Decoupling Care – Medicare vs. Medicaid

Today, we are tackling the two giants of American public health insurance: Medicare and Medicaid.

They sound almost identical. They were both born in the exact same year—1965—under President Lyndon B. Johnson’s Great Society. Yet, they serve completely different populations, have different rules, and use completely different timelines for signing up.

"I qualified for the healthcare program that starts with an 'M'..." It’s a phrase health insurance navigators hear every single day. But mixing up these two programs can cost you thousands of dollars or leave you without coverage when you need it most.

Over the next 30 minutes, we are going to demystify both. We will cover:

• The fundamental differences between them (the "Who" and "What").
• The exact timing of when you need to apply to avoid lifelong financial penalties.
• How they can actually work together if you qualify for both.

Grab a notebook for this one. Let’s start with the basics.

WealthGrow - By Wharton Investment Consultants 5010 Canby Drive, Wilmington DE 19808 Tel: 302-239-2111

Securities and advisory services offered through Registered Representatives of Cetera Advisor Networks LLC (doing insurance business in CA as CFGAN Insurance Agency LLC), member FINRA, SIPC, a broker/dealer and a Registered Investment Advisor Cetera is under separate ownership from any other named entity.

Transcript

[00:00:00]
Speaker 1: Welcome to Wealth Grow, where we discuss building wealth, planning your future, and making informedfinancial decisions.
[00:00:08]
Speaker 1: My name is Stuart Cameron,
[00:00:09]
Speaker 1: OSJ branch manager and financial advisor with Wharton Investment Consultants.
[00:00:15]
Speaker 1: A quick note before we begin,
[00:00:17]
Speaker 1: nothing here is personal advice. This is educational.
[00:00:22]
Speaker 1: Your situation is unique
[00:00:23]
Speaker 1: and the right path depends on your goals,
tax
picture, and risk tolerance.
[00:00:29]
Speaker 1: Speak with your advisor,
[00:00:31]
Speaker 1: ideally a fiduciary, to tailor these ideas to you.
[00:00:35]
Speaker 1: Today, we are tackling the two giants of American public health insurance,
[00:00:40]
Speaker 1: Medicare and Medicaid.
[00:00:43]
Speaker 1: They sound almost identical.
[00:00:46]
Speaker 1: They were both born in the exact same year, 1965,
[00:00:50]
Speaker 1: under President Lyndon B Johnson's Great Society.
[00:00:55]
Speaker 1: Yet, they serve completely different populations,
[00:00:58]
Speaker 1: have different rules, and use completely different timelines for signing up.
[00:01:04]
Speaker 1: I qualified for the health care program that starts with an m.
[00:01:09]
Speaker 1: It's a phrase
[00:01:10]
Speaker 1: health insurance navigators hear every single day.
[00:01:14]
Speaker 1: But mixing up these two programs can cost you thousands of dollars
[00:01:18]
Speaker 1: or leave you without coverage when you need it most.
[00:01:22]
Speaker 1: Over the next thirty minutes, we are going to demystify
[00:01:25]
Speaker 1: both.
[00:01:26]
Speaker 1: We will cover
[00:01:28]
Speaker 1: the fundamental
[00:01:29]
Speaker 1: differences between them,
[00:01:31]
Speaker 1: the who and what,
[00:01:33]
Speaker 1: the exact timing of when you need to apply to avoid a lifelong
[00:01:37]
Speaker 1: financial penalties,
[00:01:39]
Speaker 1: and how they can actually work together if you qualify for both.
[00:01:44]
Speaker 1: Grab a notebook for this one. Let's start with the basics.
[00:01:50]
Speaker 1: The core differences.
[00:01:52]
Speaker 1: Medicare,
[00:01:53]
Speaker 1: the age and disability
[00:01:55]
Speaker 1: program.
[00:01:57]
Speaker 1: Let's start with Medicare.
[00:01:59]
Speaker 1: The easiest way to remember Medicare
[00:02:01]
Speaker 1: is that you care
[00:02:03]
Speaker 1: for the elderly and disabled.
[00:02:06]
Speaker 1: Exactly.
[00:02:07]
Speaker 1: Medicare is a federal program.
[00:02:09]
Speaker 1: This is a crucial point
[00:02:12]
Speaker 1: because it because it is entirely federal.
[00:02:15]
Speaker 1: The rules,
[00:02:16]
Speaker 1: costs, and benefits
[00:02:18]
Speaker 1: are exactly the same
[00:02:20]
Speaker 1: whether you live in Maine,
[00:02:21]
Speaker 1: Texas,
[00:02:22]
Speaker 1: or California.
[00:02:25]
Speaker 1: Who actually qualifies?
[00:02:27]
Speaker 1: There are three main buckets of people.
[00:02:30]
Speaker 1: Individuals
[00:02:31]
Speaker 1: aged 65
[00:02:33]
Speaker 1: or older,
[00:02:35]
Speaker 1: younger people with specific permanent disabilities
[00:02:38]
Speaker 1: who have received
Social Security
[00:02:41]
Speaker 1: Disability Insurance,
[00:02:43]
Speaker 1: SSDI,
[00:02:44]
Speaker 1: for twenty four months
[00:02:46]
Speaker 1: and people of any age with end stage renal disease,
[00:02:51]
Speaker 1: ESRD,
[00:02:52]
Speaker 1: or ALS,
[00:02:54]
Speaker 1: Lou Gehrig's disease.
[00:02:58]
Speaker 1: Medicare is broken down into four
[00:03:01]
Speaker 1:
Alphabet
soup parts.
[00:03:04]
Speaker 1: Let's do a quick lightning round on what they cover.
[00:03:08]
Speaker 1: Part a,
[00:03:09]
Speaker 1: hospital insurance,
[00:03:11]
Speaker 1: Covers inpatient hospital stays,
[00:03:14]
Speaker 1: care in a skilled nursing facility,
[00:03:17]
Speaker 1: hospice care,
[00:03:19]
Speaker 1: and some health care,
[00:03:21]
Speaker 1: home health care.
[00:03:22]
Speaker 1: For most people,
[00:03:24]
Speaker 1: this is premium free because you paid taxes into it while working.
[00:03:31]
Speaker 1: Part b, medical insurance,
[00:03:33]
Speaker 1: covers doctor visits,
[00:03:35]
Speaker 1: outpatient care,
[00:03:37]
Speaker 1: medical supplies, and preventative
[00:03:39]
Speaker 1: services.
[00:03:40]
Speaker 1: This is a monthly premium
[00:03:42]
Speaker 1: based on your income.
[00:03:46]
Speaker 1: Part c,
[00:03:47]
Speaker 1: Medicare Advantage,
[00:03:49]
Speaker 1: an alternative way to get your benefits.
[00:03:52]
Speaker 1: Private companies
[00:03:53]
Speaker 1: approved by Medicare
[00:03:55]
Speaker 1: bundle parts a and b
[00:03:57]
Speaker 1: and usually d together,
[00:04:00]
Speaker 1: often adding extra perks
like
dental or vision.
[00:04:05]
Speaker 1: Part d,
[00:04:06]
Speaker 1: Prescription drug coverage
[00:04:08]
Speaker 1: run by private insurance companies
[00:04:10]
Speaker 1: to help cover the costs of prescription medication.
[00:04:18]
Speaker 1: Medicaid,
[00:04:19]
Speaker 1: the income based program.
[00:04:21]
Speaker 1: Now let's pivot to Medicaid.
[00:04:23]
Speaker 1: The memory trick here,
[00:04:25]
Speaker 1: we we provide financial aid to those who
[00:04:30]
Speaker 1: have limited income and resources.
[00:04:35]
Speaker 1: Unlike Medicare,
[00:04:36]
Speaker 1: Medicaid is a joint federal and state program.
[00:04:40]
Speaker 1: The federal government sets the baseline rules
[00:04:43]
Speaker 1: but each individual state runs its own version.
[00:04:48]
Speaker 1: They decide who qualifies,
[00:04:50]
Speaker 1: what extra benefits are offered,
[00:04:52]
Speaker 1: and how much providers get paid.
[00:04:56]
Speaker 1: This means Medicaid looks wildly different depending on your ZIP code.
[00:05:01]
Speaker 1: A person might qualify for Medicaid in New York
[00:05:05]
Speaker 1: but be completely ineligible across the border in a state that doesn't expand Medicaid
[00:05:11]
Speaker 1: under the Affordable Care Act.
[00:05:14]
Speaker 1: Generally,
[00:05:15]
Speaker 1: Medicaid targets
[00:05:17]
Speaker 1: low income individuals and families,
[00:05:20]
Speaker 1: pregnant women,
[00:05:22]
Speaker 1: children, often through the related CHIP program,
[00:05:26]
Speaker 1: people with disabilities,
[00:05:27]
Speaker 1: and elderly individuals who need long term nursing home care
[00:05:32]
Speaker 1: but have exhausted their savings.
[00:05:35]
Speaker 1: Let's look at a quick comparison checklist to solidify this.
[00:05:41]
Speaker 1: Funding.
[00:05:42]
Speaker 1: Medicare,
[00:05:43]
Speaker 1: a 100% federal.
[00:05:46]
Speaker 1: Medicaid,
[00:05:47]
Speaker 1: joint federal and state.
[00:05:50]
Speaker 1: Eligibility
[00:05:51]
Speaker 1: basis,
[00:05:52]
Speaker 1: Medicare,
[00:05:53]
Speaker 1: age 65
[00:05:56]
Speaker 1: or disability.
[00:05:58]
Speaker 1: Medicaid,
[00:05:59]
Speaker 1: income and asset levels.
[00:06:03]
Speaker 1: Location variety.
[00:06:05]
Speaker 1: Medicare
[00:06:06]
Speaker 1: identical nationwide.
[00:06:08]
Speaker 1: Medicaid
[00:06:10]
Speaker 1: varies drastically by state.
[00:06:13]
Speaker 1: Out of pocket costs,
[00:06:15]
Speaker 1: deductibles,
[00:06:16]
Speaker 1: premiums
[00:06:17]
Speaker 1: and 20%
[00:06:19]
Speaker 1: coinsurance for Medicare.
[00:06:21]
Speaker 1: Medicaid
[00:06:22]
Speaker 1: minimum
[00:06:23]
Speaker 1: to zero out of pocket costs.
[00:06:27]
Speaker 1: Long term care. Medicare
[00:06:30]
Speaker 1: does not pay for long term
[00:06:32]
Speaker 1: custodial care.
[00:06:34]
Speaker 1: Medicaid
[00:06:36]
Speaker 1: does pay for nursing homes and long term care.
[00:06:42]
Speaker 1: Application timing and deadlines.
[00:06:45]
Speaker 1: Now that we know what these programs are,
[00:06:48]
Speaker 1: let's talk about when to jump through the administrative hoops.
[00:06:52]
Speaker 1: Timing is everything, especially with Medicare,
[00:06:55]
Speaker 1: where missing a deadline can penalize you for the rest of your life.
[00:07:02]
Speaker 1: Medicare timing, the IEP,
[00:07:05]
Speaker 1: GEP
[00:07:06]
Speaker 1: and SEP.
[00:07:09]
Speaker 1: If you're turning 65,
[00:07:11]
Speaker 1: your primary
Target
is the initial
[00:07:14]
Speaker 1: enrollment period, IEP.
[00:07:17]
Speaker 1: This is a strict seven month window
[00:07:19]
Speaker 1: wrapped around your 60 birthday.
[00:07:23]
Speaker 1: Three months before the month you turn 65,
[00:07:27]
Speaker 1: the month of your birthday, and three months after the month you turn 65.
[00:07:33]
Speaker 1: If you are already receiving
Social Security
benefits when you turn 65,
[00:07:38]
Speaker 1: congratulations.
[00:07:39]
Speaker 1: You don't have to do anything.
[00:07:41]
Speaker 1: You will be automatically enrolled in parts a and b. Your card will just show up in the mail.
[00:07:48]
Speaker 1: But if but if you are not taking
Social Security
,
[00:07:52]
Speaker 1: you must actively sign up through the
Social Security
Administration website.
[00:07:58]
Speaker 1: What if you missed that seven month window
[00:08:01]
Speaker 1: because you forgot or were confused?
[00:08:05]
Speaker 1: Then you have to wait for the general enrollment period, GEP,
[00:08:09]
Speaker 1: which runs from January 1 to March 31 each year.
[00:08:15]
Speaker 1: Your coverage won't start until the first of the month after you sign up.
[00:08:21]
Speaker 1: And here is the kicker,
[00:08:23]
Speaker 1: the late enrollment
[00:08:24]
Speaker 1: penalty
[00:08:26]
Speaker 1: LEP,
[00:08:27]
Speaker 1: if you miss your IEP,
[00:08:29]
Speaker 1: you don't have alternative
[00:08:31]
Speaker 1: creditable coverage,
[00:08:33]
Speaker 1: your part b premium
[00:08:35]
Speaker 1: permanently goes up by 10%
[00:08:38]
Speaker 1: for every full twelve month period
[00:08:40]
Speaker 1: you could have had it but didn't.
[00:08:43]
Speaker 1: Part d prescription drug has a permanent late penalty too.
[00:08:48]
Speaker 1: You will pay that extra fee every single month
[00:08:51]
Speaker 1: for the rest of your life.
[00:08:54]
Speaker 1: The golden exception to this rule is the special enrollment period,
[00:08:59]
Speaker 1: SEP.
[00:09:00]
Speaker 1: If you're still working at 65
[00:09:03]
Speaker 1: and have health insurance through an employer
[00:09:06]
Speaker 1: or through a spouse's employer,
[00:09:09]
Speaker 1: you can usually delay part b and part d without penalty.
[00:09:15]
Speaker 1: Once that employment or health coverage ends, you have an eight month window to sign up for Medicare
[00:09:21]
Speaker 1: without paying any late penalties.
[00:09:24]
Speaker 1: Do not wait for COBRA to run out. COBRA does not count as active employer coverage for Medicare.
[00:09:36]
Speaker 1: Medicaid timing,
[00:09:38]
Speaker 1: rolling enrollment.
[00:09:39]
Speaker 1: Now for some simpler news.
[00:09:42]
Speaker 1: Medicaid timing is completely different. There is no enrollment window.
[00:09:46]
Speaker 1: Medicare features sorry. Medicaid features rolling enrollment.
[00:09:51]
Speaker 1: You can apply it any day, any week, and any time of the year.
[00:09:56]
Speaker 1: The second your income drops below your state's eligibility
[00:09:59]
Speaker 1: threshold,
[00:10:00]
Speaker 1: whether due to a job loss, a medical crisis,
[00:10:04]
Speaker 1: or retirement,
[00:10:05]
Speaker 1: you can apply immediately.
[00:10:09]
Speaker 1: Furthermore,
[00:10:10]
Speaker 1: Medicaid can sometimes work retroactively.
[00:10:13]
Speaker 1: If you incurred medical bills up to three months before the month you applied,
[00:10:18]
Speaker 1: Medicaid may cover those bills retroactively
[00:10:21]
Speaker 1: if you would have qualified during that period of time.
[00:10:27]
Speaker 1: Dual eligibility and long term care.
[00:10:30]
Speaker 1: Before we wrap up, we need to address a common myth.
[00:10:33]
Speaker 1: You can only have one or the other.
[00:10:36]
Speaker 1: That is false.
[00:10:38]
Speaker 1: Millions of Americans are actually dual eligibles.
[00:10:41]
Speaker 1: This means they qualify for both Medicare and Medicaid simultaneously.
[00:10:47]
Speaker 1: Think of it as a partnership.
[00:10:49]
Speaker 1: Medicare acts as your primary insurance.
[00:10:52]
Speaker 1: When you go to a doctor,
[00:10:54]
Speaker 1: Medicare pays its share first,
[00:10:56]
Speaker 1: then Medicaid acts as a secondary payer stepping in to cover the gaps
[00:11:01]
Speaker 1:
like
your Part b premiums,
[00:11:03]
Speaker 1: deductibles,
[00:11:04]
Speaker 1: and co pays.
[00:11:07]
Speaker 1: This is also where the massive massive issue of long term care comes into play.
[00:11:12]
Speaker 1: A lot of folks assume Medicare will pay for a nursing home if they get Alzheimer's
[00:11:17]
Speaker 1: or need full time assistance in their old age. It won't.
[00:11:22]
Speaker 1: Medicare only pays for a short term rehabilitation
[00:11:25]
Speaker 1: up to a hundred days after a hospital stay.
[00:11:28]
Speaker 1: If you need permanent
[00:11:30]
Speaker 1: long term custodial care,
[00:11:32]
Speaker 1: you either pay out of pocket until your savings are completely gone
[00:11:37]
Speaker 1: or you qualify for Medicaid.
[00:11:39]
Speaker 1: Because Medicaid covers long term care, many seniors undergo Medicaid spending processes
[00:11:47]
Speaker 1: to legally meet the low asset limits required to get this vital care covered.
[00:11:54]
Speaker 1: We have covered a lot of ground today. Let's hit the three most critical takeaways to remember.
[00:12:00]
Speaker 1: One,
[00:12:01]
Speaker 1: Medicare is age and disability based
[00:12:05]
Speaker 1: and run by the federal government.
[00:12:08]
Speaker 1: Medicaid is income based and run by your individual state.
[00:12:13]
Speaker 1: Mark your 60 birthday calendar.
[00:12:16]
Speaker 1: You have a strict seven month window to sign up for Medicare
[00:12:20]
Speaker 1: unless you have qualifying health insurance through an active employer.
[00:12:25]
Speaker 1: Three, Medicaid applications
[00:12:27]
Speaker 1: are open year round,
[00:12:29]
Speaker 1: so apply the moment your financial
[00:12:31]
Speaker 1: circumstances
[00:12:32]
Speaker 1: change.
[00:12:34]
Speaker 1: If you are near 65,
[00:12:36]
Speaker 1: your
Best
friend is SHIP,
[00:12:38]
Speaker 1: the State Health Insurance Assistance Program.
[00:12:41]
Speaker 1: It provides free, unbiased
[00:12:44]
Speaker 1: local counselling to help you navigate
[00:12:46]
Speaker 1: these exact choices
[00:12:48]
Speaker 1: without selling you a commercial policy.
[00:12:52]
Speaker 1: Thanks for joining me on this episode of Well Grow.
[00:12:56]
Speaker 1: If you found this helpful, please subscribe and leave us a
review
.
[00:13:00]
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like
us to cover?
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[00:13:05]
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[00:13:07]
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[00:13:08]
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[00:13:10]
Speaker 1: Thanks for listening, and until next time, plan wisely,
[00:13:15]
Speaker 1: invest smartly, and build a legacy that lasts.
[00:13:19]
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