Ch7. Medicare, Medicaid & Workers Compensation — Health and Injury Insurance

Medicare Program Structure

Medicare:
Federal health insurance for people 65+ and qualifying
people with disabilities under 65

Funding:
Part A: Hospital Insurance Trust Fund (FICA payroll taxes)
Part B/D: Supplementary Medical Insurance Trust Fund
  (premiums + general revenues)
Part C (Medicare Advantage): managed care plans

Part A (Hospital Insurance):
Inpatient hospital stays, skilled nursing facility care,
home health, hospice
Premium: free for most (40+ quarters of work history)
Deductible: $1,632 per benefit period (2024)

Part B (Medical Insurance):
Outpatient care, physician services, preventive care
Monthly premium: $174.70 (standard 2024)
Annual deductible: $240 (2024); then 80/20 coinsurance

Medicaid Program Structure

Medicaid:
Joint federal-state health coverage for low-income
individuals and families

Eligibility:
Children, pregnant women, adults, elderly, and disabled
with income below state thresholds
ACA expanded eligibility to adults up to 138% FPL
  (adopted by most but not all states)

Federal Medical Assistance Percentage (FMAP):
Federal government pays 50–83% of state Medicaid costs
Poorer states receive higher federal match

Benefits:
Mandatory: hospital, physician, lab, EPSDT (children's)
Optional: dental, vision, prescription drugs, long-term care

Long-term care:
Medicaid pays for nursing home care for those who spend
down to asset limits (typically ~$2,000 in most states)
HCBS waivers: home and community-based alternatives

Affordable Care Act (ACA)

ACA (2010):
Major health reform law expanding coverage and regulating
private health insurance

Key ACA provisions:
Medicaid expansion: states can cover adults up to 138% FPL
Marketplace plans: subsidized coverage on Healthcare.gov
Individual mandate: repealed (penalty removed in 2019)
Dependent coverage: children covered to age 26 on parent plan
Pre-existing conditions: insurers cannot deny coverage or
  charge more based on health history
Essential health benefits: minimum coverage standards

Premium tax credits:
Income-based subsidies for Marketplace plans
Available to households from 100% to 400% FPL
(expanded temporarily post-COVID to higher incomes)

Cost-sharing reductions:
Additional subsidies for lower-income enrollees
Reduce deductibles and copays

Workers’ Compensation

Workers' compensation:
State-run mandatory insurance system protecting workers
injured on the job

Employer obligation:
Employers must carry workers' comp insurance
(or be self-insured) — funded entirely by employer
No employee contribution required

Covered injuries:
Work-related accidents, occupational diseases
On-the-job injuries including commuting in some states
(depends on "coming and going" rule)

Benefits:
Medical benefits: all necessary medical treatment covered
Temporary disability: typically 60–70% of average wages
Permanent disability: lump sum or ongoing payments
Vocational rehabilitation
Death benefits: for dependents of fatally injured workers

Exclusive remedy doctrine:
Workers' comp generally bars negligence lawsuits against
employer (trade-off for guaranteed no-fault coverage)
Exception: gross negligence or intentional harm

Medicare Out-of-Pocket Limit — Part B 80/20 ★★★★★ : Medicare Part B generally pays 80% of approved costs; the beneficiary pays 20% with no out-of-pocket cap (unless covered by Medigap or Medicare Advantage). Memory hook: Part B = Medicare pays 80%, you pay 20%

Medicaid = State-Federal Partnership ★★★★★ : Medicaid is jointly funded by federal and state governments. The federal government pays a percentage (FMAP) based on state per capita income. States design programs within federal rules. Memory hook: Medicaid = joint federal-state program

Workers’ Comp = Employer Pays, Exclusive Remedy ★★★★★ : Workers’ compensation premiums are paid entirely by the employer. In exchange, injured workers generally cannot sue their employer in civil court for the same injury. Memory hook: Workers’ comp = employer pays; no-fault trade-off

Practice Quiz

Q. What is the difference between Medicare and Medicaid coverage for elderly Americans?

Medicare is federal health insurance for people 65+ regardless of income, funded by FICA payroll taxes. It covers hospital and medical costs with premiums, deductibles, and copays, but has no limit on out-of-pocket costs without supplemental coverage. Medicaid is a means-tested program that covers low-income individuals — for elderly people who have spent down their savings, Medicaid covers long-term nursing home care that Medicare does not. Many low-income elderly are “dual eligible,” receiving primary coverage from Medicare with Medicaid filling in the gaps.

Q. Can an injured worker collect workers’ compensation and also sue their employer for negligence?

Generally no. The “exclusive remedy” doctrine in workers’ compensation law provides that workers’ comp is the exclusive remedy for most on-the-job injuries — an injured worker cannot also sue their employer in tort for the same injury. In exchange, workers receive guaranteed benefits without needing to prove employer fault. However, exceptions exist for gross negligence, intentional injury, or willful violation of safety laws in some states. Workers may also sue third parties (not the employer) whose negligence contributed to the injury while still collecting workers’ comp.