While both Medicaid and Medicare are related to medical aid, they are not the same thing and they have different qualification criteria. However, before we delve into the differences, it is important to understand what they are and whom they help.
Medicare: Medicare is an entitlement program funded by tax revenue and administered by the U.S. government. While the Social Security program provides general financial support, the federal government’s Medicare program provides financial support exclusively designated for medical expenses to those who need it.
Medicare consists of money accumulated through taxation, and it is administered by the government to enrolled recipients who may have higher-than-average medical expenses. U.S. citizens eligible for Medicare include people who are older than 65 and people with a lifelong physical disability over 50. The Medicare program comprises four separate entitlement programs — Parts A, B, C, and D — which provide medical insurance, hospital insurance, and prescription drug benefits.
Medicaid: Medicaid is a federal program akin to the food stamp entitlement program, in which recipients must be in low-income households. While Medicare provides healthcare benefits for the elderly and the physically disabled, Medicaid is financial aid for low-income earners designated for medical care. In essence, Medicaid transfers wealth from the financially secure to the financially strained to ensure appropriate access to medical care.
Simply put, Medicare and Medicaid provide healthcare funding for the elderly, physically disabled, and low-income earners.
Another critical point to note is that one’s current assets and income have nothing to do with a person’s eligibility for Medicare, Medicaid is entirely income-dependent. Another point to remember is that you can qualify for Medicare without Medicaid, Medicaid without Medicare, or both Medicare and Medicaid.
Most U.S. citizens believe that, once they turn 65, their health insurance worries come to an end. They also think that Medicare, an entitlement program into which they paid throughout their working lives, will take care of their needs during the years when they need health coverage most.
Although every U.S. citizen is entitled to Medicare coverage, and those with low incomes can apply for Medicaid, these are not the cover-all health policies that many people consider them to be. This is why, whenever they make a claim, many people find themselves in a world of disappointment.
First misconception: Many Medicare recipients think that, once Medicare has paid everything it is supposed to cover, Medicaid will come in to pay for the remainder.
However, one must remember that this may or may not be accurate and works only if the person meets all eligibility criteria for Medicaid. Medicaid is a healthcare program exclusively designed to meet the needs of low-income individuals. Unless the Medicare recipient can meet the financial guidelines that the U.S. has established for the entitlement program, Medicaid will not pay for anything. This is why Medicare recipients should also have supplemental insurance.
Many U.S. citizens also believe that, to qualify for Medicaid, all they have to do is transfer their assets to a family member to decrease their apparent net worth. However, this is not true at all. Instead, if you transfer assets for the purpose of receiving Medicaid coverage, you might end up facing a significant penalty.
The reason is that, whenever a new application is filed, the government looks back at the person’s finances for the past five years. If they find that you have transferred a significant amount of money and property to a sibling or child, you may be penalized or disqualified.
Second misconception: Medicare will defray the costs of home care or hospital care.
The truth is that Medicare does not come into play until you have been in the hospital for at least three days. If you require skilled care or rehabilitation following your hospital stay, Medicare will only pay for the first 100 days. Certain patients who require physical therapy or other care may qualify for additional Medicare benefits.
Also, some people think that it is simple to sign up for Medicaid if a need arises. Unfortunately, this is also not true. Although the procedure is different in each state, you will still need to prove your eligibility, regardless of where you live, and this can take a lot of time.
You may be required to produce pay stubs (if you are still working), bank statements, proof of age and citizenship, and proof of income (Social Security), along with evidence of any insurance policies that you might own. If you are initially denied, it is good to start the appeal process as soon as you can to be sure you can have the benefits available when you need them.