Although their names are confusingly alike, Medicaid and Medicare are quite different programs. Both programs provide health coverage, but Medicare is an “entitlement” program, meaning that everyone who reaches age 65 and is entitled to receive Social Security benefits also receives Medicare. (Medicare also covers people of any age who are permanently disabled or who have end-stage renal disease.)
Medicaid, on the other hand, is a public assistance program that helps pay medical costs for individuals with limited income and assets. To be eligible for Medicaid coverage, you must meet the program’s strict income and asset guidelines. Also, unlike Medicare, which is totally federal, Medicaid is a joint state-federal program. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state’s Medicaid costs. (The state picks up the rest of the tab.)
Medicare and Medicaid Coverage of Long-Term Care
The most significant difference between Medicare and Medicaid in the realm of long-term care planning, however, is that Medicaid covers nursing home care, while Medicare, for the most part, does not. Medicare Part A covers only up to 100 days of care in a “skilled nursing” facility per spell of illness. The care in the skilled nursing facility must follow a stay of at least three days in a hospital. And for days 21 through 100, you must pay a copayment of $164.50 a day (in 2017). (This is generally covered by Medigap insurance.)
In addition, the definition of “skilled nursing” and the other conditions for obtaining this coverage are quite stringent, meaning that few nursing home residents receive the full 100 days of coverage. As a result, Medicare pays for less than a quarter of long-term care costs in the U.S.
In the absence of any other public program covering long-term care, Medicaid has become the default nursing home insurance of the middle class. Lacking access to alternatives such as paying privately or being covered by a long-term care insurance policy, most people pay out of their own pockets for long-term care until they become eligible for Medicaid. Medicaid planning can avoid complete impoverishment in this circumstance. This is why consulting with an elder law attorney is so important.
The fact that Medicaid is a joint state-federal program complicates matters, because the Medicaid eligibility rules are somewhat different from state to state, and they keep changing. Both the federal government and most state governments seem to be continually tinkering with the eligibility requirements and restrictions.
It’s possible to qualify for both Medicare and Medicaid. Such recipients are called “dual eligibles.” Medicare beneficiaries who have limited income and resources can get help paying their out-of-pocket medical expenses from their state Medicaid program. In addition, Medicaid recipients will receive the full income subsidy under their Medicare Part D (prescription drug) program, eliminating most co-payments and the dreaded “donut hole.”
Medicare is a limited benefit when it comes to long-term care. Most people will at some point require the assistance of Medicaid for their long-term care costs. Medicaid does not require complete impoverishment, but a legal plan is required to protect assets. Before starting a Medicaid plan, you should consult an elder law attorney who can outline those options that best meet your goals. Contact us today if you or your loved one’s Medicare covered long-term care is coming to an end. We can assist you in accessing valuable Medicaid benefits for you or your loved one and protect assets.
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.