Monday, June 24, 2013

Understanding the differences between Medicare and Medicaid

For a seemingly simple question, this distinction causes an extraordinary amount of confusion. The most simple answer is that Medicare is a health insurance program for all Americans age 65 and over. Medicaid is a health insurance program for low income Americans with limited financial resources of any age. Therefore, for persons 65 and older, it is possible to be eligible for both Medicaid and Medicare. Unlike many government programs, eligibility for these two programs is not mutually exclusive. It is possible to be eligible for and concurrently receive benefits from both programs.

Other than the eligibility criteria, Medicaid and Medicare also differ in their benefits. Both programs cover medical care and prescriptions drugs (to an extent), what sets them apart is their coverage of long term care.

For nursing home care, Medicare will only pay for part of the cost for a period of 100 days. Medicaid will cover the full cost of nursing home care indefinitely.

For assisted living care, adult foster care or other forms of residential care in which personal care and assistance with the activities of daily living is provided but not full medical care, Medicare does not pay anything. Medicaid, on the other hand, does cover these forms of care though some explanation of how it does is helpful. Medicaid offers elderly beneficiaries what are called HCBS or 1915 Waivers. Waivers allow beneficiaries to receive care services outside of nursing homes. Waivers are state-specific and some states have waivers specifically to pay for assisted living and others offer
only partial payment of assisted living costs.

For non-medical, home care, Medicare again pays nothing. Medicaid, similar to the way assisted living is covered, will pay for home care through Medicaid Waivers.

Hopefully this provides a quick and easily understandable answer to the question of the difference between Medicare and Medicaid. We've published several other blog posts that address Medicaid's coverage of assisted living and home care.