There can be a lot of confusion concerning Medicare and Medicaid, and whether your investments or savings can impact either one. The biggest Medicare and Medicaid difference is that Medicare is a federal program providing health care coverage to adults 65 or older, while Medicaid is a combined federal and state program that provides healthcare to those who fall into a low income bracket. Medicare can be provided to people under the age of 65 if they are disabled. Medicare is provided to people regardless of their income level, whereas Medicaid is only available to those of lower income.
It is possible to be eligible for both Medicare and Medicaid, and using both of these government services can help people receive healthcare while lowering the associated costs. Below we look at three more differences between Medicare and Medicaid, as well as areas where these two programs are similar.
Medicare and Medicaid difference #1: Program type
Medicare is considered to be an insurance program whereas Medicaid is an assistance program.
Coverage varies between program type as well, and there are two main categories where Medicaid provides coverage while Medicare does not. These are custodial care and nursing home care. Custodial care involves daily activities associated with personal care and nursing home care primarily focuses on long-term stays.
Medicare and Medicaid difference #2: Payment type
Payment is different for both Medicare and Medicaid. Since Medicare is an insurance program, the eligible users of this service are expected to pay for part of the expenses associated with their medical care. This payment is done through a deductible, and there may be small monthly payments involved, or larger payments due to hospital stays or medical procedures.
As an assistance program, Medicaid typically does not involve payments associated with medical procedures or hospital stays. However, a small co-payment may be involved for certain users in some specific situations and those are dependent on the state’s Medicaid regulations. There are still usually exemptions in these scenarios.
For instance, children are often exempt from required out-of-pocket Medicaid payments. Furthermore, any co-payments associated with Medicaid are based on the Federal Poverty Level Guidelines. It is worthy noting that some assets owned by an individual could play a part in whether or not the person qualifies for Medicaid. Some of these assets impacting eligibility include stocks and bonds, money in savings or checking accounts, secondary property or vehicles.
Medicare and Medicaid difference #3: Variety
Because it is a combined federal and state program, the guidelines of coverage and assistance for Medicaid can vary from state to state. Medicare, on the other hand, is essentially the same regardless of the state.
The Centers for Medicare & Medicaid Services, an agency within the United States’ federal government, oversees the Medicare program. On the other hand, Medicaid is overseen by a combination of state and local governments.
Understanding your investing career in conjunction with Medicare and Medicaid
Medicare and Medicaid are both government programs, and they both started in 1965. They were developed to help older Americans and those with lower incomes or specific needs afford and receive healthcare.
Many seniors ask about their investments and whether or not they will impact eligibility associated with Medicaid or Medicare. Fortunately, people are allowed to have assets and still utilize benefits from a Medicaid program. Every individual Medicaid applicant is allowed to keep $2,000 in countable liquid assets while remaining eligible for Medicaid coverage. These liquid assets include cash, stocks, bonds, and CDs, among others. Each individual state has state-specific requirements which may lead to greater savings.
Other assets play part in Medicaid eligibility too. A primary residence is one such asset. The person will be eligible as long as the home is located in the same state that the applicant is applying for Medicaid in and the property is valued under a certain amount of money. The max equity value of the house is often listed as $595,000 or less, however that max amount can vary by state. California, for instance, does not have a max equity value limit for primary residences.
In regards to Medicare, your up-front costs may change once you begin receiving Medicare coverage. You may have a higher premium to pay. Some investors will turn to their portfolio to help pay the additional costs. CDs or dividend-focused ETFs are examples of the investments often used.
How do you plan on changing your investing strategy in regards to Medicare or Medicaid eligibility?