Medicare and Medicaid: How they work together

Nearly 12 million people with Medicare also are enrolled in Medicaid. If you have Medicare and Medicaid… What does each cover? Who does it cover? It’s important to know how they work together.

Medicare is the federal program to help older adults (65 years and older) and people with disabilities pay for medical care. Because Medicare typically covers about half of a person’s health care costs, people with Medicare generally have extra coverage that fills the gaps. People get this extra coverage from a former job, or they buy it from a health insurer or get it through Medicaid.

Medicaid is a joint federal and state program. People with incomes and assets below set levels qualify for Medicaid. Medicaid may cover dental, vision, and hearing and long-term care services that Medicare does not cover. People with both Medicare and Medicaid, sometimes called “dual eligibles” have lower incomes and fewer assets than people who do not qualify for Medicaid. More than 85 percent of people with Medicare and Medicaid have annual incomes below about $16,500.

Many states let people with Medicare (and others) “spend down” to Medicaid eligibility levels if their income is otherwise too high to qualify. These states let you reduce your income by the amount of health care costs that you pay for out of pocket. If your income then meets the Medicaid eligibility limit, you will qualify for Medicaid. Call your Medicaid office to see if your state has a Medicaid “spend-down” or “excess income” program and how to qualify. (Depending upon the rules in your state, you may go on and off Medicaid at different times during the year; and, you may be eligible for different types of Medicaid benefits, including home and community-based care.)

People with Medicaid automatically qualify for Extra Help. If you spend down to Medicaid, depending upon your income, some or all of your Medicare Part D premiums, deductibles and copays, will be covered from the month you qualify for Medicaid through the end of the year.

If you have both Medicare and Medicaid, Medicare pays first. Medicaid picks up health care costs that Medicare does not pay. To have your costs covered in full, you must see doctors who take both Medicare and Medicaid.

People with Medicare and Medicaid–about one in five people with Medicare–tend to have greater health care needs than the general Medicare population. They are more likely to have chronic illnesses as well as cognitive and functional impairments. They also tend to need more hospital and long-term care.

It is difficult to predict your future health care needs. Your income and assets may be too high to qualify for Medicaid, but not so high that, if you needed costly care, you could spend down to Medicaid eligibility levels. If so, call your local State Health Insurance Assistance Program or your Area Agency on Aging about planning ahead to qualify for Medicaid. You might want to contact an elder law attorney. In some states you can set up a “Special Needs Trust” or another kind of trust that permits you to put some of your income and assets in the trust. You may then qualify for Medicaid because that income and those assets are not counted for purposes of qualifying for Medicaid.

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