The average cost of a hospital visit in the United States is $2,883, according to ValuePenguin. For the average American to afford a normal stay, they would need to work 384 hours at $33.82 an hour. Unless you want to get saddled with a huge bill, you need to be able to rely on insurance to cover most of that cost.
Two options available to every United States citizen are Medicare and Medicare. Both are funded by a combination of payroll taxes, funding from the federal government, and the state you live in.
But what is the difference between Medicare and Medicaid, and how do you know if you qualify for either?
What Is the Difference Between Medicare and Medicaid?
When most people consider government-run programs for insurance purposes, they think of either Medicare or Medicaid. On the surface, these seem like good options if you want an alternative to private health insurance. However, neither of them works exactly like that.
Both Medicare and Medicaid serve different populations and have different eligibility requirements. One is meant more for older citizens, while the other aims to help low-income individuals. You can also receive private insurance on top of them for more comprehensive coverage.
How your coverage works depends on whether you have Medicare or Medicaid. Medicare has four main parts, with each covering different healthcare services.
Part A, or hospital insurance, covers inpatient care in hospitals. It’s often accompanied by Part B, which is medical insurance. Together, you can get fairly comprehensive basic coverage.
Part C includes Medicare-approved private insurance plans that provide more substantial coverage. Part D, or prescription drug coverage, is usually offered as part of Part C.
In comparison, Medicaid offers various mandatory benefits. These include hospital services, physician services, home health services, and much more. You may also qualify for optional benefits such as prescription drug coverage, dental care, and hospice care.
Each state has varying Medicaid coverage, so you’ll need to research what you can receive in your area.
One of the best things about Medicare Part A is that most people on it don’t need to pay a monthly premium. If you don’t qualify for premium-free Part A, you can always pay for it. The standard Medicare Part B premium was $148.50 in 2021.
Part C will have a varying cost depending on who you buy the extra coverage from. Part D also has deductibles that depend on what drug plan you’re on. You may end up paying either very little per month or something closer to what you would pay on a normal insurance plan.
The cost of Medicaid will vary based on your state’s regulations, your household income, and the program you enroll in. Generally speaking, lower incomes result in lower out-of-pocket costs.
There may be copayments expected for certain services such as doctor’s visits or prescriptions. However, some states make it so there aren’t any copayments for certain groups, like children or pregnant women.
Requirements and Medical Needs
What’s important to note about both Medicare and Medicaid is that they each have different requirements.
Medicare primarily serves people who are 65 years or older. Citizens automatically become eligible on their 65th birthday, though they can apply three months beforehand.
However, you can also qualify for Medicare if you’re a younger person with certain disabilities as outlined by the Social Security Administration.
Meanwhile, Medicaid was specifically designed to help anyone who is considered low-income as a way to help them cover medical expenses. It depends on your state, but they tend to follow income limits based on a percentage of the Federal Poverty Level.
Advanced Coverage Options
Medicare gives beneficiaries the option of using Advantage plans, which are private insurance policies provided by partnering companies. These serve as alternatives to both Part A and Part B coverage, with the exception of hospice care.
The reason you would use these is to get extra coverage, such as vision, hearing, or dental. In exchange, you pay a monthly premium like you would with any other insurance policy.
Medicaid does not offer an equivalent, but there are different managed care options and specialized programs available.
For example, the Program of All-Inclusive Care for the Elderly (PACE), combines both Medicare and Medicaid. Long-Term Services and Supports (LTSS) provide institutional care and community-based services for those with chronic disabilities or illnesses.
Each health insurance program has its limitations and restrictions.
While Medicare is meant to help seniors with their medical needs, it doesn’t cover all medical services. The default Medicare does not cover long-term care, dental care, eye examinations, or daily living aids. It also won’t cover your prescriptions unless you pay for Part D or get an advantage plan.
Medicaid provides more coverage, but it varies from state to state. Your covered services are also largely restricted to those in the state of enrollment. Even then, you’re restricted to the providers who accept Medicaid.
Why to Choose Medicare or Medicaid
In most cases, Medicare has lower premiums and out-of-pocket costs when compared to private insurance options. They may charge more if you’re an elderly individual with pre-existing conditions when compared to Medicare. Beneficiaries will also have the option of choosing between supplemental policies or the more expensive Advantage plans.
As for Medicaid, it was made specifically for low-income individuals and families. These are people who would otherwise struggle to afford private health insurance. Beneficiaries can also expect a wider range of healthcare services depending on the area they’re in.
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What is the difference between Medicare and Medicaid? While they serve similar purposes, one is meant to assist senior citizens while the other focuses more on the financially challenged. Both are meant to provide more accessible health coverage for those in need.
Do you need help comparing Medicare and Medicaid in the context of your situation? Our professional staff offers expert, bilingual guidance to help make the best choice for your needs. Let’s make sure you get the insurance coverage that you deserve!