Medicare and Medicaid are federal programs instituted in 1965 to help cover medical expenses for American citizens and some legal non-citizens. Both are administered by the Centers for Medicare and Medicaid, a federal government agency of the United States Department of Health and Human Services (HHS).
Medicare is a trust-fund type insurance organization funded by taxpayers who pay into it with payroll deductions during their working years. It is designed to cover people aged 65 and older and people with End-Stage Renal Disease (ESRD) and certain other chronic, disabling diseases.
Medicare is available to all qualifying Americans regardless of income level. Certain out-of-pocket costs will be based on income. About 80 percent of Medicare-approved charges will be covered by Original Medicare, with the recipient paying the remaining 20 percent.
Many Medicare beneficiaries purchase a Medicare Supplement Plan to help cover the 20 percent. Others choose a Medicare Advantage Plan purchased from a private insurance company reimbursed by Medicare. In both cases, remaining out-of-pocket expenses are based on income but are much less than 20 percent of the total.
Out of pocket costs with a Medicare Supplement Plan or Medicare Advantage Plan would include a small monthly premium for out-patient coverage, hospital and other deductibles, coinsurance, and copayments.
As of September 2020, 70.6 million people were covered by the Medicaid Program.
Low-income individuals, including adults, children, people with disabilities, and elderly adults, may qualify for Medicaid coverage.
Individual states administer the Medicaid Program according to federal specifications. Funding for the Medicaid program is provided by the states, including the District of Columbia and the federal government.
Two partner programs of Medicaid help furnish a solid foundation for maintaining the nation’s health.
- The Children’s Health Insurance Program (CHIP): Matching federal funds are supplied to states to help provide medical coverage to children whose families cannot afford private medical care but who have incomes above the level to qualify for Medicaid
- The Basic Health Program (BHP): This program provides states with an option to be able to offer affordable medical coverage with improved continuity of care to people with incomes that fluctuate above and below eligibility levels for the Medicaid and CHIP programs
In 2020, the CARES Act enhanced the Medicare and Medicaid programs’ potential to help fund the COVID-19 pandemic crisis.