Medicaid and Medicare are the two largest publicly funded health programs in the country, with different missions that often overlap. Medicare provides health coverage to seniors and some individuals with disabilities. Medicaid covers adults and children who cannot afford insurance, or who have health care costs they cannot afford. Often, an individual will be eligible for coverage through both programs. The following blog will describe how Medicare and Medicaid interact. Part one gives an overview of Medicare, what it covers, and what options are available for more coverage. Part two will describe how Medicare and Medicaid work together.
Part 1: Medicare, MediGap, and Medicare Advantage
For many seniors, health insurance coverage can be very confusing. Most seniors know that they are eligible for Medicare when they reach age 65, but it’s easy to get confused about what is and isn’t covered. Let’s dive into the different Medicare options to help make things clear.
What is Medicare?
Medicare is a Federal program for those over age 65 and individuals enrolled in Social Security disability programs. Medicare is divided into multiple Parts. Part A covers hospitalization, surgery, and short-term rehabilitation. Part B covers doctor visits, outpatient care, ambulances, mental health services, and some prescriptions. Part C is better known as Medicare Advantage, and is an option to have private insurance instead of Medicare. The newest Medicare program is Part D, which covers prescription drugs.
Medicare Parts A and B are often referred to as “Original Medicare”. Seniors eligible for Social Security are automatically enrolled in Parts A and B. They don’t have to pay premiums for Part A and can opt-out of Part B. Seniors who aren’t eligible for Social Security can still enroll in Part A, but they must pay a monthly premium and must enroll in Part B as well.
Seniors who are retired should enroll in both A and B as soon as they are eligible. If they enroll late, they may be penalized by having to pay Part A premiums or a higher premium for Part B. Seniors who are still working or whose spouse is still working may be able to delay enrolling in Medicare and keep the insurance provided by the employer.
Does Medicare cover everything I need for free?
Original Medicare provides basic coverage, but it is not cost-free. Both Part A and Part B have deductibles, co-pays, and limits on services. For example, Medicare Part A has a $1,484 deductible for each hospitalization, charges a daily co-pay for hospital stays longer than 60 days, and has a lifetime limit on coverage. Medicare Part B charges monthly premiums of $148.50 and has very limited coverage for prescription drugs. Original Medicare does not cover dentures or dental care, eye exams, hearing aids, or routine foot care. For many seniors, these services are an essential part of their heath care. To get coverage beyond what Original Medicare offers, seniors can either purchase MediGap supplemental insurance or opt for Medicare Advantage.
What is the difference between MediGap and Medicare Advantage?
Seniors on Medicare can get additional health coverage through private insurance. They can either purchase a MediGap policy or they can opt to enroll in Medicare Advantage. The key difference between the two is that MediGap keeps Original Medicare while Medicare Advantage replaces it entirely. With MediGap, the basic coverage remains the same, but the MediGap policy covers the deductibles and co-pays and can provide dental and vision coverage. Additionally, MediGap can cover prescription drugs through Medicare Part D. There are a set number of standard MediGap policies, and they are available anywhere in the US. Almost all MediGap policies will be accepted everywhere Medicare is accepted. MediGap policies limit out-of-pocket costs and cover more services but charge significant premiums on top of the basic Medicare premiums.
Medicare Advantage plans replace Original Medicare entirely. With Advantage, the government gives a private health insurance company a fixed amount of money to provide coverage. Medicare Advantage plans have very low out of pocket costs, often no additional premiums, and cover things that Original Medicare does not. However, the insurance company can limit coverage to in-network doctors and hospitals. The insurance company has greater ability to deny claims, which are more difficult to appeal than traditional Medicare. Different Advantage plans are offered in different areas and moving from one area to another can mean losing coverage.
The rules around Medicare enrollment can be confusing, we hope the information above helped clarify what Medicare is and what it covers. The Medicaid/Medicare world is complex, we know you’ll have questions, and we are here for you as you plan for your future.