Both Medicare and its associated program, Social Security Disability Insurance, aim to provide financial assistance to people in the form of health insurance and disability benefits, respectively. But is Medicare means-tested?
Like Social Security Disability Insurance (SSDI), Medicare is available to people with all kinds of financial backgrounds. If you qualify for Social Security Disability Insurance, then you will automatically be eligible for Medicare after a period of 24 months.
Means-tested benefits are government aid and welfare programs that assess a family’s income compared to the federal poverty line. On the other hand, universal benefits like public schools, Medicare, and social security retirement income don’t consider your income when you apply for them; therefore, they are not means tested.
Difference Between Medicare and Medicaid
Medicaid and Medicare are only two of the many government programs that may be available to people who need health benefits or suffer from a disability. These two programs pay for a share of federal spending on health care. Because the names of the two programs are so similar to one another, differentiating between the two can be challenging.
However, Medicaid and Medicare are very different from one another in terms of both eligibility requirements and the benefits they provide. The following is a comparison of the two programs.
Medicaid
Medicaid is a joint federal and state initiative that provides health insurance to certain low-income individuals and families. These include children, pregnant women, parents of eligible children, those with disabilities, and those in need of long-term care.
To be eligible for Medicaid, a person must have a low monthly income and, in some situations, very few resources in the person’s possession. Medicaid is a means-tested program since eligibility is determined by an individual’s income and assets.
Medicare
Medicare is a health insurance program that is available to all eligible individuals, regardless of their financial situation. Medicare recipients tend to be over the age of 65; however, under-65s with disabilities who have been receiving Social Security Disability Insurance payments for at least two years are also eligible for Medicare.
Who Can Get Medicare?
Medicare is generally intended for those who have reached the age of 65. If you are suffering from a disability, end-stage renal disease (ESRD, permanent kidney failure that requires dialysis or a transplant), or amyotrophic lateral sclerosis (ALS, often known as Lou Gehrig’s disease), you may be eligible for Medicare at an earlier age.
Medicare consists of four parts:
- Part A (Hospital Insurance)
- Part B (Medicare Insurance)
- Part C (Medicare Advantage Plans)
- Part D (Prescription Coverage)
Part A
The vast majority of people do not have to pay a premium for their Medicare Part A coverage. This is also known as “premium-free Part A.” If any of the following apply to you, you will be exempt from paying the Part A premium:
- Have met the requirements to receive (or are already receiving) retirement or disability payments from Social Security (or the Railroad Retirement Board),
- Enroll in Medicare before 65,
- Are 65 or older, and either you or someone you’re related to (such as a current or past spouse) paid Medicare taxes while employed for a specified period of time (often 10 years).
If you don’t get Part A premium for free, you may be able to purchase it.
Part B
If you enroll in Medicare Part B, you must pay a monthly payment even if you do not use any of the services that are covered by this plan. The annual premium can go up or down, depending on your financial situation.
The vast majority of people do not get a bill from Medicare since the premium is taken out of their Social Security, Railroad Retirement Board, or Civil Service Retirement checks automatically. If your premium is not automatically deducted, Medicare will send you a charge for your Part B premium.
Most people who are eligible for Medicare Part B will indeed have their premium automatically deducted from their Social Security, Railroad Retirement Board, or Civil Service Retirement checks. This is known as “premium withholding.”
However, if your premium is not automatically deducted, Medicare will typically send you a bill for your Part B premium on a monthly basis.
Part C
Medicare Part C plans have different monthly premiums. The annual premium is subject to change.
Part D
The cost of Medicare Part D monthly premiums varies per plan. The annual premium amount is subject to change. Additional monthly payments may also be required, depending on your income level.
What Does Means Tested Mean?
A means test is a way to determine whether or not an individual is eligible for financial help to obtain a service or good, such as welfare benefits. It evaluates a person’s ability to cover costs for a service or good by considering the amount of money the person already has and the amount they might be able to earn in the future.
Is Medicare Means Tested?
Medicare is a health insurance program in the United States for those age 65 and up and is not based on a person’s financial situation. This means that most Medicare benefits are available regardless of a person’s ability to pay. Instead, eligibility relies on factors such as age and, in some situations, disability.
It’s important to keep in mind that while Medicare coverage is not based on income, some premiums and services may be more or less affordable depending on your financial situation. Individuals who have higher incomes may be subject to increased rates for Medicare Parts B and D.
Adjustments based on monthly income are referred to as Income-Related Monthly Adjustment Amounts (IRMAA). However, this is not a true means test because it applies to only some Medicare recipients and has to do with income levels.
Will I Have to Pay Back Medicare?
Since Medicare is an insurance program, beneficiaries are not typically responsible for paying back any portion of their benefits.
On the other hand, a Medicare beneficiary or potential Medicare beneficiary may be required to establish a Medicare set-aside trust in certain circumstances, including workers’ compensation and other claims. This trust is intended to pay a portion of the beneficiary’s future medical expenses.
Conclusion
So, while Medicare is designed to charge those with higher incomes more than others, many argue that it is not actually means-tested since it is based solely on income and applies only to specific individuals who go above a certain income threshold.
