Medicaid 101

With roughly 70 million Americans enrolled, Medicaid is one of the most wide-ranging -- and expensive -- government programs in the United States. It also serves a vital purpose -- providing healthcare services for those who could otherwise not afford it. Children, in particular, are well-represented in the program, comprising 43-percent of Medicaid enrollees.

Young people aren't the only core group being served by Medicaid, however; Americans nearing or at retirement age are also a key demographic for Medicaid assistance.

Let's review the basic contours of the Medicaid program -- and common circumstances that may trigger eligibility.

What Medicaid Does

Like its older cousin, Medicare, Medicaid is a government program that provides health care to certain eligible populations. There are some core distinctions, however. Medicare is an insurance program for older and disabled Americans that generally requires small monthly premiums. Medicaid is an assistance program available to low-income people regardless of age. While Medicare is a federal program, Medicaid is operated jointly by the federal government and U.S. states. Essentially, it's a state and local program that is operated under federal guidelines and with federal funding. Because of this, financial eligibility requirements vary from state to state.

Who Is Eligible for Medicaid?

Eligibility for Medicaid assistance is determined by meeting certain requirements based on income and family size. The best way to determine if you are eligible is by consulting your state government's Medicaid website.

It should be noted that eligibility requirements vary widely among states. The passage of the federal Affordable Care Act came with a large Medicaid expansion states could either choose to accept or decline. States that accepted the expansion have looser eligibility requirements.

Medicaid and Retirees

While Medicaid has traditionally been seen as strictly an assistance program for low-income Americans, our growing life spans have made Medicaid more relevant for retirees. The primary reason for this is because Medicaid pays for two key services that Medicare does not: long-term care and custodial care.

Long-term care is essentially nursing home care. While Medicare pays for short-term rehabilitative care, it will not pay for care beyond 100 days. Medicaid will pay for long-term nursing under some circumstances, although it may not cover the full cost.

Custodial care involves helping people with daily tasks such as washing, cleaning, getting dressed, etc. Medicare does not cover such costs -- and they can be extraordinarily expensive. If you have dual eligibility for both Medicare and Medicaid, the odds are good most of your healthcare costs will be largely covered.

The Takeaway

While Medicaid is often perceived as an assistance program for low-income people, it plays a key role for Medicare-eligible retirees who may be struggling to cover certain costs not covered by their insurance. If you're nearing retirement age, consider how these two programs may work together for your benefit.