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Medicare & Medicaid: What's the difference?

| January 11, 2023
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Medicare 

Medicare is federal health insurance for people 65 or older, and some people under 65 with certain disabilities or conditions. Medicare is run by a federal agency called the Centers for Medicare & Medicaid Services. Because it’s a federal program, Medicare has set standards for costs and coverage. This means a person’s Medicare coverage will be the same no matter what state they live in. 

Medicare-related bills are paid from two trust funds held by the U.S. Treasury. Different sources (including payroll taxes and funds that Congress authorizes) fund the trust funds. People with Medicare pay part of the costs through things like monthly premiums for medical and drug coverage, deductibles, and coinsurance. 

Medicaid 

Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by states, according to federal requirements. Medicaid is a joint federal and state program that helps cover medical costs for some people with limited income and resources. The federal government has general rules that all state Medicaid programs must follow, but each state runs its own program. This means eligibility requirements and benefits can vary from state to state. 

Medicaid offers benefits that Medicare doesn’t normally cover, like nursing home care and personal care services. People with Medicaid usually don’t pay anything for covered medical expenses but may owe a small co-payment for some items or services. Find out if you qualify for your state's Medicaid program

Do they work together? 

Yes, they can. 

Individuals who are entitled to both Medicare and medical assistance from a state plan under Medicaid are potentially eligible to enroll in a Dual Eligible Special Needs Plans (D-SNPs) where States cover some Medicare costs, depending on the state and the individual’s eligibility.  Dual special needs plans are for people who could use some extra help. That may be because of income, disabilities, age and/or health conditions. Dual plans are a type of Medicare Advantage plan. Dual special needs plans are also called D-SNP for short. These names all mean the same thing.  

How does it work if you’re dual-eligible both Medicaid and Medicare? A dual special needs plan works together with your Medicaid health plan. You’ll keep all your Medicaid benefits. Most dual plans also give you more benefits and features than you get with Original Medicare. All for a $0 plan premium. Medicaid programs often cover benefits that aren’t offered by Medicare. Examples could include dental, vision and hearing coverage, transportation assistance and long-term care. Paying for certain Medicare costs is another way Medicaid programs can help Medicare. 

The overall goal is for both Medicaid and Medicare to work together more effectively to improve care and lower costs. It’s the responsibility of the Medicare-Medicaid Coordination Office to make sure that people who are dually enrolled in both Medicare and Medicaid have full access to seamless, high quality health care. The Medicare-Medicaid Coordination Office was created within the Centers for Medicare & Medicaid Services (CMS) as part of the Affordable Care Act. 

 

Depending on which level of Medicaid you qualify for, it will determine how much benefit you can receive. Here are some eligibility categories. After you apply and get approved, Medicaid will approve you at one of the levels below. 

Medicaid Eligibility Categories  

The Medicaid eligibility categories encompass all categories of Medicaid eligibility including: 

  • Full Medicaid (only) 
  • These individuals are entitled to Medicare Part A and/or Part B and are eligible for full Medicaid benefits. They are not eligible for Medicaid as a QMB, SLMB, QDWI, QI-1, or QI-2. Typically, these individuals need to spend down to qualify for Medicaid or fall into a Medicaid eligibility poverty group that exceeds the limits listed above. Medicaid provides full Medicaid benefits and pays for Medicaid services provided by Medicaid providers, but Medicaid will only pay for services also covered by Medicare if the Medicaid payment rate is higher than the amount paid by Medicare, and, within this limit, will only pay to the extent necessary to pay the beneficiary's Medicare cost sharing liability. 
  • Qualified Medicare Beneficiary (QMB only) without other Medicaid 
  • These individuals are entitled to Medicare Part A, have income of 100% Federal poverty level (FPL) or less and resources that do not exceed twice the limit for SSI eligibility, and are not otherwise eligible for full Medicaid. Medicaid pays their Medicare Part A premiums, if any, Medicare Part B premiums, and, to the extent consistent with the Medicaid State plan, Medicare deductibles and coinsurance for Medicare services provided by Medicare providers. 
  • QMB Plus 
  • Similar to QMB but with full Medicaid benefits 
  • Specified Low-Income Medicare Beneficiary (SLMB Only) without other Medicaid  
  • These individuals are entitled to Medicare Part A, have income of greater than 100% FPL, but less than 120% FPL and resources that do not exceed twice the limit for SSI eligibility, and are not otherwise eligible for Medicaid. Medicaid pays their Medicare Part B premiums only 
  • SLMBPlus 
  • Similar to SLMB but eligible for full Medicaid benefits 
  • Qualified Disabled and Working Individual (QDWI). 
  • These individuals lost their Medicare Part A benefits due to their return to work. They are eligible to purchase Medicare Part A benefits, have income of 200% FPL or less and resources that do not exceed twice the limit for SSI eligibility, and are not otherwise eligible for Medicaid. Medicaid pays the Medicare Part A premiums only. 

States may vary in determining their eligibility categories; therefore, there may be state-specific differences in the eligibility levels in comparison to those listed here.  For specific information regarding Medicaid eligibility categories, refer to your state Medicaid website. 

 

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