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What is Medicaid and how does it differ from Medicare?

Medicaid is a joint insurance program between the federal government and states for low-income people of all ages. Whereas Medicare is for elderly people, Medicaid is available to low-income children and adults. Medicaid programs vary by state and have different restrictions.

TIP: Individual state agencies and the Health Care Financing Administration (HCFA) oversee the program. Contact your state agency to see if you qualify.

Who is eligible for Medicaid?

Medicaid is generally for people that are determined to be low-income, have a disability and are eligible for federal aid. In some states, you are automatically eligible for Medicaid if you receive Supplemental Security Income (SSI).

CAUTION: The eligibility requirements differ in each state. Contact your state's program to see if you qualify.

How much will Medicaid cost?

Depending on your state's rules, you may have to pay a small deductible or copayment. But Medicaid beneficiaries who are hospital or nursing home patients and are expected to contribute most of their income to institutional care are exempted from this requirement. And you do not have to pay a copayment for emergency services.

Can I make a salary and still get Medicaid?

Because Medicaid is directed toward low-income citizens as opposed to just the elderly, income is a factor to consider. Generally, if you receive SSI, you will be eligible to receive Medicaid benefits. Medicaid categorizes resources as either countable or noncountable; it uses countable assets to determine eligibility. These assets include those that can be converted to cash, such as bank accounts, retirement benefits and property. Noncountable assets do not affect eligibility and include such assets as your home, one car, personal belongings and household furnishings and appliances.

A friend says I have too much money in assets to be eligible for Medicaid and that I should sell some off to qualify. Can I do this?

No. Medicaid has strict rules about transferring your assets to be eligible for the program. State programs vary, but generally, any transfers made for up to 60 months (5 years) before you apply for Medicaid may be considered assets for eligibility purposes. Before trying to sell any of your assets, check to see what your state's transfer limit is.

Someone told me I can still apply for Medicaid even though my income exceeds the limit, but I will have to "spend down" some of my assets. What does this mean?

A "spend-down" is like an insurance deductible. If your income or assets are above the Medicaid limit, you will have to incur bills in the amount of your spend-down to be eligible. You will receive a Medicaid card after you prove your spend-down.

EXAMPLE: Joe has $1,000 in assets over the Medicaid limit. Once Joe spends $1,000 on medical bills and submits copies to his local Medicaid office, Medicaid will provide Joe with a Medicaid card.

What requirements are there for getting Medicaid?

Medicaid is offered to several categories of people, included the aged. As mentioned above, you must also meet your state's income and asset limits to be eligible. Medicaid also requires that you be a United States citizen and a resident of the state in which you apply. Some legal immigrants may also qualify.

How do I apply for Medicaid?

You can apply for Medicaid at your local social services office. Look in the government pages of your phone book. If you cannot find it, call your local Social Security office, and they can direct you to the closest Medicaid office. Or visit to locate your state's program.

What does Medicaid pay for?

Medicaid requires all states to provide some basic medical services. After these basics, the states can offer-or not offer-services of their choosing. Required medical services include inpatient and outpatient hospital services, physicians' services, some home health care services and nursing home services in Medicaid-approved facilities.