A Quick Guide to the Difference Between Medicaid & Medicare

Medicare and Medicaid may sound alike, but the health insurance programs are wildly different. Here's a quick primer.

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.

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Report: 600,000 Veterans Could Go Without Health Insurance Next Year

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A new Urban Institute report predicts that more than 600,000 veterans will go without health insurance in 2017 unless there are policy changes to the Medicaid program. They point out that more than half of those veterans live in the 19 states that have not expanded Medicaid.

“If Medicaid expansion decisions do not change between now and 2017, we project that approximately 604,000 veterans will be uninsured in 2017 and that 54% will be living in states that have yet to expand Medicaid,” according to the report.

In May 2011, the Urban Institute, supported by the Robert Wood Johnson Foundation, began studying the effects the Patient Protection and Affordable Care Act of 2010 had on citizens. The findings in the September 2016 report are based off analysis of data from the 2011 – 2015 National Health Interview Survey (NHIS), 2013 – 2014 American Community Survey (ACS) and U.S. Census Bureau.

The report notes that, even with Medicaid expansion, thousands of veterans are going to be left without a way to pay for medical care, as they all aren’t eligible for care provided by the Department of Veterans Affairs. It estimates that 38% of veterans would become part of the “assistance gap,” meaning they are not in the low-income category that qualifies them for Medicaid, but are making too much money to qualify for federal Obamacare health insurance subsidies. (It’s important to note that Medicaid expansion doesn’t come without costs — states have to figure out a way to pay for it.)

The researchers predict that, while fewer than 1 in 10 uninsured veterans in certain states would qualify for Medicaid in 2017 based on current expansion plans, “a projected 47% would qualify if all 19 states chose to expand.”

How Medical Debt Can Affect You

Medical debt can become a major burden and may even damage your credit, no matter if you’re a veteran, on active duty or a civilian. This can complicate things when it comes time to get a mortgage, take out a loan for a car or even apply for a job (many employers look at a version of your credit report as part of the application process).

If you’re currently laden with medical debt, it’s a good idea to review your bills for any errors, like double charges or other incorrect entries, that may help that number come down. And, while it may be challenging, it’s important to remember that you need to make your bill payments on time to maintain good credit. (You can see how your medical debts are affecting your credit by taking a look at two of your free credit scores, updated every 14 days, on Credit.com and by getting copies of your free annual credit reports through AnnualCreditReport.com.) If you need assistance with paying these bills, consider talking with a professional to see what your options are.

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