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Understanding Medicare and Medicaid

What’s the difference between Medicare and Medicaid? And how is each related to your business?

This section discusses the differences between the two programs as well as the interrelationship between public health insurance and the business community.

As an employer, it’s important to know the needs and services available to your diverse workforce.

One of those services is Medicare, a public program that assists the aging population, as well as people with disabilities. The other one is Medicaid, a federal healthcare benefit program, administered by the state.

Medicare Facts

  • Medicare is often referred to as federal public health insurance for the elderly, yet nearly 7 million people with disabilities under the age of 65 are on Medicare.1
  • Funding for Medicare does not just come from payroll tax revenues. Funding also comes from general revenues and premiums paid by the beneficiaries themselves.
  • There are no income or asset test requirements to qualify for Medicare.
  • Employer-sponsored plans are one of the leading sources of supplemental coverage for Medicare beneficiaries. In 2006, 35 percent of beneficiaries had an employer-sponsored plan — approximately one in three beneficiaries.1

Medicaid Facts

  • The state Medicaid program in Massachusetts is known as MassHealth.
  • In 2008, Medicaid was a source of supplemental coverage for 8 million Medicare beneficiaries with low income or assets. Individuals who are beneficiaries of both programs are referred to as “dual eligible.”
  • According to a Massachusetts Medicaid Policy Institute report 2, some important ways that MassHealth and the business community are interrelated are:
  • MassHealth addresses gaps in employer-sponsored insurance coverage for low-wage workers and their families.
  • MassHealth plays a supportive role to employer coverage. For example, it may provide public assistance to cover out-of-pocket costs for low-wage workers, or may offer financial support to small employers who provide health coverage to low-wage workers, known as the Insurance Partnership program.
  • MassHealth is a major partner in maintaining a healthy workforce by promoting insurance coverage.
  • MassHealth provides coverage support for employees with disabilities to join and remain in the workforce by paying for needed medical services that are otherwise difficult to obtain.

Next Steps

  • Are members of your workforce on public insurance programs? If not, learn more about Medicare, Medicaid and MassHealth.
  • Make sure that your employees are aware of public insurance programs. Provide literature about these programs in your Human Resources office and make them readily available to your employees.

Resources

Medicare

  • For more general information on Medicare, The Henry J. Kaiser Foundation has developed a user-friendly report called Medicare: A Primer
  • For more detailed information about Medicare, visit www.medicare.gov

Medicaid



1The Henry J. Kaiser Foundation, Medicare: A Primer, January 2009

2Massachusetts Medicaid Policy Institute, MassHealth: It’s Good for Business, June 2005