Medicare & Medicaid
Medicare
BREAKING DOWN 'Medicare'
Congress created the Medicare program as part of the Social Security Act in 1965 as a way of extending insurance coverage to individuals over the age of 65 who frequently lacked appropriate coverage prior to that time. Subsequent legislation has expanded Medicare’s eligibility pool to include individuals under 65 who receive Social Security Disability Insurance checks and those with end stage renal disease. Those who receive SSDI generally need to wait 24 months after they receive their first check before becoming eligible for Medicare, though the program waives this requirement for those with amyotrophic lateral Sclerosis.
Since U.S. taxpayers fund the Medicare program, rising healthcare costs have generated political arguments regarding the future solvency of the program. To date, however, the program’s popularity has shielded it from major changes to its eligibility, funding or coverage provisions.
Types of Medicare coverage
Basic Medicare coverage comes predominately via Parts A and B, also called Original Medicare, or through a Medicare Advantage plan. Medicare Part A covers costs billed by hospitals or similar inpatient or inpatient-like settings, such as skilled nursing facilities. Part B generally covers costs billed for outpatient care, such as physician’s office visits. Original Medicare plans do not limit out-of-pocket costs for services rendered during a given year.
Medicare Advantage plans, also known as Medicare Part C plans, must offer coverage at least equivalent to Original Medicare. Consumers purchase Medicare Advantage plans through private insurers rather than through the government itself. Many of these plans offer annual limits on out-of-pocket costs. Many also provide benefits that Original Medicare patients would otherwise need to purchase via supplemental insurance, such as a Medigap plan.
Medicare offers supplemental prescription drug coverage through Medicare Part D. Enrollees in Medicare Part A or Part B may enroll in Part D to receive subsidies for prescription drug costs that Original Medicare plans do not cover.
Medicaid
BREAKING DOWN 'Medicaid'
Medicaid is a government-sponsored insurance program for individuals of any age whose resources and income are insufficient to cover healthcare. In the United States, it is the largest source of funding for health-related services for low-income people. Funded jointly by state and federal governments, but mainly by the latter, Medicaid is managed at the state level. The program was authorized by the Title XIX of the Social Security Act, which also created Medicare. The bill was signed into law in 1965 by President Lyndon B. Johnson.
States establish and administer their own Medicaid programs and determine the type, amount, duration, and scope of services within broad federal guidelines. Federal law requires states to provide certain “mandatory” benefits and allows states the choice of covering other “optional” benefits. Mandatory benefits include services like inpatient and outpatient hospital services, physician services, laboratory and x-ray services, and home health services, among others. Optional benefits include services like prescription drugs, case management, physical therapy, and occupational therapy. See a list of mandatory and optional benefits for Medicaid programs.
