Medicaid and Private Insurance Eligibility
Generally, you can buy private insurance through your employer (if your employer offers it), directly from an insurer, or via online marketplaces. For Medicaid, states generally must cover individuals with low incomes, children and pregnant women who meet certain requirements, and those eligible for Supplemental Social Security Income—although the exact requirements may differ slightly from state to state. In some cases, you can have both Medicaid and private health insurance, as long as you meet your state’s income requirements to qualify for Medicaid. Having both types of insurance might make your medical care significantly more affordable. That said, there may be some downsides to using both.
How Having Medicaid and Private Insurance Works
If you have both Medicaid and private insurance, it’s important to understand how they interact. This interaction is known as the “coordination of benefits” (COB). In most cases, when you have Medicaid as well as another health insurance coverage, Medicaid serves as last-resort supplemental coverage—often known as “wrap-around” coverage. This means your other health insurance plan is required to pay for covered expenses first. It’s only after your other plan has kicked in first that Medicaid will cover what’s left.
Advantages of Having Medicaid and Private Insurance
Carrying both Medicaid and private insurance can drastically reduce your out-of-pocket costs, especially if your private insurance plan has a high deductible or pays for only a small percentage of your care. Let’s say you get a hospital bill for $5,000 and you have a coinsurance of 20% on your private insurance plan. As a result, your plan will cover 80% of your hospital bill, which amounts to $1,000. Under normal circumstances, you would be on the hook for the remaining $1,000. But if you have Medicaid as supplemental coverage, it would pay for the remaining balance, minus any coinsurance or copay you have. So if your Medicaid coverage requires a copayment of $50, you would pay that amount while Medicaid covers the other $950.
Disadvantages of Having Medicaid and Private Insurance
If you’re eligible for Medicaid, you’re no longer eligible for any premium tax credits on Obamacare coverage. As a result, rather than Medicaid saving you money, it could actually increase your premiums if you continue to carry the plan you bought from the Marketplace. There could also be a disadvantage even if your private insurance plan isn’t a Marketplace plan, but is provided by your employer. If you choose to keep Medicaid and your employer insurance, maintaining your employer-sponsored coverage likely means continuing to pay substantial costs for premiums. Considering that Medicaid eligibility is dependent on having a low income, the yearly premiums for private health insurance could make up a significant amount of your budget. If you feel like your Medicaid coverage is as good as or better than your private plan, it may not be worth it to keep your private insurance.
Is It Worth It To Keep Both?
To decide whether it’s worth it to maintain both coverages, run the numbers to see what your total out-of-pocket cost would be for only Medicaid versus Medicaid with your private insurance. Pay special attention to what your state’s Medicaid covers since it could be worth it to keep your private insurance if your state’s Medicaid doesn’t provide all the coverage you need. To help you decide, let’s back up a bit and go over some basic information about Medicaid and private health insurance.
Medicaid vs. Private Insurance
Medicaid and private insurance are two of the most popular types of health insurance coverage for American families.
What Is Medicaid?
Medicaid is a government-funded health insurance program that works as a partnership between the federal and state governments. This program is designed for individuals with low income, children, elderly adults, pregnant women, and those with disabilities. Medicaid was created in 1965. Each state operates its own Medicaid program and is able to have different program guidelines, features, and requirements. The exact services covered under Medicaid may differ depending on the state, but services that all states are required to cover include (but aren’t limited to):
Inpatient and outpatient hospital servicesPhysician servicesLab and X-ray servicesHome-health servicesFamily-planning servicesTransportation to medical care
The federal government allows states to require you to pay for some of your Medicaid costs in the form of copayments, deductibles, and coinsurance. However, cost-sharing isn’t allowed for emergency services, family-planning and pregnancy services, or children’s preventive care. States must cover 100% of those services.
What Is Private Insurance?
Private health insurance includes any health insurance plan that’s offered by a private insurer and isn’t funded by the government. Many Americans receive their private insurance through an employer-sponsored group plan, while others purchase their own coverage directly through a private insurer or through the Health Insurance Marketplace. How private insurance works may look a bit different depending on whether or not it’s an employer-sponsored plan. When companies offer insurance plans, they often give their employees a select list of plans to choose from. They may also cover a certain portion of their employees’ premiums. But if you buy health insurance outside of an employer-sponsored plan, you’re usually responsible for your entire premium, unless you buy a Health Insurance Marketplace plan and are eligible for federal premium tax credits. Because private insurance isn’t a government-run program, plans may look different from one insurer to the next. That said, there are 10 essential health benefits all private insurance plans must cover (not including short-term insurance), as required by the Affordable Care Act:
Ambulatory servicesEmergency servicesHospitalizationPregnancy, maternity, and newborn careMental health services and substance abuse disorder servicesPrescription drugsRehabilitative and habilitative care and devicesLaboratory servicesPreventive care and chronic disease managementPediatric services
Like Medicaid, private insurance usually requires you to share the cost of your care in the form of premiums, copayments, deductibles, and coinsurance.
