anything toward the cost of their care. Where out-of-pocket costs apply, Medicaid typically charges less.


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