Medicare and Medicaid and Medigap: What is the Difference?
Gail Carlson, MPH Ph.D
State Health Education Specialist, University of Missouri Extension
Most Americans are confused about the difference between Medicare,
Medicaid and Medigap. Medicare and Medicaid programs are government
programs created as part of the Social Security Act of 1965. Medigap
is an insurance policy offered by private insurance companies to
fill the "gaps" in coverage for Original Medicare. Here is a brief
summary of the three programs.
Medicaid
Medicaid is a health insurance program financed and run jointly by
the federal and state governments for low-income people of all ages
who do not have the money or insurance to pay for health care. The
goal of the program is to provide medical and other health care
services to eligible individuals so that they are able to remain as
self-sufficient as possible. Medicaid is a state administered
program. Each state sets its own guidelines, subject to federal
rules and guidelines. Certain services must be covered by the states
in order to receive federal funds. Other services are optional and
are elected by states.
Services that are often provided are:
* health screening and services for children,
* hospital and physician services,
* laboratory services and X-rays,
* care in nursing homes or
* home health care services.
Medicaid eligibility in nearly every state is limited to:
* low-income children,
* pregnant women,
* families with dependent children,
* persons who are blind or disabled, and
* persons 65 or older.
Other eligibility requirements must also be met.
Medicare
Medicare is a federally funded and administered program that
provides health insurance for older Americans and those who are
disabled. Individuals contribute to Medicare during their working
years, just as they do to Social Security. Since Medicare is a
federal program, eligibility guidelines and services are much the
same all over the country.
People eligible for the program include:
* most persons over the age of 65,
* persons with disability status, or
* persons with irreversible kidney failure.
There are a number of Medicare plan choices. Two of the most widely
available plans are Original Medicare and Medicare Advantage.
Original Medicare Plan
The Original Medicare Plan is available nationwide and is a
pay-per-visit health plan. You can go to any health care provider
who accepts Medicare and is accepting new Medicare patients. There
are usually coverage "gaps" or costs that you must pay, such as
deductibles, copayments and coinsurance. Some people buy a Medigap
policy to cover these gaps in coverage (see Medigap below).
The Original Medicare Plan has two parts. Part A provides hospital
insurance and Part B, which is optional, provides medical insurance.
If someone chooses Part B, a monthly premium is deducted from his or
her Social Security benefits. Insurance coverage for prescription
drugs is a new benefit added on January 1, 2006. Insurance companies
and other private companies work with Medicare to offer the drug
benefit. Costs vary depending on which plan is selected by the
individual.
Medicare Advantage Plan
Medicare Advantage Plans are available in some parts of the country.
These are managed care Medicare plans. Medicare pays a set amount of
money for your care every month to these private health plans
whether or not you use services. In most of these plans, generally
there are extra benefits and lower co-payments than in the Original
Medicare Plan. However, you may have to see doctors that belong to
the plan or go to certain hospitals to get services. If you enroll
in a Medicare Advantage Plan, you probably won’t need a Medigap
policy because Medicare Advantage Plans usually provide a wider
range of services.
Medicare does not cover all health care services, nor does it pay
the entire cost of all the services that it does cover.
Medigap
Medigap insurance is also known as Medicare supplement insurance. A
Medigap policy provides reimbursement for the out-of-pocket costs
that are not covered by Original Medicare. Gaps in the Original
Medicare Plan consist of deductibles, coinsurance and co-payments
that the individual is responsible for paying. Medigap policies are
sold by private health insurance companies. There are 12
standardized policies, called Plans "A" through "L." Each plan has a
different set of benefits. Not all companies sell all 12 policies.
When purchasing Medigap insurance, shop around. Policies offering
the same benefits can vary greatly in price. Since the plans are
standardized they are easy to compare across companies. In addition,
you want a policy that truly supplements Medicare - one that will
cover that portion of the bill not covered by Medicare, as well as
covering some additional health services not provided by Medicare.
Also consider your own situation; not everyone needs a Medigap
policy. For example, you might not need a Medigap policy if you have
a Medicare Advantage Plan or a supplemental health insurance plan
through your former employer.
While much has remained constant in Medicare and Medicaid since
these programs were created 40 years ago, both programs have also
changed a great deal. Faced with an aging population, rising health
care costs and decreasing availability of employer-sponsored health
insurance, governments are debating how to maintain these programs
and control costs. In spite of these concerns, Medicaid and Medicare
play a major role in providing health care coverage for people of
all ages. Medigap policies can further reduce health care costs for
individuals who have Original Medicare. |
