Medicare and Medicaid: The Rundown

Jun 27, 2016

Medicare and Medicaid: The Rundown

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What is the difference between Medicare and Medicaid?

Both are government programs that assist people with paying for healthcare, but the words sound very similar, which causes a lot of people to get the terms confused. Below we have included a breakdown of each program and why they’re important.

Medicare

Administered by the U.S. government in 1966, the social insurance program provides health insurance for citizens over 65 years old or those with disabilities. Just this year it has provided insurance for over 50 million Americans.

How does it help?

On average, Medicare covers about half (48 percent) of the health care charges for those enrolled. The enrollees must then cover the remaining approved charges either with supplemental insurance or with another form of out-of-pocket coverage. Out-of-pocket costs can vary depending on the amount of health care a Medicare enrollee needs.

The program is broken down into four different parts, A, B, C, and D. Part A covers hospital bills and medical expenses. This includes food, room and board, and medical tests. Part B covers other medical expenses like physicians, nursing, and other physical therapy visits. Part C covers other unforeseen expenses as well as offers a payment plan that was not implemented until 1996. Part D is the biggest portion of the program and it covers prescription drugs. The plan offers reduced prices for many prescription drugs that will be offered.

Medicare can be used to pay for a limited amount of long-term care. For example, Medicare will cover up to 100 days in a nursing home after your senior has spent 3 days in a hospital. It may be used to cover home care in some cases, but there are strict eligibility requirements.

Current Issues

There have been proposals to increase the additional premiums paid by the wealthiest people with Medicare, compounding several reforms in the ACA that would increase the number of wealthier individuals paying higher, income-related Part B and Part D premiums. Currently, only about 5 percent of participants have income-related insurance plans. Those who fall into a higher income bracket have been complaining about having a higher premium.

Some Medicare supplemental insurance (or “Medigap”) plans cover all of an enrollee's cost-sharing, insulating them from any out-of-pocket costs and guaranteeing financial security to individuals with significant health care needs. Lawmakers have argued that many are taking advantage of this system, seeking unnecessary procedures simply because they are covered. These expensive procedures will eventually increase the cost for other participants.

Medicaid

Unlike Medicare, this program is dedicated to low-income families. Beginning in the 1980’s, the program was designed to help those who could not afford health insurance. After Obama’s election, The Affordable Care Act was then significantly expanded to cover more insurance plans.

How does it help?

Under managed care, Medicaid recipients are enrolled in a private health plan, which receives a fixed monthly premium from the state. The health plan is then responsible for providing for all or most of the recipient's healthcare needs. The annual costs vary from state to state, as do the insurance plans.

Current Issues

Many politicians have tried to abolish the Medicaid program, and instead want to turn over the program over to private insurers. Experts claim that it will continue to grow and become an ever-larger share of our federal budget. Most Members of Congress are looking for ways to get our fiscal house in order. However, cutting the program would leave many low-income families and those with disabilities, left without a safety net and potentially no health care.

This could cause many people in need (elderly, low-income families, veterans) fighting for a smaller amount of resources. Currently, no action has been taken, but the future of this program is uncertain. 

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Frequently Asked Questions

Will Medicare pay for long-term care services like nursing homes?

For things like rehabilitation that will last no more than 100 days, then it is possible for Medicare to cover the costs. Keep in mind that you must also have had a prior hospital stay of at least three days, and are admitted to a Medicare-certified nursing facility within 30 days of this stay. Medicare will cover 100% of the cost for the first 20 days, however, you’ll have to pick up the cost starting the 21st day.

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Due to our financial situation, I simply cannot afford to put my parents in a home, but having them live with me isn’t exactly ideal. Are there any other affordable options?

We realize that senior care communities can be costly, but there are a few things to be considered. Many healthcare providers will help offset the costs of moving to a senior care community. If that’s still not financially possible, look into having a home care aid come to your parents' house a few times a week. These home care aids can be hired through an agency or independently and can provide a variety of services to take care of senior loved ones. Don’t let money get in the way of providing the care your parents deserve.

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