Medicare and Medicaid have similar names but are two completely separate government health insurance programs. Understanding the difference can help you and your family plan for aging and retirement.
What is Medicare?
Medicare is a program administered by the federal government—the Centers for Medicare & Medicaid services—that is essentially available to anyone, regardless of income. If you are over 65 years of age or are younger and have a specific disability, you may qualify for Medicare. People covered under Medicare pay into a trust from which medical bills are paid. Most long-term care costs are not covered under Medicare, making it difficult for aging individuals and their families to pay for care facilities or long-term rehabilitation.
What is Medicaid?
Unlike Medicare, Medicaid is administered by individual states, such as Texas. It is catered to serve low-income people at any age, and also covers the costs of long-term care in nursing home facilities. In Texas, Medicaid is extremely complex and can be difficult to navigate. Medicaid applicants must either have a disability, be caring for a disabled child, or have a monthly income under a limit set by the government each year. Medicaid applicants must also have less than $2,000 in certain assets, which can exclude primary residences, vehicles, and some personal property. The government will look at the most recent five years of financial statements to ensure an applicant’s eligibility, making it difficult for applicants to transfer assets in anticipation of filing for Medicaid benefits if they wait until the last minute.