Medicaid has a starring role in the health care drama currently playing out in Washington. But unless you actually receive Medicaid, chances are you don’t know much about this unique social safety net that provides health insurance to some 74.5 million Americans — nearly a quarter of the U.S. population. It pays the bills for 62 percent of the nation’s nursing home patients.
Some assume that Medicaid is strictly a federal program. Others think it’s part of welfare. More than a few think it’s the same as Medicare.
In fact, it is none of the above.
Here’s what you need to know about Medicaid.
Medicaid, Medicare: What’s the difference?
Medicaid, a federal-state partnership administered separately by each state, provides health and long-term care assistance for low-income people who fall into certain eligible categories.
Medicare, a federally funded and administered program, provides health insurance for:
- People 65 or older.
- Those younger than 65 with certain disabilities, including kidney failure.
The name confusion over Medicaid and Medicare dates back to 1965 when both programs were signed into law as amendments to the Social Security Act by President Lyndon Johnson, as part of his “Great Society” initiative. The fact that some people are eligible for both Medicaid and Medicare (known as “dual eligibles”) and the way that Medicaid goes by different names in some states add to the Medi-muddle.
Also tossed into the mix of names is the Children’s Health Insurance Program, or CHIP, created in 1997 to expand Medicaid-style health care coverage to low-income children. Medicaid and CHIP currently cover nearly 36 million kids.
Who’s eligible for Medicaid?
Medicaid coverage is now possible in every state for these low-income Americans without savings or other resources to cover health care costs:
- Parents and caregiver relatives of eligible children.
- Pregnant women.
- People with disabilities.
- Seniors in need of long-term care, including nursing home care.
The Affordable Care Act, the health care reform law signed by President Barack Obama in 2010, required all states to expand Medicaid to millions more poor Americans, including childless adults. But a U.S. Supreme Court Obamacare ruling in 2012 gave states the ability to opt out, so 19 states still have not expanded Medicaid. Proposals now before Congress would effectively reverse the Medicaid expansion.
Eligibility for Medicaid is tied to an applicant’s household income and how it measures against the federal poverty level.
The thresholds vary, both by applicant category and by state. Here are some examples of what that means, from a 2016 survey by the Kaiser Commission on Medicaid:
- For a child in a family of three to be eligible, the median household income cutoff across all the states was $51,230.
- For jobless parents in that same family of three to be covered, the maximum household income could be as low as $10,045 in states that have chosen not to expand Medicaid.
Applicants also must satisfy federal and state residency, immigration status and U.S. citizenship requirements for Medicaid.
What does Medicaid cover?
While programs vary state to state, federal Medicaid guidelines require each state’s program to offer these mandatory benefits:
- Inpatient and outpatient hospital services.
- Doctor visits.
- Laboratory, X-ray, screening and diagnostic services.
- Birth center and midwife services.
- Family planning.
- Home health and nursing home care.
- Anti-smoking counseling.
- Transportation to and from a health care facility.
Some states also cover vision care, dental services, mental illness, podiatry, prostheses, prescription drugs, chiropractic services, various therapies (physical, occupational, speech, hearing and language) and hospice care.
How is Medicaid funded?
Each state’s Medicaid program is funded by the federal government, the state government and, in some states, county governments.
“States get reimbursed by the federal government at the traditional federal Medicaid matching rate, which varies anywhere between 50 (percent) and 83 percent, depending on the state’s per capita income. On average, it’s about 57 percent,” says John McDonough, a professor at the Harvard T.H. Chan School of Public Health.
The states (in some cases, with help from counties) have to come up with the rest.
Under Obamacare, the federal government initially agreed to pick up 100 percent of the cost of Medicaid expansion but has begun phasing that down toward an eventual 90 percent.
The bills in Congress aimed at undoing the Affordable Care Act would shrink federal Medicaid spending by up to $772 billion over the next 10 years, according to the nonpartisan Congressional Budget Office.
How does Medicaid pay my doctor?
States have several options regarding how Medicaid reimbursement is delivered.
Under the traditional “fee-for-service” model, the program pays health care providers directly for each service. Over the past 20 years, however, some states have moved to require patients to join Medicaid managed care organizations, which are similar to HMOs and deliver services under monthly contracts with the state.
What about the long-term care coverage?
To qualify for Medicaid’s long-term care coverage, a person must be age 65 or over, blind or have a permanent disability. He or she would require assistance with activities of daily living, such as eating, bathing, dressing, using the toilet and transferring to and from a bed or chair.
State financial eligibility requirements also must be met, and they typically involve a rigorous assessment of assets, to determine whether the applicant is considered poor enough.
In most states, individuals who wish to qualify for Medicaid long-term care coverage are allowed to “spend down” their savings and other counted assets to $2,000, or $3,000 for couples living together. Homes don’t count toward the total, and neither do vehicles, personal belongings or assets held in trust. If one spouse is not living in a nursing home or other institution, most states allow that person to keep half the couple’s assets between set minimum and maximum amounts, which ranged between $24,180 and $120,900 in 2017.
If you wait until the moment you need Medicaid for long-term care, the complexities of the program can be daunting, says Joy Thomas, Medicaid benefits specialist with Clinkscales Elder Law Practice in Hays, Kansas.
“The biggest thing with Medicaid is to plan ahead,” she says. “There are resources that may not have to be spent down. There may be ways that you can make resources non-countable within the rules that Medicaid has established. You’ve paid into the system for years, and you’re entitled to those things when you reach a certain income and asset level.”