What’s the Difference Between Obamacare & Medicare?

Obamacare is the nick name affectionately given to the Affordable Care Act (ACA) passed back in 2010. The law’s intention was to provide coverage for those who cannot afford it through the form of a subsidy and to provide coverage to people who could not be accepted for health coverage due to pre-existing conditions.

The ACA was the largest piece of legislation to be passed through congress in 45 years. Can you guess the largest bill prior to that? If you said Medicare, you are correct! Passed in 1965 Medicare was a tremendous undertaking by the US government. Prior to Medicare, approximately 35% of the population over 65 were uninsured due to cost. If that sounds sort of familiar, you might be thinking of how many people under 65 went uninsured prior to the ACA.

As of January 1st, 2014, insurance providers offering coverage through the ACA are no longer able to underwrite (require medical information) when signing up a new participant. In addition, people may be eligible for a subsidy when signing up for an ACA plan based on income.

Medicare is health insurance for people 65 and older or for those who have been collecting disability benefits for 24 months or longer.

ACA plans are all sold through private insurance carriers. The plans are typically HMO or PPO plans and the coverage levels are bronze, silver, gold and platinum with platinum plans being the most comprehensive. The better the coverage, the higher the cost.

Medicare is health insurance for people 65 and older or for those who have been collecting disability benefits for 24 months or longer. Other than age, one of the biggest differences is in how Medicare is funded. Medicare is funded through payroll tax deductions similar to how our social security benefits are funded.

As we work and pay taxes, part of our check goes to fund Medicare. Upon turning 65, a large part of our benefits are given back to us through the form of health insurance. Medicare is fairly complex and there are elements of the coverage that are subsidized by the government even further such as prescription drug coverage and Medicare Advantage plans.

If you really examine Medicare as it compares to the ACA you would see striking similarities in certain aspects. This would only make sense because we are talking about two massive health insurance programs passed by the federal government, subsidized by the government and working in tandem with private health insurance carriers. The most major difference is that one is for people over 65 and the other for people under 65.

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