Healthcare in America can be complicated, but two programs stand out as lifelines for millions: Medicaid and Medicare. Though their names sound similar, these programs serve different purposes and have unique eligibility rules. Understanding the difference between Medicaid and Medicare is essential for making smart choices about your health and finances, especially when it comes to mental health care.
Who’s eligible for Medicaid and Medicare
Many people find themselves wondering “I am I eligible for Medicaid or Medicare?” Who is covered by which program is one of the biggest differences between Medicaid and Medicare.
Who qualifies for Medicaid?
Medicaid coverage eligibility depends mostly on your income and family size, with other criteria that can change depending on your state. While there are federal guidelines, states have some wiggle room to expand coverage. In general, Medicaid covers:
- Low-income adults and children
- Pregnant women
- Elderly people with limited resources
- People with disabilities
To qualify for Medicaid, you must meet specific income limits, which vary by state and family size. Medicaid expansion vs. traditional Medicaid has increased access in many states, allowing more people to qualify based on income alone.
Patients in certain states may also come across more specific rules around Medicaid eligibility. For example, in Georgia, parents and childless adults under age 65 are subject to a Medicaid work requirement if their annual income is up to 100% of the federal poverty level (which is $25,820 for a family of three in 2024). Illinois and Florida have “medically needy” programs (otherwise known as Medicaid spend-down). These programs extend Medicaid eligibility to those who would normally be disqualified due to higher income as long as they meet a certain threshold of high medical expenses.
Who qualifies for Medicare?
While Medicaid is coverage intended for people with limited income or resources, Medicare is focused on people of a specific age and with certain conditions or disabilities. In general, Medicare covers:
- Anyone 65 years and older
- Younger people who have received Social Security disability benefits for at least 24 months
- Individuals with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS)
For seniors, Medicare is generally the primary coverage for those 65 and older, regardless of income.
Who qualifies for both Medicaid and Medicare?
Some individuals may qualify for both Medicaid and Medicare, a situation known as dual eligibility. This typically applies to low-income seniors or younger individuals with disabilities who meet Medicare’s age or disability requirements and Medicaid’s income criteria. Dual eligibility can provide more comprehensive coverage and help reduce out-of-pocket costs.
What Medicaid and Medicare cover
Medicaid and Medicare both offer comprehensive healthcare coverage, but they have different levels of coverage.
Medicaid coverage
Medicaid typically provides a broad range of services, including:
- Hospital stays (inpatient and outpatient)
- Doctor visits
- Lab work and X-rays
- Home health services
- Nursing home care
- Hospice care
- Early screening and treatment for children
- Family planning
- Rural health clinic services
- Mental health services
- Long-term care services
States may also offer additional services beyond these federal requirements.
Medicare coverage
You may have heard of Medicare in “parts” — Medicare Part A, Part B, and so on. This is because Medicare coverage consists of multiple parts. Each part has a unique purpose and covers different services.
- Part A: Covers hospital stays, skilled nursing care, hospice care, and home health care.
- Part B: Covers doctor visits, outpatient care, medical supplies, and preventive services.
- Part C (Medicare Advantage): An all-in-one alternative to Original Medicare offered by private insurance companies, combining Parts A and B with additional benefits like prescription drug coverage.
- Part D: Covers prescription drug costs.
While Medicare is excellent for acute care, hospital stays, and doctor visits, its long-term care coverage is often less comprehensive than Medicaid. For individuals requiring extended care, Medicaid may be a more suitable option.
Costs of Medicaid and Medicare
Out-of-pocket costs for Medicaid and Medicare coverage vary significantly.
Medicaid premiums and coinsurance
Medicaid premiums, co-payments, and out-of-pocket costs all vary from state to state. However, Medicaid beneficiaries usually pay little to nothing. Depending on your state and income level, minimal copayments or premiums may exist.
Medicare premiums and coinsurance
Medicare often involves higher costs than Medicaid. Costs can include:
- Premiums for Parts B and D
- Deductibles and copayments for various services
- Potential additional costs for Part C (Medicare Advantage) plans
Higher-income individuals may also face higher premiums for certain Medicare parts.
Medicare coinsurance is an out-of-pocket cost where you pay a percentage of the total cost for a healthcare service after Medicare has covered its portion. For example, if your coinsurance is 20% and a medical service costs $100, Medicare would pay $80, and you would pay $20.
Medicare Advantage plans, offered by private insurance companies, can provide additional benefits beyond Original Medicare. However, they may also have their premiums, copays, and deductibles. Choosing between Medicare Advantage and Original Medicare depends on your needs, preferences, and budget.
Benefits of Medicaid and Medicare
Both Medicaid and Medicare have their unique benefits.
Medicaid benefits
- Acts as a healthcare safety net for the most vulnerable
- Offers many different types of care, including preventive, primary, and long-term services
- Covers a wide range of mental health services, including therapy and counseling
- Allows states to tailor programs to their specific needs
- Usually, it comes with a price tag of zero (or close to it) for beneficiaries
Medicare benefits
- Provides healthcare coverage for nearly all older adults and some disabled individuals
- Lets you choose your providers without state restrictions
- Offers consistent coverage no matter where you live in the U.S.
- Covers many mental health services, including outpatient therapy and counseling
- Ensures you can access care regardless of what state you live in
When comparing Medicare Advantage plans vs Medicaid, it’s important to note that Medicare Advantage often offers additional benefits beyond Original Medicare, such as dental and vision coverage, which may be more comparable to some Medicaid plans.
Drawbacks and limitations
Medicaid and Medicare both have their drawbacks.
Medicaid limitations
- Coverage can vary from state to state, leading to healthcare disparities
- Some areas have limited providers due to lower reimbursement rates
- The application process can be challenging
Medicare limitations
- There are some coverage gaps, particularly in long-term care, dental, vision, and hearing services
- It can come with high out-of-pocket costs, especially without supplemental insurance
- Choosing between Original Medicare and Medicare Advantage can be confusing
- May limit coverage for extended mental health treatment
When comparing Medicare vs Medicaid for disabled individuals, it’s important to note that while both programs offer coverage, Medicaid often provides more comprehensive long-term care services for those with disabilities.
Medicaid and Medicare coverage for mental health services
Both Medicaid and Medicare can help people find the mental health care they need. However, the scope and cost of coverage varies between these programs.
Getting mental health care with Medicaid
Medicaid does cover mental health services, but because plans are administered individually by states, coverage varies across the country. That said, in part because of how many people Medicaid serves, it’s the single-largest payor of mental health services in the country.
All Medicaid plans include behavioral treatment such as counseling and psychotherapy with a psychiatrist, counselor, therapist, clinical social worker, or psychologist. Inpatient psychiatric services, and medication-assisted treatment for addiction are also covered to certain extents.
Medicaid is like other health insurance plans in that some providers accept it, and others don’t. When researching what your mental health care options are with Medicaid, you can ask providers — such as therapists — if they accept Medicaid. You can also contact your state’s medicaid office to find out more about the providers who are in-network.
Getting mental health care with Medicare
One-on-one or group psychotherapy or mental health counseling visits are covered by Medicare, including cognitive behavioral therapy (CBT) and family counseling. The doctor, psychiatrist, clinical psychologist, clinical social worker, clinical nurse specialist, nurse practitioner, or physician assistant must be a licensed professional who accepts Medicare
Psychiatric evaluation is covered and includes assessment for mental health conditions such as depression, anxiety, bipolar, attention-deficit/hyperactivity disorder (ADHD), post-traumatic stress disorder (PTSD), schizophrenia and other psychotic disorders, and substance use disorders. Some coverage is offered for substance use disorder assessments, treatments, and counseling, such as alcohol, tobacco, and opioid use disorders.
Medicare also covers medication management, diagnostic tests, partial hospitalization services, and structured psychiatric services more intense than what you’d get at a doctor or therapist’s office. You don’t stay in the hospital overnight and must meet specific requirements.
Learn more about Medicare and mental health, including what’s not covered and how to check your coverage, in this article.
Origins of Medicaid and Medicare
Medicaid and Medicare began on July 30, 1965, as part of President Lyndon B. Johnson’s “Great Society” plan. The goal of these programs was to provide affordable health coverage for elderly, disabled, and low-income Americans who were falling through the cracks of the healthcare system. Since then, both programs have grown and changed to meet the country’s evolving health needs.
Medicaid was created under Title XIX of the Social Security Act to help those who need it most. Medicaid is a team effort between state and federal governments. Medicare, established under Title XVIII of the Social Security Act, mainly helps people aged 65 and older, regardless of how much money they have.
How Medicaid and Medicare are funded
Medicaid is funded jointly by federal and state governments. The federal government provides money to states for a specific percentage of the program, which is referred to as the Federal Medical Assistance Percentage (FMAP). States are required to fund the remaining amount of the state plans.
Medicare, on the other hand, is all federal. It’s funded through a mix of:
- Payroll taxes (the “Medicare taxes” you see on your paycheck)
- Premiums paid by beneficiaries
- A portion of the federal government’s general fund
This federal approach means Medicare plays by the same rules nationwide, offering consistent coverage whether you’re in Maine or California.
Choosing between Medicaid and Medicare
Medicaid and Medicare offer essential healthcare coverage, and understanding their differences is crucial for making informed decisions. With state-specific variations and potential out-of-pocket costs, exploring dual eligibility options and seeking professional guidance is important.
Don’t let the complexities of Medicare and Medicaid prevent you from getting the mental health support you need. Grow Therapy’s network of providers understands these systems and can help you navigate your coverage options. Take the first step towards better mental health today. Schedule a consultation with a Grow Therapy provider who accepts your insurance.
