Knowing the difference between Medicare and Medicaid (Part I)

Medicare and Medicaid are two governmental programs that provide medical and health-related services to specific groups of people in the United States. Although the two programs are very different, they are both managed by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services.

Medicare is a social insurance program that serves more than 44 million enrollees (as of 2008). The program costs about $432 billion, or 3.2% of GDP, in 2007. Medicaid is a social welfare (or social protection) program that serves about 40 million people (as of 2007) and costs about $330 billion, or 2.4% of GDP, in 2007. Together, Medicare and Medicaid represent 21% of the FY 2007 U.S. federal government. Both Medicaid and Medicare were created when President Lyndon B. Johnson signed amendments to the Social Security Act on July 30, 1965.

Medicaid is a means-tested health and medical services program for certain individuals and families with low incomes and few resources. Primary oversight of the program is handled at the federal level, but each state:

1. Establishes its own eligibility standards,
2. Determines the type, amount, duration, and scope of services,
3. Sets the rate of payment for services, and
4. Administers its own Medicaid program.

What services are provided with Medicaid?

Although the States are the final deciders of what their Medicaid plans provide, there are some mandatory federal requirements that must be met by the States in order to receive federal matching funds. Required services include:

1. Inpatient hospital services
2. Outpatient hospital services
3. Prenatal care
4. Vaccines for children
5. Physician services.
6. Nursing facility services for persons aged 21 or older
7. Family planning services and supplies
8. Rural health clinic services
9. Home health care for persons eligible for skilled-nursing services
10. Laboratory and x-ray services
11. Pediatric and family nurse practitioner services
12. Nurse-midwife services
13. Federally qualified health-center (FQHC) services and ambulatory services
14. Early and periodic screening, diagnostic, and treatment (EPSDT) services for children under age 21

States may also provide optional services and still receive Federal matching funds. The most common of the 34 approved optional Medicaid services are:

1. Diagnostic services
2. Clinic services
3. Intermediate care facilities for the mentally retarded (ICFs/MR)
4. Prescribed drugs and prosthetic devices
5. Optometrist services and eyeglasses
6. Nursing facility services for children under age 21
7. Transportation services
8. Rehabilitation and physical therapy services
9. Home and community-based care to certain persons with chronic impairments

Who is eligible for Medicaid?

Each state sets its own Medicaid eligibility guidelines. The program is geared towards people with low incomes, but eligibility also depends on meeting other requirements based on age, pregnancy status, disability status, other assets, and citizenship.

'States must provide Medicaid services for individuals who fall under certain categories of need in order for the state to receive federal matching funds. For example, it is required to provide coverage to certain individuals who receive federally assisted income-maintenance payments and similar groups who do not receive cash payments. Other groups that the federal government considers "categorically needy" and who must be eligible for Medicaid include:

1. Individuals who meet the requirements for the Aid to Families with Dependent Children (AFDC) program that were in effect in their state on July 16, 1996
2. Children under age 6 whose family income is at or below 133% of the Federal poverty level (FPL)
3. Pregnant women with family income below 133% of the FPL
4. Supplemental Security Income (SSI) recipients
5. Recipients of adoption or foster care assistance under Title IV of the Social Security Act
6. Special protected groups such as individuals who lose cash assistance due to earnings from work or from increased Social Security benefits
7. Children born after September 30, 1983 who are under age 19 and in families with incomes at or below the FPL
8. Certain Medicare beneficiaries

States may also choose to provide Medicaid coverage to other similar groups that share some characteristics with the ones stated above but are more broadly defined. These include: Infants up to age 1 and pregnant women whose family income is not more than a state-determined percentage of the FPL

1. Certain low-income and low-resource children under the age of 21
2. Low-income institutionalized individuals
3. Certain aged, blind, or disabled adults with incomes below the FPL
4. Certain working-and-disabled persons with family income less than 250 percent of the FPL
5. Some individuals infected with tuberculosis
6. Certain uninsured or low-income women who are screened for breast or cervical cancer
7. Certain "medically needy" persons, which allow States to extend Medicaid eligibility to persons who would be eligible for Medicaid under one of the mandatory or optional groups, except that their income and/or resources are above the eligibility level set by their State

Medicaid does not provide medical assistance for all poor persons. In fact, it is estimated that about 60% of America's poor are not covered by the program. 

Who pays for services provided by Medicaid?

Medicaid does not pay money to individuals, but operates in a program that sends payments to the health care providers. States make these payments based on a fee-for-service agreement or through prepayment arrangements such as health maintenance organizations (HMOs). 

Each State is then reimbursed for a share of their Medicaid expenditures from the Federal Government. This Federal Medical Assistance Percentage (FMAP) is determined each year and depends on the State's average per capita income level. Richer states receive a smaller share than poorer states, but by law the FMAP must be between 50% and 83%.

States may impose nominal deductibles, coinsurance, or copayments on some Medicaid beneficiaries for certain services. However, the following Medicaid beneficiaries must be excluded from cost sharing:

1. Pregnant women,
2. Children under age 18, and
3. Hospital or nursing home patients who are expected to contribute most of their income to institutional care.

All Medicaid beneficiaries must be exempt from copayments for emergency services and family planning services.

Discover Medicare in Part II 

Medicare Expansion Plan Dumped

The new Medicare expansion plan would have allowed people 55 and older to buy into Medicare. The bill would have increased health care spending and reportedly contained unrealistic expectations to save money on Medicare.

Senate democrats backed off this Medicare expansion plan as a compromise in exchange for the government operated insurance option in health care reform. Republicans and several Democrats complained that Medicare is a budget busting program that under pays for medical services and this new bill leave the insured with fewer doctors willing to provide service as many had expressed their intention to opt out of the Medicare practice. It's back to the drawing board in 2010.

Meanwhile it's "Open Enrollment" for individuals that wish to participate in any Medicare Supplement plans, also known as Medi-Gap policies. For more information or to receive an instant Medicare Supplement quote from America's finest companies, visit QuoteBroker Insurance Services online or call (800) 783-0802

What is Medi-Gap Insurance?

Medi-Gap Insurance, aka Medicare Supplement Policies cover the costs Medicare doesn't.

Medicare provides beneficial coverage for Seniors health related expenses but, at the same time, leaves gaps that you either pay for out-of-pocket or with private insurance. A Medicare supplement insurance policy (also called Medigap) is a health insurance policy sold by a private insurance company to help fill in those gaps.

With Medicare supplement insurance:

• There are no restrictive networks; you control and choose the physicians, specialists, and hospitals that you trust for your care

• You can go directly to the physicians you choose without pre-certifications and pre-approvals

• The benefits offer predictability and stability as the plans are standardized by the government
• You have coverage that helps with deductibles, copayments, and coinsurance
• There are 12 standardized Medicare supplement plans that offer varying amounts of coverage – with Plan (A) providing basic benefits and Plan (J) offering more comprehensive coverage.

Medi-gap - Medicare Supplement plans can be shopped online. This is the easiest way to compare plans, features and prices offered by health insurance companies competing for your business. QuoteBroker offers free insurance quotes from several different Medicare Supplement carriers in your area.

Medicare Open Enrollment - Health Plan & Rx Changes for 2008

This is the time of year that individuals can switch their existing health or Rx plan for another companies plan. Open enrollment started on November 15, 2007 and will close on December 31st, 2007 . If you are not age 65, but have received your Red, White and Blue card, you can also enroll at this time. For individuals turning age 65 later in 2008, you will receive the same Red, White and Blue card approximately 30-60 days before your birthday. You will have an open enrollment period at that time. Then you will only be able to switch once a year.

There are a number of no cost programs, as well as moderately priced Medicare supplemental health insurance plans available to individuals receiving Medicare Benefits. Let review the basics.

First, the Original Medicare Plan:

This fee-for-service plan covers many health care services. You can go to any doctor or supplier that is enrolled and accepts Medicare and is accepting new Medicare patients, or to any hospital or other facility.

The Original Medicare Plan is a fee-for-service plan managed by the Federal Government. In general, with the Original Medicare Plan:

• You use your red, white, and blue Medicare card when you get health care.
• You can go to any doctor or supplier that accepts Medicare and is accepting new Medicare patients, or to any hospital or other facility.
• You pay a set amount for your health care (a deductible) before Medicare pays its part. Then, Medicare pays its share, and you pay your share (your coinsurance or copayment) for covered services and supplies (unless you have a Medigap policy or other supplemental insurance that may pay for these costs.)
• You may have a Medigap policy or other supplemental coverage that may pay deductibles, coinsurance, or other costs that aren’t covered by the Original Medicare Plan.

Medicare Health Plans (like HMOs and PPOs)

These plans are approved by Medicare and run by private companies. When you join one of these plans, you are still in Medicare. Some of these plans require referrals to see specialists. They provide all of your Part A (hospital) and Part B (medical) coverage. They generally offer extra benefits, and many include prescription drug coverage. These plans often have networks, which means you may have to see doctors who belong to the plan or go to certain hospitals to get covered services. In many cases, your costs for services can be lower than in the Original Medicare Plan, but it is important to check with the plan because the costs for services will vary.

Medicare Advantage Plans are health plan options that are approved by Medicare but run by private companies. They are part of the Medicare Program, and sometimes called "Part C." When you join a Medicare Advantage Plan, you are still in Medicare. With Medicare Advantage Plans:

• Some of the plans require referrals to see specialists.
• In many cases, the premiums or the costs of services (co-pays and deductibles ) can be lower than they are in the Original Medicare Plan or the Original Medicare Plan with a Medigap policy. Medicare Health Plans charge different premiums and have different costs of services, so it is important to check with the plan before you join.
• The plans provide all of your Part A (hospital) and Part B (medical) coverage and must cover medically-necessary services.
• They often have networks, which means you may have to see doctors who belong to the plan or go to certain hospitals to get covered services.
• They generally offer extra benefits, and many include prescription drug coverage.
• In many cases, your costs for prescription drug coverage can be lower than in the stand-alone Medicare Prescription Drug Plans.
• Some of the plans coordinate your care, using networks and referrals, more than others. This can help manage your overall care and can also result in savings to you.
• You don’t need to buy a Medigap policy.

Medicare Health Plans include:

• Health Maintenance Organization (HMO)
• Preferred Provider Organization (PPO)
• Private Fee-for-Service (PFFS) Plans
• Medicare Medical Savings Account (MSA) Plans
• Medicare Special Needs Plans.

Medicare Prescription Drug Plans

These plans add prescription drug coverage to the Original Medicare Plan, some Medicare Cost Plans, some Medicare Private Fee-for-Service Plans, and Medicare Medical Savings Account Plans.

Medicare Prescription Drug Plans are offered by insurance companies and other private companies approved by Medicare. They add coverage to:

• The Original Medicare Plan
• Some Medicare Cost Plans
• Some Medicare Private Fee-for-Service Plans, and
• Medicare Medical Savings Plans.

With a Medicare Prescription Drug Plan:

• Generally, you pay less for your prescriptions.
• You will get a plan member card after you enroll. You use this card when you go to the pharmacy to get your prescriptions filled.
• You will pay the co-payment, coinsurance, and/or deductible, if any.

If you have limited income and resources, you may get extra help to pay for your Medicare drug plan costs.

If you want to compare Medicare Prescription Drug Plans, use the Medicare Prescription Drug Plan Finder.

Medigap (Medicare Supplement Insurance) Policies

These policies help pay some of the health care costs that the Original Medicare Plan doesn’t cover. If you are in the Original Medicare Plan, you could get a Medigap policy to help cover the extra health care costs.

Medigap policies are health insurance policies sold by private insurance companies to fill "gaps" in Original Medicare Plan coverage. In general, with a Medigap policy:

• You get help paying for some of the health care costs that the Original Medicare Plan doesn’t cover.
• You also get benefits not covered by Original Medicare, like emergency health care outside the United States.
• You pay a monthly premium to the private health insurance company that sells you the policy. Medicare and the Medigap policy both pay their shares of covered health care costs.

For Medigap or supplement plans - click here

For additional information contact the U.S. Department of Health Services: http://www.medicare.gov/