Health insurance can be complicated to navigate. And government-assisted insurance — such as Medicare and Medicaid — is no exception. For starters, the names are almost identical. Second, one can be eligible for both.
The basics: Medicare is funded entirely by the federal government, while Medicaid is supported by federal and state funds. In general, Medicare is for people 65 years and older, and Medicaid provides insurance to those with lower incomes.
For individuals who are age 65 and older, here’s what you need to know: You are automatically eligible for Medicare if you are a U.S. citizen or have been living legally in the United States for at least five years.
Just like private insurance programs, Medicare offers several levels of coverage. You will not pay a monthly fee for the first level — Part A, also called Hospital Insurance, which covers inpatient hospital visits. The second tier, Part B, also called Medical Insurance, covers doctors’ visits and other outpatient care. You will most likely pay a monthly fee for Part B (this is where Medicaid can help those with lower incomes).
Medicare Advantage insurance (Part C) is offered by private companies approved by Medicare, and includes Part A and Part B coverage. The federal government pays a fixed monthly amount to the companies offering Medicare Advantage Plans and you pay the rest.
Medicare has prescription drug coverage in its stand-alone drug program (Part D), which can be added to any of the levels already mentioned.
Medicare is also available for people under the age of 65 who have certain disabilities or end-stage kidney disease.
Regardless of your age, if you are a U.S. citizen, and have high medical bills and low income, you might be eligible for Medicaid. For instance, 2012 average cutoffs for income include: maximum of $8,818 per year for individuals and up to $15,208 per year for those supporting four people (including oneself). For individuals who are blind, disabled or age 65 and older, the average maximum eligible income goes up to $9,500/yr for an individual and $18,070/yr for a four-person household. (These income levels vary by state.)
There are exceptions to the income requirements, for example, for pregnant women and children.
The medical benefits offered under Medicaid insurance vary from state to state. However, in general, Medicaid offers more coverage than Medicare and is less expensive; some programs require a small co-pay for certain services. However, eligible individuals are not required to pay a monthly fee as they are for parts of Medicare.