Insuring low-income families since 1965, Medicaid could be considered more vital than ever due to the high cost of healthcare. It insures more than 75 million Americans as of April 2021, from newborns to seniors.
This introductory guide will answer your questions concerning:
- What is Medicaid?
- What does Medicaid cover?
- Who qualifies for Medicaid?
- How do you apply for Medicaid?
- What is the difference between Medicaid and Medicare?
The goal of this guide is to help you gain a solid understanding of Medicaid and determine if it’s a viable alternative for you and your family.
Medicaid is a health insurance program that is federally controlled and state-administered. It’s made available to low-income families and other mandatory coverage groups, including children, pregnant women, low-income parents, seniors, and people with disabilities.
Although they’re subject to federal standards, states have the flexibility to determine covered services, health care delivery models, methods for paying doctors and hospitals, and covered populations.
The five states with the highest Medicaid enrollment are:
- California (10,860,126)
- New York (5,863,440)
- Texas (4,034,937)
- Georgia (3,805,520)
- Pennsylvania (2,980,867)
Children account for about 45% of all Medicaid enrollees, and the elderly and disabled account for about 25%.
There are two guarantees associated with Medicaid:
- First, every American who meets Medicaid eligibility requirements is guaranteed coverage.
- Second, states are guaranteed federal matching dollars, with no cap for qualified services provided to eligible enrollees. The match rate for most Medicaid enrollees is determined by a formula providing a minimum match of 50%, with a higher federal match rate for poorer states.
The basic foundations of Medicaid are related to the entitlement and the federal-state partnership, which can be summarized as:
- Entitlement: eligible individuals are entitled to a defined set of benefits, and states are entitled to federal matching funds.
- Partnership: Federal sets core requirements on eligibility and benefits, states have the flexibility to administer the program within federal guidelines.
[ Related read: How many Americans are uninsured? ]
Medicaid covers certain mandatory medical services that are similar to services covered by Medicare Parts A and B. These services include:
- Hospital care
- Skilled nursing
- In-home care
- Doctor’s visits
- Preventive care
- Wellness screenings
- Medical transportation
States have the option to offer additional benefits, such as vision and dental. Other optional benefits include:
- Personal care
- Case management
- Prescription drug coverage
- Physical and occupational therapy
- Respiratory services
- Rehabilitative care
- Speech therapy
Although Medicaid will pay for some services not covered by Medicare, the program does exclude some services. The majority of items that aren’t covered fall into one of these four categories:
- The services are unreasonable or not medically necessary
- Charges were improperly bundled or billed through another allowance
- Providers were reimbursed through another program
- The particular services or tests aren’t covered
Medicaid won’t pay for medical care provided outside of the United States, except in certain travel-related situations or when a foreign hospital is closer than domestic alternatives. Additionally, Medicaid will not pay for:
- Durable medical equipment replaced through a warranty
- Health care services provided by another government agency
- Free health screenings or devices that are given away
- Cosmetic surgery and any resulting complications
- Personal comfort items, such as TVs and beautician services
In addition to the groups listed above that are guaranteed coverage, states can also offer coverage to other individuals needing assistance. This includes seniors living in a nursing home or receiving hospice care and seniors receiving home and community-based services.
In 2010, Medicaid eligibility was expanded by the Affordable Care Act to include adults earning up to 138% of the Federal Poverty Level (FPL). This holds true in most states, though income limits may vary.
Individuals expected to require nursing home care for at least 30 days can earn up to $2,382 per month and remain eligible for Medicaid benefits.
There are asset limits with Medicaid. Individual applicants may have $2,000 worth of countable assets; couples may have $4,000.
- Cash and bank accounts
- Secondary homes or vehicles
- Life insurance policies with a cash value
- Revocable trusts
- Certain annuities
Some assets are exempt and are not counted against eligibility. They include:
- Retirement accounts
- A primary vehicle
- A primary home up to a fixed value
- Personal property
- Household items
The American Council on Aging provides a state-by-state eligibility guide. In addition, you can visit MedicaidPlanningAssistance.org to find the income limit for your state.
Another qualification for Medicaid is acceptable residency. Benefits are available to United States citizens and legal residents. However, applicants for Medicaid must apply for coverage in their primary state of residence. Out-of-state coverage is restricted unless an individual is experiencing a life-threatening emergency or requires institutional long-term care.
Since each state administers Medicaid programs, applications need to be filed through an individual’s primary state of residence. The federal Medicaid website, Medicaid.gov, provides a link to every state regarding Medicare eligibility and enrollment.
Individuals can also complete an application in the Health Insurance Marketplace. Upon completion of the application, they are advised which programs they and their family qualify for. In addition, the Marketplace will notify the applicant’s state Medicaid agency if they appear to be eligible for coverage.
There are three primary differences between Medicaid and Medicare:
- Medicaid is managed by the state whereas Medicare is managed by the federal government
- Medicaid eligibility is based on income, whereas Medicare eligibility is mainly based on age
- There is little or no cost to an individual for Medicaid coverage, whereas Medicare has premiums, deductibles, and co-pays
Some people qualify for both Medicaid and Medicare. They are eligible for Medicaid because they meet their state’s requirements for eligibility, and they qualify for Medicare because of their age (65 or older) or due to having a disability.
For complete details on all things concerning Medicaid, visit Medicaid.gov. It contains information and updates pertaining to eligibility and benefits and full instructions on how to apply for coverage.
Joel Palmer is a freelance writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.
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