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The Differences Between Medicare and Medicaid

Health care insurance these days can be confusing with all the actual changes and proposed changes being discussed. Where does one start to get a good picture of the differences between Medicaid and Medicare?

The “most” important thing to know about Medicare and Medicaid is that that two programs, despite being close in name, are decidedly different and offer their various services to different types of individuals at different ages.

Medicare is

  • A federal health care program developed in the mid-1960s, part of the Social Security program
  • Social security took money from paychecks during working years, returned it as income after 65
  • Helps offer affordable health care for seniors and reduce health care costs
  • Part A covering nursing home care, hospice, and other inpatient and hospital stays
  • Part B covering out patient medical costs (medical supplies, doctor visits, etc.)
  • Part B means paying an out-of-pocket monthly fee
  • No plan B? Sign up later, but pay a 10 percent increase for every 12 months you do not have it
  • Part C offering a health plan from a private company (PPO, HMO) called Medicare Advantage. It covers Part A, B and sometimes prescriptions. This plan can be less expensive than paying premiums for other plans.
  • Part D covering drug costs and added to whatever other plans you choose
  • Medicare is funded by a tax added to a worker’s paycheck plus premiums paid by Medicare beneficiaries plus government funding

Medicaid is

  • Funded by the federal government, but the money passes down to each state to allocate as they see fit
  • Medicaid was “born” about the same time as Medicare and was intended to help lower income citizens afford health care
  • Set up so that the federal government matches state funding
  • Overseen by the Centers for Medicare & Medicaid Services in each state to pass out funding and endure the state meets the federal government’s minimum standards
  • Who it funds as opposed to Medicare. Medicaid serves those with limited resources and income and that includes seniors, low-income individuals, those at the poverty level by offering personal care services/nursing home care. Recipients do not have to be 65 years or older. Those served by Medicaid are a wide ranging swath of Americans needing and qualifying for such services
  • The ability of older Americans who subsist on just Social Security to also receive Medicare benefits and classified as low income while over the age of 65

Of course, Medicaid and Medicare are much more than just a summary of highlights on a page. It is best to research what you want and need, what suits your lifestyle and budget and to ask as many questions as you can to understand what you are likely going to purchase. There are highly trained health insurance brokers and health insurance agents that have answers right at their fingertips and can help you make informed choices. Just do not wait until the last minute to make a decision, as often the last minute purchases are those that are regretted.