Medicare vs. Medicaid

What is Medicare? Medicare is a social insurance program administered by the United States government providing health insurance coverage to people ages 65 and over and to those under 65 who are permanently physically disabled or who have a congenital physical disability. (Centers for Medicare and Medicaid Services; CMS)

What is Medicaid? Medicaid is the United States health program for certain people and families with low incomes and resources and is jointly funded by the state and federal governments, and is managed by the states. Medicaid is the largest source of funding for medical and health-related services for people with limited income in America.

Who pays for Medicare? Medicare is financed by payroll taxes imposed by the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act of 1954. Employees pay 2.9% from their wages; 1.45% from the worker and 1.45% from the employer.

Who pays for Medicaid? States provide up to half of the funding for the Medicaid program. In some states, counties contribute to the funds as well.

Who is eligible for Medicare? Anyone that is 65 years or older and has been a legal resident for at least 5 years is eligible for Medicare. People with disabilities are eligible as well if they have received Social Security Disability Insurance (SSDI) benefits. Some Medicare premiums are waived if:

• The person receiving Medicare is 65+ and has been a U.S. citizen for 5 continuous years and they or their spouse has paid Medicare taxes for at least 10 years.
• They are under 65, disabled, and have been receiving either SSDI benefits or Railroad Retirement Board disability benefits which they must receive for at least 24 months from date of entitlement.
• They are eligible for SSDI and have amyotrophic lateral sclerosis.
• Those who are 65+ and they or their spouse have not paid Medicare taxes for 10 years must pay a monthly premium.

Who is eligible for Medicaid? Eligibility is determined largely by lower incomes. This can include children, pregnant women, parents of eligible children, people with disabilities, and elderly needing nursing home care. While CMS set out the general rules under which Medicaid operate, each state runs its own program. Therefore under certain circumstances, an applicant may be denied coverage and as a result the eligibility rules differ from state to state.

Benefits Of Medicare

• Hospital Insurance [ ($248.00 per month for those with 30-39 quarters of Medicare-covered employment) ($450.00 per month for those with fewer than 30 quarters of Medicare-covered employment and who aren’t otherwise eligible for premium-free Part A coverage) ]
• Medical Insurance [ $96.40 per month ]
• Medicare Advantage Plans [ May or may not charge premium; may also choose to rebate a portion of the Part B premium to the member ]
• Prescription Drugs [ May or may not charge premium ]

Costs and Funding Challenges of Medicare In 2008, Medicare provided health care for 45 million Americans. The cost of Medicare doubles almost every four years and spending increases in response to an increase in overall health care. Medicare spending reached 16% of all federal spending and grew to 20% in 2008. According to reports, Medicare will spend more than it brings in from its taxes and is expected to grow about 7% per year for the next 10 years.

Budget for Medicaid Medicaid spending has totaled up to about 16.8% of state general funds on the program. This takes up 22% of each state’s budget. Medicaid payments assist 60 percent of all nursing home residents and about 37 percent of all childbirths in the Unites States. The federal government pays 57% of Medicaid expenses on average.