Home > Personal Finance > A Quick Guide to the Difference Between Medicaid & Medicare

Comments 0 Comments

Medicare and Medicaid may sound alike, but these government health insurance programs are dramatically different from one another. Here’s a brief overview.

What Is Medicare?

Administered by the federal government, Medicare is a health insurance program primarily for adults who are 65 years of age or older and have paid into the Social Security system for at least 40 quarters (about 10 years). An individual who lacks the necessary work credits can also benefit from the program through their spouse, as can individuals who are younger than 65 but have received Social Security Disability Insurance payments for at least two years.

What Medicare Covers

There are different parts to Medicare that make it a veritable “alphabet soup.” For example, Medicare Part A covers mostly in-patient hospital care and provides a minimal benefit for skilled nursing care and hospice care. Medicare Part B covers the costs of outpatient care, such as doctors’ visits, lab tests and preventative care. Medicare Part C is the Medicare Advantage program and an alternative to Medicare parts A and B.

Like most types of insurance, Medicare parts A, B and C include co-pays and deductibles. Generally, the amount of income you earn and the amount of assets you own are irrelevant for participation, so paupers, billionaires and everyone in between can be eligible.

Surprisingly, given that Medicare is primarily a program for individuals 65 and older, the program covers just a small portion of the cost of a nursing home stay. At most, it fully covers the costs associated with the initial 20 days of a stay and provides only partial coverage for the next 80 days. In addition, for a stay to be covered, a patient must meet certain requirements.

For example, the patient must have been hospitalized for at least three consecutive days directly prior to receiving care at a nursing home and that care must be considered medically necessary. Because of these requirements, patients or their families are often forced to pay out of pocket for nursing home care or seek relief from Medicaid.

What Is Medicaid?

Medicaid (known as Medi-Cal in California) is a federal-state program. It primarily acts as a safety net for those who can’t pay for healthcare.

Seniors can participate in Medicaid if they pass three tests: a medical necessity test, an asset test and an income test.

The medical necessity test requires that skilled nursing care is necessary to address the patient’s medical needs. The asset test places strict limits on how much property a patient and the patient’s spouse can own while benefiting from Medicaid. The income test limits how much individuals and couples may earn to be eligible for Medicaid.

There are ways to get around these eligibility tests if you or a loved one can’t pass them but want Medicaid to help pay for the cost of a nursing home stay. However, doing so may require the help of an attorney who practices elder law. A relatively new kind of law, elder law can help individuals preserve their assets and qualify for Medicaid. (Disclosure: The Wiewel Law firm, in Austin, Texas, specializes in estate planning.)

Remember, Medicaid planning is a complicated process and even a small error can mean the program will refuse to help pay for the cost of a nursing home stay. Be sure to speak with an expert if you have concerns.

Image: shapecharge

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team