Differentiating Medicare and Medicaid
Persons commonly confuse the terms Medicare and Medicaid. For this reason, it is important to differentiate between them. Medicare is a federal health insurance program for seniors and disabled persons and has no financial restrictions. Medicaid is a state and federal medical assistance program for financially needy persons of any age.
Both programs offer a variety of benefits, including physician visits and hospitalization, but only Medicaid provides long-term nursing home care. Medicaid also pays for long-term care and supports in home and community based settings, including adult foster care homes and assisted living residences, to prevent and delay nursing home admissions. While Medicare does not provide long-term home and community based benefits, in 2019, some Medicare Advantage plans (Medicare Part C) began to offer such benefits.
The Centers for Medicare and Medicaid Services (CMS) oversees both the Medicare and Medicaid programs. For the Medicaid program, CMS works with state agencies to administer the program in each state. For the Medicare program, the Social Security Administration (SSA) is the agency through which persons apply.
Definition: Dual Eligible
Persons who are eligible for both Medicare and Medicaid are called “dual eligibles”, or sometimes, Medicare-Medicaid enrollees. To be considered dually eligible, persons must be enrolled in Medicare Part A (hospital insurance), and / or Medicare Part B (medical insurance). As an alternative to Original Medicare (Part A and Part B), persons may opt for Medicare Part C (Medicare Advantage). While Original Medicare is managed by the federal government, Medicare Advantage plans are managed by Medicare approved private insurance companies. Via Medicare Advantage, program participants receive Medicare Part A, Part B, and often Part D (prescription drug coverage).
To be dual eligible, persons must also be enrolled in either full coverage Medicaid or one of Medicaid’s Medicare Savings Programs (MSPs). Full coverage Medicaid covers physician visits, hospital services (in-patient and out-patient), laboratory services, and x-rays. Medicaid also pays for nursing home care, and often limited personal care assistance in one’s home. Some states offer long-term care and supports in the home and community thorough their state Medicaid program, although many states offer these supports via 1915(c) Medicaid waivers. While MSPs do not provide the same coverage, they do provide assistance paying for Medicare premiums. They may also cover Medicare deductibles and co-payments.
Benefits of Dual Eligibility
Persons who are enrolled in both Medicaid and Medicare may receive greater healthcare coverage and have lower out-of-pocket costs. For Medicare covered expenses, such as medical and hospitalization, Medicare is always the first payer (primary payer). If Medicare does not cover the full cost, Medicaid (the secondary payer) will cover the remaining cost, given they are Medicaid covered expenses. Medicaid also covers some expenses that Medicare does not, such as personal care assistance in the home and community and long-term skilled nursing home care. (Medicare limits nursing home care to 100 days). The one exception, as mentioned above, is that some Medicare Advantage plans cover the cost of some long term care services and supports. Medicaid, via Medicare Savings Programs, helps to cover the costs of Medicare premiums, deductibles, and co-payments.
Long-Term Care Benefits
Medicaid provides a wide variety of long-term care benefits and supports to allow persons to age at home or in their community. Original Medicare does not provide these benefits, but some Medicare Advantage do offer various long term home and community based services. The following list of potential benefits for long term care is not exhaustive, and all benefits may not be available in all states.
- Adult Day Care / Adult Day Health
- Personal Care Assistance (at home, adult foster care homes, and assisted living facilities)
- Medical / Non-Medical Transportation
- Respite Care (to give the primary caregiver a break)
- Congregate Meals / Meal Delivery
- Home Health Aide / Skilled Nursing
- Home Modifications (widening of doorways, installation of ramps, addition of pedestal sinks to allow wheelchair access, etc.)
- Personal Emergency Response Systems
- Housekeeping / Chore Services
- Companion Services
- Transition Services (from nursing home back to home)
- Therapies (physical, occupational, and speech)
- Medication Administration
Both Medicaid and Medicare will provide Durable Medical Equipment, such as wheelchairs and walkers.
Since Medicare is a federal program, eligibility is consistent across the states. One must be a U.S. Citizen or a legal U.S. resident residing in the states for a minimum of 5 years immediately preceding one’s Medicare application. One must also be a minimum of 65 years old OR disabled OR have end-stage renal disease OR have Lou Gehrig’s disease (amyotrophic lateral sclerosis). Eligibility for Medicare is not financially based; There are no income and asset limits.
Persons generally are not charged a monthly premium to receive Medicare Part A (hospitalization insurance). For premium free coverage, a person (or their spouse) must have worked a minimum of 10 years and paid into Medicare. In 2022, the full monthly premium cost is $499. Persons who have worked, but have not met the full work requirements, are able to purchase Medicare Part A at a reduced rate of $274 / month. The annual Part A in-patient hospitalization deductible is $1,566. After the deductible is met, one must pay a cost share (coinsurance) for services.
For Medicare Part B (medical insurance), enrollees must pay a monthly premium of $170.10. There is also an annual deductible of $233.
To enroll in a Medicare Advantage (MA) plan, one must be enrolled in Medicare Parts A and B. The monthly premium varies by plan, but on average, is approximately $20. Not all MA plans charge a monthly premium, but when there is a premium, it is in addition to one’s monthly Part A and Part B premiums, if applicable.
For Medicare Advantage plans that offer long-term home and community based services as a supplemental benefit, medical / functional requirements must be met to receive these benefits.
Eligibility requirements for Medicaid are not as straightforward as are the requirements for Medicare. This is because each state sets their own requirements within federally set parameters. Even within the same state, there are a variety of pathways to Medicaid eligibility and each pathway has their own criteria.
Medicaid has income and asset limits. Generally speaking, in 2022, the individual income limit for institutional Medicaid (nursing home Medicaid) and Home and Community Based Services (HCBS) via a Medicaid Waiver is $2,523 / month, and the asset limit is $2,000. There is some variation of income and asset limits by state. See Medicaid eligibility requirements by state. Applicants must also have a functional need for care, which generally equates to a level of care consistent to that which is provided in a nursing home. Learn more.
Medicare Savings Programs
The income and asset requirements for Medicare Savings Programs do not use the above financial criteria. There are three MSP programs that are relevant to the elderly. In 2022, most states use the limits below, but some states use different guidelines. For example, Alaska, Connecticut, the District of Columbia (DC), Indiana, Maine, Massachusetts, and Hawaii have higher income limits, and some states, such as Alabama, Arizona, Connecticut, Delaware, DC, Louisiana, Mississippi, New York, Oregon, and Vermont do not limit one’s assets.
Qualified Medicare Beneficiary (QMB)
The QMB program helps to pay the monthly premiums for Medicare Part A and Part B, share of costs, coinsurance, and deductibles. The income limit is 100% of the Federal Poverty Level (FPL), plus a $20 disregard. A single applicant can have income up to $1,153 / month and a couple can have up to $1,546 / month. The asset limits are higher than they are for full Medicaid. The limit for a single applicant is $8,400, and the limit for a couple is $12,600.
Specified Low Income Medicare Beneficiary (SLMB)
The SLMB program helps pay the premium for Medicare Part B. The income limit is 120% of the FPL, plus an additional $20 that is disregarded. An individual can have monthly income up to $1,379 and a couple can have up to $1,851. The asset limit is $8,400 for an individual and is $12,600 for a couple.
Qualifying Individual (QI)
The QI program, also called Qualified Individual, helps pay the monthly premium for Medicare Part B. The income limit is 135% of the FPL, plus a $20 disregard. A single applicant can have income up to $1,549 / month, and couples, up to $2,080 / month. Assets are capped at $8,400 for an individual and $12,600 for a couple.
Becoming Medicaid Eligible
Income and assets over the Medicaid limit(s) in one’s state is not cause for automatic disqualification. This is because there are Medicaid-compliant planning strategies intended to lower one’s countable income and / or assets to meet the limit(s).
A word of caution: Medicaid has a look-back period that immediately precedes one’s date of long-term care Medicaid application. During this period, past asset transfers are reviewed to ensure an applicant (and / or an applicant’s spouse) has not gifted assets or sold them under fair market value. If this rule has been violated, it is assumed the assets were transferred to meet Medicaid’s asset limit, and a penalty period of Medicaid disqualification will be calculated. An exception exists for California, which has a more lenient look back period of 2.5 years. New York is another exception in that there currently is no look back period for long-term home and community based services. However, the state will implement a 2.5 year look back period no earlier than March 31, 2024.
How to Apply
To apply for Medicare, contact your local Social Security Administration (SSA) office.
To apply for Medicaid, contact your state’s Medicaid agency. Persons might find it helpful to learn about the long-term care Medicaid application process. Prior to applying, one may wish to take a non-binding Medicaid eligibility test. The results of which will help families know if a loved one might be eligible for Medicaid or if they need to work with a Medicaid planning professional to become eligible.