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Medicare vs. Medicaid

Medicare and Medicaid are government-funded healthcare programs that help cover costs for certain U.S. citizens. If you qualify for both Medicare and Medicaid, you could be entitled to additional savings programs that help cover your healthcare costs. While both programs cover healthcare benefits, there are several differences when you compare Medicare vs. Medicaid.

Below we review the situations in which you may qualify for both forms of coverage and how you can best utilize the benefits of each healthcare program.

What is the Difference Between Medicare and Medicaid?

Medicaid and Medicare both cover healthcare costs for specific groups of people. Medicare covers costs for those over age 65 or under 65 with disabilities. On the other hand, Medicaid covers healthcare costs for those with low incomes, regardless of age.

One notable difference between Medicare and Medicaid is that Medicare operates on the federal level, while Medicaid is different in each state. As a federal program, Original Medicare coverage offers the same benefits to all enrollees. Thus, Medicare benefits do not change from state to state.

There are two parts to Original Medicare: Medicare Part A and Part B. Medicare Part A covers inpatient hospital costs, and Medicare Part B covers outpatient services, doctors’ appointments, and durable medical equipment.

In addition to Original Medicare, Medicare Part C (Medicare Advantage), Part D prescription drug policies, and Medicare Supplement (Medigap) plans are available through private insurance companies. These forms of coverage work with Original Medicare to help cover additional costs.

As a state-run program, Medicaid qualification requirements and benefits can differ. Often, if you qualify for full Medicaid, you will not need to pay a monthly premium, and you will receive coverage for a wide array of services.

How Do I Qualify for Both Medicare and Medicaid?

To enroll in Medicare or Medicaid, you must meet specific eligibility requirements. To be eligible for Medicare, you must be an American citizen or legal resident of at least five years and one of the following:

  • Age 65 or older
  • Receiving Social Security Disability Income (SSDI) benefits for at least 24 months
  • Diagnosed with end-stage renal disease
  • Diagnosed with amyotrophic lateral sclerosis

Meanwhile, eligibility requirements for Medicaid vary based on your location. However, the primary eligibility requirement is based on your monthly income and family size. In most states, you will qualify for Medicaid if you earn less than 138% of the federal poverty level, which is approximately $38,295 for a family of four.

If you have children in your household, you may be afforded a higher income level based on the individual laws in your state. Additionally, if you are pregnant, have a pressing medical need, or have a unique circumstance, your state’s Medicaid program may provide additional benefits.

Suppose you qualify for both Medicare and Medicaid simultaneously. In that case, you become eligible for Dual-Special Needs Plans, the Qualified Medicare Beneficiary Program, the Low-Income Medicare Beneficiary Program, and Extra Help with Medicare Part D.

Each of these programs helps you cover costs you typically pay out-of-pocket.

What is the Cost of Medicare vs. Medicaid?

Regarding costs, you may see extreme differences between Medicare vs. Medicaid. Most people receiving Original Medicare must pay premiums, copayments, deductibles, and coinsurances based on the services they receive.

The chart below breaks down out-of-pocket costs on Original Medicare.

Original Medicare Costs
Monthly PremiumMedicare Part A: typically, $0
Medicare Part B: $174.70
DeductibleMedicare Part A: $1,632 per benefit period
Medicare Part B: $240
Coinsurance and CopaysMedicare Part A: $0-$816 per day (depending on the length of hospital stay)
Medicare Part B: 20% of all Medicare-covered services

In contrast, most people receiving Medicaid will not pay a monthly premium for their coverage. Additionally, the state health insurance programs cover most services in full or only require a small copayment.

Your state determines Medicaid costs. Some states may require a small premium or different copayment based on where you live and your income level.

WHAT Are Dual-Eligibility Medicare Advantage Plans?

When you qualify for Medicare and Medicaid, you have dual eligibility. Dual Eligible Special Needs Medicare Advantage Plans allow easier access to necessary healthcare services for those on Medicare and Medicaid.

Once you enroll in Medicare and Medicaid, you will receive coverage for most out-of-pocket healthcare costs. Your Dual-Eligible Special Needs Medicare Advantage plan will help cover the remaining costs for which you may be responsible.

Unfortunately, when you have Medicare and Medicaid, you cannot enroll in a Medicare Supplement plan. This is because Medicaid will not cover your Medicare Supplement premium. Thus, the next best option is to enroll in a Dual-Eligible Special Needs Medicare Advantage plan.

Many top carriers offer Dual-Eligible Special Needs Medicare Advantage plans, such as:

  • Cigna
  • Humana
  • Mutual of Omaha
  • Aetna
  • And more!

What Is Full-Benefit Dual-EligibiLe?

Full-Benefit Dual-Eligible (FBDE) refers to those who qualify for Medicare and full Medicaid through their state. FBDE individuals are automatically eligible for coverage through Medicare savings programs and receive full coverage for Medicare Part A and Part B premiums, copays, deductibles, and coinsurance.

If you have FBDE status, you will likely pay $0 annually for any healthcare-related service.

WHICH Is Primary: Medicare vs Medicaid?

When you have both Medicare and Medicaid, Medicare will always pay first. Thus, Medicare covers its portion of your medical expenses before Medicaid coverage kicks in.

If you receive a service that Medicaid covers but Medicare typically does not, your Medicaid plan will cover 100% of the costs aside from a small copayment if applicable.

WHAt Happens if I Lose Medicaid Coverage?

If your income significantly increases, you may become ineligible for Medicaid. In this case, you will also need to make changes to your Medicare coverage.

You may receive a special enrollment period and guaranteed issue rights to enroll in a new Medicare plan that suits your needs. You can enroll in either a Medicare Supplement or Medicare Advantage plan during this window.

It is important to remember that when you lose Medicaid, your out-of-pocket costs will increase. So, when choosing new coverage, you must account for these new costs. Your best option is to contact a licensed Medicare agent to help find the right plan for your new budget.