Federal Law and Legal Definition

Medicaid is a medical assistance program jointly funded by state and federal governments for low income individuals. It was originally enacted as part of the Social Security Act of 1935. Today, Medicaid is a major social welfare program and is administered by the Health Care Financing Administration.

Medicaid covers in-patient hospital services, out-patient hospital services, laboratory and x-ray services, skilled nursing home services, physicians' services, physical therapy, hospice care, and rehabilitative services, and other services. Patients must select from pre-approved physicians and other providers of medical care. Medicaid eligibility is not restricted by age or employment.

Federal law prevents states from reducing other welfare benefits people receive when they become eligible for Medicaid. Also, states may not impose citizenship or residency requirements other than requiring that an applicant be a resident of the state. Within broad national guidelines established by Federal statutes, regulations, and policies, each State (1) establishes its own eligibility standards; (2) determines the type, amount, duration, and scope of services; (3) sets the rate of payment for services; and (4) administers its own program. Medicaid policies for eligibility, services, and payment are complex and vary considerably, even among States of similar size or geographic proximity. Thus, a person who is eligible for Medicaid in one State may not be eligible in another. In 1996, Congress passed a law making persons criminally liable for committing fraud in order to become eligible for medical assistance.

Medicare is a federally funded system of health and hospital insurance for U.S. citizens, regardless of income, age sixty-five or older, for younger people receiving Social Security benefits, and for persons needing dialysis or kidney transplants for the treatment of end-stage renal disease. Medicare beneficiaries usually receive medical care through physicians of their own choosing or through health maintenance organizations and other qualified medical plans.