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Understanding the Differences between Various Parts of Medicare and Medicaid

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities and people with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by states, according to federal requirements. States and the federal government fund the program jointly.

Medicare includes different parts and helps cover specific services, as follows:

Medicare Part A (Hospital Insurance)

Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care and some home healthcare.

Medicare Part B (Medical Insurance)

Part B covers certain doctors' services, outpatient care, medical supplies and preventive services.

Medicare Part C (Medicare Advantage Plans)

A Medicare Advantage Plan is a type of Medicare health plan offered by a private company that contracts with Medicare to provide patients with both Part A and Part B benefits. Medicare Advantage Plans include the following:

  • Health Maintenance Organizations
  • Medicare Medical Savings Account Plans
  • Preferred Provider Organizations
  • Private Fee-for-Service Plans
  • Special Needs Plans

If you are enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan and are not paid for under Original Medicare. Most Medicare Advantage Plans also offer prescription drug coverage.

Medicare Part D (Prescription Drug Coverage)

Part D adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans and Medicare Medical Savings Account Plans. These plans are offered by insurance companies and other private companies approved by Medicare. In addition, Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.