What is the Difference Between the Medicare and Medicaid Programs?
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Intriduction

It is a sobering reality that the cost of health care in the United States has been on the rise in the past decades and shows no sign of leveling out. These rising costs affect the impoverished and the elderly more directly than any other segment of the population. National and state health care programs help millions of individuals each year who need assistance with health care costs.

The recent COVID-19 global pandemic has thrust many Americans who were previously on solid healthcare footing into seeking aid to balance out the increased cost of healthcare after job loss or catastrophic illness. As of December 2022, Medicaid enrollment has increased by 29.8% since the start of the COVID-19 pandemic in February 2020. Medical assistance programs have been a lifeline to Americans who are among the most in need.

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What Is a Medical Assistance Program?

State and federal programs that assist individuals who need help with health care coverage are commonly referred to as medical assistance programs. Millions of people rely on these programs to cover costly medical expenses. The two most common medical assistance programs are Medicaid and Medicare.

Key Differences Between Medicare and Medicaid

These two national health insurance programs are often mistakingly used interchangeably. They are both healthcare assistance programs and are spelled similarly. Despite the similarities, there is a clear distinction between the two. That distinction lies in the target populations that they are designed to serve.

In broad terms, Medicare is a federal health care program that provides coverage to individuals who are 65 years or older. Medicare also provides coverage for individuals who are under 65 and have a qualifying disability. Medicaid, on the other hand, is a state and federal health care program that provides coverage for low-income individuals.

Both of these programs are governed by the Centers for Medicare and Medicaid, or CMS, which is a federal agency under the umbrella of the United States Department of Health and Human Services. CMS administers the Medicare program and is the partner federal organization that states work with for Medicaid.

Individuals who are eligible for both can be covered by both programs at the same time to cover more costs and provide the most advantageous coverage.

What Is Medicaid?

Medicaid is a federal medical assistance program that aids low-income and disabled individuals. It is the largest source of funding for health services for low-income individuals as it provides affordable health care to almost 90 million Americans. Medicaid was created as part of the Social Security Amendments of 1965 which provided for federal funds to match state funding for individuals whose resources were able to cover the cost of medical expenses.

Individual states manage their own Medicaid programs. Therefore, the qualifying criteria for eligibility can vary greatly. Over 60% of Medicaid beneficiaries are enrolled in some sort of privately managed care plan. Medicaid is a prime example of a partnership that brings together the federal government, state governments, and private industry.

Medicaid, unlike Medicare, is a means-tested and needs-based program. With Medicare, the primary determining eligibility requirement is age while Medicaid is focused on the individual’s available resources.

Medicaid saw a drastic expansion as a part of the Affordable Care Act (ACA). This resulted in an estimated 11 million more individuals qualifying than previously would not have. A United States Supreme Court ruling in 2012 clarified that states could not have their federal matching funds for Medicaid eliminated if they didn't expand under the ACA. Because of this, many states opted to not extend their coverage. All 37 states chose to extend benefits.

Children are by far the largest group of enrollees in the Medicaid system. The program also helps 62% of all nursing home residents and 41% of all childbirths in the United States

How to Apply for Medicaid

Medicaid is a federal and state government partnership. Matched funding is provided by the federal government but the actual administration of the health plan and services is facilitated by individual states. Applications for Medicaid should be conducted through the various state Medicaid offices. One stipulation that is common to the various state programs is that potential enrollees must be residents of the state they are applying for aid.

As an example, let’s look at how to apply for Medicaid (called Medi-Cal) in California. There are three options:

Before applying, gather the necessary information. This includes social security numbers for US citizens or document information for immigrants, employer and income information for the whole family, federal tax information, and any health insurance offered through an employer.

What Are the Requirements to Be Eligible for Medicaid?

The guidelines for Medicaid eligibility are complicated at best. In general, applicants must fall into one of the following categories to be eligible:

  • Low-income children
  • Pregnant women
  • Parents of Medicaid-eligible children
  • Low-income disabled individuals
  • Low-income seniors (65 years or older)

There are a host of other criteria that factor into Medicaid eligibility, and it can change depending on the state that you live in. The CMS website is a great resource for understanding these factors.

Children and Medicaid

An interesting feature of Medicaid is that children can be eligible for Medicaid even when their parents are not. Many times, a parent’s income is too high to qualify for Medicaid but too low to qualify for private insurance. In these instances, the Children’s Health Insurance Program , or CHIP, is available to help bridge that gap and provide the necessary insurance coverage for uninsured children up to the age of 19 years old.

The CHIP program doesn’t require enrollment during a traditional open enrollment program which allows parents to enroll children in need any time of year.

Types of Medicaid Managed Care Plans

An unfortunate reality that our society currently faces is the increasing frequency with which families are seeking managed care for their loved ones. It is a complicated and time-intensive process and requires a fair amount of knowledge about how the healthcare system works. The federal government’s Medicaid website is a great resource for all topics related to Medicaid managed care.

Understandably, managed care is sought out so frequently given the complex nature of medical assistance programs. In addition to caring for a loved one, the added stress of navigating government programs can take its toll. Managed care plans can be a great asset.

There are three types of Medicaid managed care plans: comprehensive risk-based plans, primary care case management, and limited-benefit plans.

  • Comprehensive risk-based plans: These are by far the most common of the managed risk plans and likely the plans that most Americans have had some experience with. These plans are similar to health maintenance organizations (HMO) models in that states provide a static amount of funding to qualified health plans for each plan enrollee. If the total cost of the benefits and services provided extend beyond that funding, the plan is responsible for the balance.
  • Primary care case management: In these plans, enrollees are assigned a primary care physician who is reimbursed a fixed amount per enrollee. The disbursed funds are meant to compensate the primary care physician for the coordination of the enrollee’s care. This is a great option for enrollees who have a physician who may be uniquely familiar with their particular set of circumstances.
  • Limited-benefit plans: These plans are designed to provide funding for one specific type of benefit. Most often, these plans are used for instances of mental health, substance abuse services, transportation, and dental services.

What is the Medicare Program?

Similar to Medicaid, the government Medicare program is federally funded. As of March 2023, over 65 million Americans are enrolled in Medicare . The program is available to adults 65 and is partially funded by their social security. The only exceptions to the age rule Medicare are for anyone with a disability, ALS, or End-Stage Renal Disease.

Medicare is divided into four parts :

  • Medicare Part A: Hospital insurance. If you already have retirement or disability benefits from Social Security, this portion is free. If not, the minimum payment is $259/month.
  • Medicare Part B: Medicare insurance. This portion is deducted from Social Security, Railroad Retirement Board, or Civil Service Retirement checks. If none of those apply, then a bill is sent for every month.
  • Medicare Part C: Medicare Advantage Plans. This is an additional charge based on the type of health care plan selected.
  • Medicare Part D: Drug coverage. Monthly premiums for this section vary based on the healthcare plan selected.

Providers must abide by the Medicare Program Integrity Manual , a comprehensive publication from CMS that helps providers detect and prevent fraud, waste, and abuse in the Medicare program.

What Problem Was the Medicare Program Created to Solve?

Medicare solves the problem of needing expensive healthcare during old age when people tend to have less money. Medicare was created because healthcare costs tend to grow as a person gets older. As our bodies age, they need more medical treatment. However, people are also unable to continue working as much as they once did when they were younger. Thus, they’re no longer able to afford private medical care like they could have when they were working full-time.

The Medicare program's history dates back to the 1950s. Previous versions of Medicare were available, but they were restricted by eligibility and the scope of care offered. To remedy this, President Johnson spearheaded the Medicare legislation, and the program was enacted in 1965.

How Have Population Changes Affected the Medicare Program?

The US population growth is slowing down, meaning that there are fewer young people than there used to be. By the year 2030, 19.6% of the population will be over 65 years old , compared to only 12.3% in 2000. It’s expected that health spending for the program will go over $16 trillion in 2030, compared to only $1.7 trillion in 2000. These population changes mean that more of the federal budget will need to be funneled into Medicare to ensure these life-saving services remain available.

A significant change to Medicare over the years is the focus on preventative medicine. Now that doctors know more about illnesses and diseases in 2023 rather than the 1960s, doctors can provide solutions to some problems before they become life-threatening. While that won’t prevent the rising costs of Medicare as a whole, it could help mitigate them.

What Funds the Medicare Program?

The Medicare program is funded by three different entities :

  • General revenues (46%)
  • Payroll tax revenues (34%)
  • Medicare beneficiaries (15%)

There are a handful of other sources as well, such as taxes on Social Security benefits, payments from states, and interest.

How to Apply for Medicare

To apply for Medicare, you can call the administration at 1-800-772-1213 or apply for benefits through the Social Security website. An application must be sent in during open enrollment. For 2024, this period ended on December 7, 2023.

There are a few things to consider when applying for Medicare.

The Medicare website goes over each of these considerations in detail and is the best resource for situation-specific questions.

For the application process, more information must be collected for Medicare than Medicaid. It’s recommended that you make sure you have on hand your Social Security number or citizenship status, birthday and where you were born, marriage and divorce history, military service history, all Social Security claims to date, current health insurance and employer (if that pertains to you), and your bank information to sign up for direct deposit.

Medicare Programs and Services

Medicare Advantage Plans and Original Medicare Plans offer additional services depending on the one selected. When choosing your plan, you may be able to add on the following options:

  • Silver Sneakers Medicare Program: A fitness app for eligible Medicare members 65+. Silver Sneakers offers in-person classes, online classes, and on-demand video workouts.
  • Pace Medicare Program : An organization that connects the elderly to Medicare services available in their community.
  • Extra Help Medicare Program : Because of the Inflation Reduction Act, qualifying individuals receive help paying for their Medicare drug coverage.
  • SHIP Medicare Program: Highly-trained volunteers that help individuals and families navigate applying for and using Medicare.

Additionally, private companies offer Medicare Advantage Plans. For example, the Kaiser Medicare Program is a great option for individuals who have had Kaiser insurance for their entire life. This allows them to keep their doctors and stick with the medical care systems that they already know how to use.

The Medicare program for caregivers can alleviate some of the costs of caring for an elderly individual. Medicare pays for several types of in-home services, including home health aides, medical social workers, occupational therapists, and more.

What Are the Requirements to Be Eligible for Medicare?

To learn if you’re eligible for Medicare, you can use the Medicare eligibility tool. Typically, most Americans become eligible when they turn 65. However, certain health conditions such as ALS allow you to qualify for Medicare sooner. This survey asks you the following questions:

  • Date of birth
  • If you worked for at least 10 years and paid Medicare taxes during that time
  • If your age is over 65, it will ask if you live in the US or one of its territories and if you get group health benefits through a spouse or family member’s current employer.
  • If your age is under 65, it will ask if you have a disability and the type that you have.

Support Your Client’s Medicare or Medicaid Funding With PlanStreet

Non-profits in the healthcare sector often work with low-income and elderly individuals to secure medical treatment and services needed. PlanStreet’s case management software is made with Healthcare and Patient Services Organizations in mind, with features such as

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  • Customizable templates for Medicaid/Medicare reimbursements and more
  • A configurable dashboard that makes it easy to check the status of each patient.

PlanStreet streamlines administrative case management systems so that healthcare providers can focus on the important work of finding healing solutions for those in need on Medicaid and Medicare. To learn more about how PlanStreet can boost your organization, schedule a live demo with our team today.

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