Medicaid Versus Medicare

People with special needs may qualify for
a variety of government benefits, including Medicaid and Medicare. It
can be difficult to tell the two programs apart, especially because
their names are so similar. However, Medicaid and Medicare, which
account for the lion's share of federal spending on health care, are
dramatically different programs with different eligibility requirements
and benefits. Here's how the two programs differ.

Means-Tested Means Medicaid

Medicaid
is a state and federal partnership program that gives medical coverage
to selected groups with low-incomes — children, pregnant women,
parents of eligible children, people with disabilities, and elderly in
need of long-term care. In order to qualify for Medicaid, a person must
generally have a low monthly income, and in certain cases he may not
have many resources in his own name. Because eligibility is based on a
person's income and assets, Medicaid is known as a means-tested program.

Medicare
is a pure health insurance system that is open any member of a
qualifying group, regardless of income or assets. Although people over
age 65 make up the majority of Medicare beneficiaries, younger people
with disabilities can also qualify for Medicare benefits if they have
been eligible to receive Social Security Disability Insurance (SSDI)
benefits for at least two years. Even people who have not paid into the
Social Security system could qualify for benefits on a parent's work
record in certain situations.

Medical Coverage Varies Depending on the Program

Medicare,
which is run primarily by the federal government, offers three main
types of coverage. Part A covers hospital visits and some follow-up
care, Part B covers doctor visits and other outpatient care, and Part D
provides prescription drug coverage. (Part C, also known as Medicare
Advantage, is a managed care alternative to regular Medicare that is
offered by private insurers working with the federal government.)
Although Medicare covers a variety of treatments and physicians, it does
not pay for long-term care in a skilled nursing facility other than for
short rehabilitation stays, and it usually does not completely cover a
beneficiary's hospital or doctor costs. To make up for these
shortfalls, many Medicare recipients purchase private Medigap insurance
plans that provide coverage for services or costs that Medicare does not
cover.

Medicaid is a joint
program between the states and the federal government, and each state is
given much wider latitude to pick and choose the programs it offers
residents. Some Medicaid programs are very comprehensive and cover
everything a patient could need, while other Medicaid programs,
especially so-called Medicaid waiver programs, target specific
demographic groups, like people with developmental disabilities.
Medicaid is, however, the primary federal insurer for long-term care.

To Payback or Not to Payback

Because
Medicaid is a means-tested program, a potential beneficiary with too
many resources (assets) may have to place some of his funds into a
special needs trust in order to obtain benefits. There a two main types
of special needs trusts that hold a beneficiary's own funds: first-party special needs trusts and pooled trusts.
In both cases, when the trust beneficiary dies, the funds remaining in
the trust must be used to pay back the government for services received
from Medicaid.

Because
Medicare is an insurance program, a beneficiary is not usually required
to repay the government when she receives benefits. However, in some
cases involving workers compensation and other claims, a Medicare or
potential Medicare beneficiary must set up a Medicare set-aside trust that is designed to cover a portion of his future care.

Dual Eligibles

It
is possible to qualify for both Medicaid and Medicare at the same time,
and people who receive benefits from both programs are called dual
eligibles. Unfortunately, Medicaid and Medicare were not designed to
work together, and coordination is not always easy. In many cases, dual
eligibles have their Medicare premiums paid by their state Medicaid
program, and because states are reluctant to provide services to people
who also receive Medicare, they often fight with doctors and other
medical providers over which program should be billed for care. Most
dual eligibles are required to receive drug coverage from a Medicare
Part D prescription drug plan, instead of through the typically broader
drug benefits provided through Medicaid.

Not
everyone who receives health benefits from the government understands
exactly what they are receiving. If you have questions about your
health care program, or if you would like to know if you may qualify for
additional benefits, talk to your special needs planner today.