Medicare and Medicaid sound alike. The names are easy to mix up. But Medicare vs Medicaid is a real and important difference. They are very different programs, and many seniors qualify for both. Here is what you need to know in plain language.
What is Medicare?
Medicare is health insurance from the federal government. You qualify based on age, not income. Most people get Medicare at 65. People with certain disabilities get it earlier.
Medicare is the same in every state. The rules, the benefits, and the cost structure are all set by the federal government.
What is Medicaid?
Medicaid is health insurance based on income, not age. It is jointly run by the federal government and each state. The rules can be different in each state.
Medicaid covers low income adults, children, pregnant women, seniors, and people with disabilities. To qualify, your income and assets need to be below certain limits.
The big differences
Medicare:
- You qualify by age (65) or disability
- The rules are the same everywhere
- Most people pay a monthly premium
- Covers most medical care, but with copays and deductibles
Medicaid:
- You qualify by income and assets
- Each state has different rules
- Usually free or very low cost
- Often covers things Medicare does not, like long term nursing home care
Can I have both?
Yes. Many seniors have both. This is called being "dually eligible." About 12 million Americans have both Medicare and Medicaid.
If you qualify for both, Medicare pays first. Medicaid fills in most of the gaps. You may pay nothing or very little for doctor visits, hospital stays, and prescriptions.
Special programs that help with Medicare costs
Even if you do not qualify for full Medicaid, you might qualify for help paying Medicare costs. These are called Medicare Savings Programs. Each state runs them, and the income limits change every year.
The four main ones:
- QMB: pays your Part B premium, deductibles, and copays
- SLMB: pays your Part B premium
- QI: pays your Part B premium
- QDWI: helps disabled workers with Part A premiums
If your income is below about 1,800 dollars a month as a single person, or 2,400 as a couple, you might qualify for one of these. Always worth checking.
Extra Help with prescription drugs
This is a separate program. It helps low income people pay for Part D. The income limits are higher than for Medicaid, so more people qualify.
If you get Extra Help, your prescription copays drop to a few dollars. There are no deductibles, no donut hole, no big surprises.
How to apply
You apply for Medicaid and the Medicare Savings Programs through your state Medicaid office. You can apply online in many states. You can also apply by mail or in person.
For Extra Help with prescriptions, you apply through the Social Security Administration. You can apply online at ssa.gov or by phone.
A common mistake
Many people who qualify for these programs do not apply. They think the process is hard or that they will not qualify. The numbers say half of seniors who would qualify for Extra Help are not getting it.
If your income is on the lower side, it is worth filling out an application. The worst case is you get told no. The best case is you save hundreds or thousands of dollars a year.
Why this matters when picking a Medicare plan
If you qualify for Medicaid or Extra Help, your Medicare plan options change. There are special Medicare Advantage plans for dual eligible people. They often have extra benefits like a monthly grocery card or free transportation to the doctor.
Pick a plan that fits your situation. A regular Medicare Advantage plan may not be the best fit for someone on Medicaid.