Dual eligibility refers to individuals who qualify for both Medicare and Medicaid, providing comprehensive health coverage for those with limited income and resources. Medicare is a federal program primarily for people over 65 or those with certain disabilities. Medicaid is a joint federal and state program designed for financially needy persons of any age.
This dual status means the two programs work together to cover a broad range of medical needs and reduce out-of-pocket expenses. Medicare acts as the primary payer for most medical services, processing the claim first and paying its share of the approved amount. Medicaid then functions as the payer of last resort, covering remaining costs and services not addressed by Medicare.
How Primary and Secondary Insurance Coordinate Payments
The coordination of benefits between Medicare and Medicaid is managed through a process known as the “Crossover Claim.” This process ensures providers are reimbursed efficiently and minimizes the patient’s financial liability.
The sequence begins when a healthcare provider submits a claim for a dual-eligible patient to Medicare, which acts as the primary payer. Medicare processes the claim and pays its portion of the approved amount, which is typically about 80% for many medical services.
After processing, Medicare automatically forwards the remaining balance, which represents the patient’s cost-sharing liability (deductibles, copayments, and coinsurance), to the state Medicaid program. This electronic transfer eliminates the need for the provider to manually bill Medicaid separately.
Medicaid then reviews the forwarded claim as the secondary payer, determining how much of the remaining patient responsibility it will cover. For many dual-eligible individuals, Medicaid pays this remaining balance, resulting in little to no out-of-pocket expense for the patient for Medicare-covered services.
Eliminating Cost-Sharing for Medicare Services
The primary benefit of having Medicaid as secondary coverage is the elimination of most out-of-pocket costs associated with Medicare-covered services. For those who meet the eligibility requirements, Medicaid covers these cost-sharing amounts.
For Medicare Part A, which covers hospital insurance, Medicaid will pay the inpatient hospital deductible, which resets annually. It also covers the daily coinsurance amounts that begin accruing after a specified number of days during an extended hospital or skilled nursing facility stay.
Regarding Medicare Part B, which covers outpatient care, doctor visits, and durable medical equipment, Medicaid eliminates the annual deductible. Furthermore, it covers the standard 20% coinsurance that Medicare does not pay for most Part B services.
Medicaid also provides financial relief for prescription drug coverage under Medicare Part D. It generally covers the Part D premium, if applicable, and automatically enrolls the individual into the Extra Help program (Low-Income Subsidy). This subsidy eliminates nearly all out-of-pocket costs for medications, including deductibles, coverage gap costs, and copayments.
Filling Coverage Gaps with Supplemental Benefits
Beyond covering Medicare’s cost-sharing, Medicaid fills significant gaps by providing benefits that Medicare does not cover or covers only in a limited capacity. The most substantial gap filled is in Long-Term Services and Supports (LTSS), which includes most custodial care.
Medicare only covers short-term, medically necessary skilled nursing facility care for up to 100 days following a qualifying hospital stay. In contrast, Medicaid covers the full cost of long-term nursing home care for those who qualify, which is not a Medicare benefit. Medicaid also funds extensive Home and Community-Based Services (HCBS), such as personal care assistance, which allows many individuals to receive support in their own homes.
Medicaid also commonly covers routine services that Medicare excludes, such as comprehensive vision, dental, and hearing care. This coverage often includes routine eye exams, dental procedures, eyeglasses, and hearing aids. Additionally, Medicaid programs frequently provide Non-Emergency Medical Transportation (NEMT), covering rides to and from medical appointments, a service not provided by Medicare.
Integrated Coverage Through Specialized Health Plans
For dual-eligible individuals, receiving benefits is often streamlined through a specific type of private health plan known as a Dual Eligible Special Needs Plan (D-SNP). These plans are a subset of Medicare Advantage (Part C) designed explicitly for people with both Medicare and Medicaid.
D-SNPs coordinate the medical benefits covered by Medicare with the supplemental services covered by Medicaid into a single plan. This integration simplifies the experience for the patient, who might otherwise navigate two separate systems.
These specialized plans often provide additional benefits beyond what Original Medicare offers, such as enhanced dental, vision, and hearing coverage, along with care coordination services. Enrolling in a D-SNP allows beneficiaries to maintain all their Medicaid benefits while receiving their Medicare services through a single managed care organization.