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How to pay for senior medical services: Medicare vs Medicaid

Find out how these government programs can help you finance medical expenses

by Zack Reeves ConsumerAffairs Research Team
Doctor with clipboard and senior woman

Introduction

More than 25 million Americans aged 60 and over are economically insecure according to the National Council on Aging, so finding and affording health care is a struggle for many older Americans. Medicare and Medicaid can help.

Medicare covers over 55 million people, and Medicaid covers over 69 million people, making them the largest U.S. agencies helping seniors and their caregivers pay for health care.

Life in later years should be about enjoying quality time with your loved ones, not struggling with a financial burden. Use this resource to find out how Medicare and Medicaid can help you pay for senior medical services.

Senior couple on laptop

Signing up: Medicare vs Medicaid

Medicare

Once American citizens turn 65, they’re eligible for Medicare. If they’ve worked and paid Social Security and Medicare taxes for at least 10 years, they’re eligible to get Medicare without paying a monthly premium. If you haven’t worked that long, you might not be eligible.

Medicare has different parts: Part A, Part B, Part C and Part D. (Medicare Supplemental Insurance, sometimes referred to as “Part C,” is not part of original Medicare. Part D covers prescription drugs. This article will focus on Parts A and B.)

  • Part A: Covers hospital care, skilled nursing facility care, skilled nursing care, hospice and home health services.

  • Part B: Covers clinical research, ambulance services, medical equipment, mental health services and second opinion doctor visits.

Sign up for both Part A and Part B by visiting the Social Security Administration’s website and filling out the application form. The SSA’s site also offers helpful information about the program, like FAQs, info for military families and how to plan for retirement.

The SSA suggests signing up for Medicare within three months of turning 65; otherwise, they may charge a late penalty. If you’re not eligible for premium-free Medicare, signing up late could lead to a 10 percent hike in your monthly premium.

If you’re already receiving Social Security benefits when you turn 65, you won’t need to apply for Medicare. The program will mail you a notification of enrollment a few months before your birthday.

Medicaid

Medicaid is the largest provider of health coverage in the United States, covering almost 69 million individuals of all ages. Those eligible for Medicaid fall into several different groups:

  • Children

  • Pregnant women

  • Parents

  • Seniors

  • Individuals with disabilities

Medicaid is a jointly-run federal and state program. While federal law requires every state’s Medicaid to cover certain medical services, additional coverage varies by state.

Medicaid has certain eligibility requirements, mostly related to income and owned assets, but these also change from state to state. Find your state’s Medicaid website on this list to see if you qualify and what your Medicaid will cover.

Senior with walker

Medical supplies: Medicare vs Medicaid

Medicare

Medicare covers what the program calls DME: Durable Medical Equipment. According to the Medicare website, medical supplies are considered DME if they meet the following criteria:

  • Durable (can withstand repeated use)

  • Used for a medical reason

  • Not usually useful to someone who isn't sick or injured

  • Used in your home

  • Has an expected lifetime of at least 3 years

This includes items like crutches, walkers, oxygen equipment, blood sugar monitors and commode chairs. Everyone with Medicare Part B is eligible to get these supplies paid for if they need them.

In order to have your supplies paid for by Medicare, you must have a signed order from your doctor stating that you need these supplies for a medical condition. The doctor can either give you the signed order to give to the supplier, or the doctor’s office can fax the order to the supplier. Find a supplier and call ahead to ensure they have the item you need in stock.

Not all suppliers of medical equipment accept Medicare. Use Medicare.gov’s Supplier Directory to find a supplier in your area.

Medicaid

Medicaid’s policy on medical supplies is similar to Medicare’s: they both cover supplies if they are considered by a doctor to be medically necessary.

However, because Medicaid differs by state, not all state Medicaid programs will cover the same supplies in the same way. Check with your local Medicaid office to see if they cover the equipment you need.

Senior patient talking to doctor

Doctor visits: Medicare vs Medicaid

Medicare

Medicare Part B covers a free “Welcome to Medicare” doctor visit within the first 12 months of your coverage. After that, they offer a free annual wellness visit.

Be sure that your doctor accepts Medicare before your appointment. Use Medicare.gov’s Physician Compare tool to find doctors in your area who use the program.

Some people may need doctor visits beyond a yearly check-up. In this case, be prepared to pay 20 percent of the fees associated with the visit, assuming the doctor accepts Medicare.

Medicaid

Most state Medicaid programs cover visits to a doctor. Coverage varies by state. For instance, Texas covers doctor visits completely, but other states charge for them.

Because states have more discretion with their Medicaid coverage than with their Medicare coverage, there are federal maximum copayments that doctors can charge Medicaid patients. Currently, the maximum copayment for a doctor visit is 20 percent of what the office charges. So, if a doctor charges $150 for an office visit, the most you’ll have to pay as a Medicaid patient is $30.

Check with your doctor’s office before your visit to find out if your appointment will be covered by Medicaid.

Doctors checking on senior patient

Hospitalizations: Medicare vs Medicaid

Medicare

Medicare Part A pays for hospitalizations longer than two nights. Your deductible is $1,316 for each benefit period.

The benefit period begins when you’re hospitalized. After that, your benefit periods are segmented into these portions of time:

  • 1-60 days

  • 61-90 days

  • 91 days and beyond

This means that you pay a separate $1,316 deductible every time a new benefit period starts (at 61 days and at 91 days consecutively).

The daily amount that you pay (known as coinsurance) for each benefit period goes up the longer you stay at the hospital.

  • In the first benefit period (1-60 days), you won’t pay any coinsurance.

  • In the second benefit period (61-90 days), the coinsurance is $329 per day.

  • After 90 days, if you still have lifetime reserve days (see below), the coinsurance is $658 per day.

After 90 days in a hospital, you start using your lifetime reserve days, which are limited extra days of hospital coverage you can receive throughout your lifetime.

Medicare recipients receive 60 lifetime reserve days. After you run out of lifetime reserve days, you are responsible for any and all hospital fees.

Gather all the information you can before checking into a hospital, if you’re able. Research could save you from an unexpectedly high hospital bill. This helpful checklist from Medicare.gov can help you choose your hospital.

Medicaid

Federal law requires Medicaid to cover inpatient and outpatient hospital stays.

Medicaid’s policy on hospitalization differs state-by-state. For example, New York charges only a $25 copayment for hospital stays. Arizona charges $75. Colorado, on the other hand, charges $10 per day of hospitalization. These differences will affect you, so ask your provider how your hospital stay will be covered.

Nurse helping senior woman drink water

Nursing homes: Medicare vs Medicaid

Medicare

Original Medicare does not pay for most nursing home care unless it’s deemed medically necessary. Since most assisted living and nursing home care is custodial (meaning the care involves the daily business of living: eating, dressing and using the bathroom), Medicare will not cover the expenses of living in an assisted living facility or a nursing home.

However, Medicare will cover medically necessary procedures that occur during a nursing home stay.

Also, Medicare covers time spent in skilled nursing facilities, so if you require physical therapy, occupational therapy, speech-language pathology or intravenous injections in a controlled environment, you can stay in a skilled nursing facility as long as the care is medically necessary. Basically, if a doctor or a nurse is necessary to provide care, Medicare will cover it.

Medicaid

Medicaid covers stays in Medicaid-certified nursing homes. Federal law requires that these nursing homes provide Medicaid recipients the following services for free:

  • Nursing and related services

  • Specialized rehabilitative services (treatment and services required by residents with mental illness or intellectual disability, not provided or arranged for by the state)

  • Medically-related social services

  • Pharmaceutical services (with assurance of accurate acquiring, receiving, dispensing, and administering of drugs and biologicals)

  • Dietary services individualized to the needs of each resident

  • Professionally directed program of activities to meet the interests and needs for well being of each resident

  • Emergency dental services

  • Some routine dental services

  • Room and bed maintenance services

  • Routine personal hygiene items and services

Medicaid might not pay for services like a private room, specially prepared food (beyond what’s provided by the nursing home) or television. For services beyond those listed above, check with your nursing home and your local Medicaid provider to see if they cover what you need.

To find a Medicaid-certified nursing home in your area, use Medicare’s Nursing Home Compare tool and search with your zip code. In the box on the side that reads “Filter by,” click the box that reads “Accepts Medicaid.” The list will narrow down to only include those that accept Medicaid.

Senior woman talking to doctor

Conclusion

Federal Medicare and state Medicaid can lift the burden of payment off of families, caregivers and seniors who might already have limited income.

The best way to make sure you’re getting coverage is to ask questions. Call your local Medicaid or Medicare provider and tell them your medical service needs; they should be able to give you answers. For more information, read through Medicare.gov and Medicaid.gov.

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by Zack Reeves ConsumerAffairs Research Team

As part of the Consumer Affairs Research Team, Zack Reeves creates content that helps consumers make important decisions. He parses through fine details to present buyers with all the information they need to improve their lives.