Both Medicare and Medicaid appear in the news a lot. But even though these are two health insurance programs run by the US government, they are still fairly different from one another.
When you’re trying to understand Medicare vs Medicaid, there’s one main distinction that you have to know. Essentially, Medicare is a federal health insurance program that is based on age. It guarantees insurance coverage for people who are aged 65 or older and it also covers some younger people who have disabilities.
Medicaid, on the other hand, is a healthcare program that’s designed to serve low-income Americans, regardless of age.
Now, that we understand the basic differences between these two programs, let’s dig a little further. So continue reading and we’ll walk you through everything you need to know.
What Is Medicaid?
Medicaid is a government healthcare program that’s mainly based on financial circumstances. This means that it’s funded via money that’s collected through income taxes. There are currently over 65 million people enrolled in Medicaid.
While Medicare is run strictly through the federal government, Medicaid is run through both the federal and state governments. While federal guidelines do apply, the program works a little differently in each state.
The rules to apply also vary by state. But applicants should be aware that the application process could take several weeks or even months.
You also might be asked to undergo a medical screening and may need to provide extensive documentation of present and past financial transactions.
While states will sometimes charge out-of-pocket fees, certain types of people – such as children – are usually exempt from these costs.
What Is Medicare?
Most Americans consider Medicare to be an entitlement program. It’s essentially a health insurance policy that covers seniors as well as younger people who have certain disabilities. The program was started in 1965 and many of today’s seniors have been paying into the system for decades.
If you paid taxes on your earnings to Medicare while you were working, you’re automatically eligible for Medicare when you turn 65, regardless of your income level. Your Medicare taxes are usually automatically taken out of your paycheck, just like your Social Security taxes.
Medicare comes in four parts.
Part A covers hospital care. Part B covers medical tests, doctors, and some medical procedures and equipment. Essentially, it covers anything that’s done to you.
Medicare Part C is an alternative to standard Medicare coverage. It’s known as Medicare Advantage and can include some procedures not covered by Medicare, such as dental, vision, and hearing. Medicare Advantage plans are administered by private insurance companies.
Medicare Part D covers prescription drug costs and is also administered by private insurance companies.
If you’re interested, you can read about options here to learn more about Medicare.
The Importance of Knowing the Difference When It Comes to Medicare vs Medicaid
As we can see, there are some important differences to know when it comes to Medicare vs Medicaid. Even though both are government-run healthcare programs, they cover different groups of people and work in different ways.
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