Do You Need Health Insurance if You Have Medicare or Medicaid?

Some elderly or disabled individuals may not need to purchase health insurance under Obamacare.

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Lisa Greene-Lewis
Under health care reform, otherwise known as the Affordable Care Act or Obamacare, uninsured Americans will be required to have health insurance by March 31, 2014 or face a tax penalty.

There will be an option to shop for and purchase health insurance through your state's online health insurance marketplace beginning Oct. 1, 2013. You may also qualify for a tax credit to help you pay for your health insurance if you purchase through the online exchange.

However, some uninsured lower income, elderly or disabled individuals may not need to purchase health insurance through their state's online marketplace, as they may qualify for Medicaid and Medicare. Here is the difference between the two programs and how they're affected by health care reform.

Medicaid

What it is: Medicaid is a state-run health insurance program for individuals, families, children, and people with disabilities under the age of 65. Individuals can qualify for Medicaid based on their income and family size.

If you currently have Medicaid: You're already covered and you don't need to worry about purchasing health insurance through the exchanges. Although you are ineligible to receive a tax credit through your state's health insurance exchange, you have the benefit of receiving free or low-cost health insurance through Medicaid. 

Who qualifies: Some states have expanded their Medicaid insurance program to individuals with higher-income limits. Under the new health care law, you may qualify for Medicaid coverage if you make up to $15,800 per year or $32,500 for a family of four.

The benefits: Medicaid benefits may also vary by state, but there are certain benefits that must be covered by every Medicaid program, including inpatient hospital services, X-ray and laboratory services, and physician services. Keep checking on your state's Medicaid coverage plans, since states are allowed to expand their programs at any time and there is no deadline for expansion. You can check your state's Medicaid office to find out the status of your state's offering.

The bottom line: If you qualify for Medicaid and don't have health insurance yet, you can apply as early as Oct. 1, 2013 through your state's Medicaid office or your state's health insurance marketplace. You can avoid a tax penalty by having Medicaid coverage before March 31, 2014.

Medicare

What it is: Medicare is a federal health insurance program for individuals age 65 or older, people with disabilities under age 65 or people of any age with kidney failure.

If you currently have Medicare: You are covered and don't need to worry about purchasing health insurance through exchanges (Medicare isn't part of the health insurance marketplace) or receiving a tax penalty.

However, individuals with higher incomes ($200,000 for an individual and $250,000 for couples filing jointly) may see an additional Medicare tax of 0.9 percent on their wages beginning this year as a result of health care reform.

Who qualifies: You can see if you're eligible for Medicare by checking the Medicare Eligibility Tool. In general, you may be eligible for Medicare if you or your spouse worked in Medicare-covered employment for at least 10 years and you are at least 65 years old.

The benefits: Various parts of Medicare cover different services. For example, Medicare Part A covers inpatient hospital care as well as hospice care. Meanwhile, Medicare Part B covers outpatient care, medical equipment expenses, health care provider services and some preventative screenings, which have been expanded under health care reform. Preventative care includes an annual wellness visit, flu shots and HIV, depression and diabetes screenings, among others.

The bottom line: The method in which you obtain Medicare coverage won't change under the law, and the open enrollment is still Oct. 15 to Dec. 7. You can visit Medicare.gov to learn more about the program's options.

Lisa Greene-Lewis is a certified public accountant and TurboTax tax expert. She has more than 15 years of experience in tax preparation, including positions as a public auditor, controller and operations manager. For more tax-related tips, go to blog.turbotax.intuit.com.