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Medicare vs. Medicaid
People often confuse Medicare with Medicaid, which is understandable. The names are similar, and they are both government programs that help people with medical care. Some people are eligible for Medicare only. Others might be eligible for Medicaid only, and still others might be eligible for both programs.
Medicaid vs. Medicare
There are significant differences between the two programs. Medicaid is a hybrid program that receives some of its funding from the federal government and some from each state. Since each state runs its own Medicaid program, every state’s variation of Medicaid is unique. It is important to understand the nuances of how Medicaid works in your own state. Medicare is a federal program and its benefits are fairly uniform across the country.
What this Means for Your Long Term Care
For purposes long term care planning, Medicare will only pay for 100 days of skilled care in a nursing home. This is just over 3 months. Medicare does not play for custodial care, or “long-term care” in a nursing home. See: https://www.medicare.gov/coverage/long-term-care
Often, my clients will find themselves discharged from a hospital to a nursing home to receive skilled care. But pratically speaking, many who go to receive skilled care in a nursing home are not discharged from the nursing home. This can be due to various factors, such as a slip and fall, care in a hospital, but with permanent long term care in the nursing home.
After 100 days, Medicare will pay nothing. Then the client will either have to “private pay” from his or her own income or assets, or qualify for Medicaid. Medicaid, becasue it is a needs based program, will only pay for your nursing home care if you have no more than the following resources if you are a single person:
- A home worth less an $600,000 (generally including its contents, excluding collectibles);
- 1 Car;
- A burial plot or policy;
- And here is the kicker: only $2,000 of other assets.
So if you have more than $2,000 in the bank, you would not qualify for Medicaid. You would have to “private pay” until you “spend down” to $2,000 or less in cash or other assets. But it gets even worse, becasue even the house can be seized in a program called “Medicaid Estate Recovery” when you or your loved one dies or leaves the nursing home.
Keep in mind that the cost of nursing homes is very high. Usually the costs is a miniumum of approximately $5,500 per month (generally in more rural parts of Louisiana), and can be well over $6,000 to $6,500 (generally in more populated areas of Louisiana).
Can you afford roughly $6,000 per month? Do you have long term care insurance to pay for it? Not likely. That is where I come in.
I can develop a plan for you to get you qualified. That plan can be part an overall estate, asset protection and probate avoidance plan. Alternatively, if you or a loved one needs to go into a nursing home soon (OR ARE ALREADY IN ONE AND YOU ARE PRIVATE PAYING), I can develop a Medicaid crisis plan to save AT LEAST half of your assets, and probably more.
Source of Funding
States and the federal government pay for the Medicaid programs out of their annual budgets. Taxes and other sources of revenue provide the funds that the state and federal governments use to pay for Medicaid.
Medicare’s funding comes from withholding from your paychecks, while you are employed. That withheld money is deposited into a trust fund that provides insurance to help pay the medical bills of eligible individuals.
Type of Program
Medicaid is a need-based assistance program that helps people with low income, regardless of age and whether you have paid into the system. Depending on your income and your assets, you might have to pay something, but there are no monthly premiums.
Medicare is an insurance program, not an assistance program. You are only eligible for Medicare, if you paid enough money into the program from the withholdings your employer took out of your paychecks for Social Security and Medicare taxes. Think of Medicare as health insurance that you pay for throughout your entire working life, but you do not start to access the benefits until you are 65. However, even then you continue paying monthly premiums, co-pays and deductibles.
Medicaid covers the elderly, people with disabilities, pregnant women, families and children who meet the low-income guidelines. Eligibility differs from state to state, so you might qualify in one state but not another.
To be eligible for Medicare, you must be at least 65 years old, (unless you have a disability), or have End Stage Renal Disease. Either you or your spouse must have worked for at least 10 years at a job that paid Medicare taxes to get Part A (hospital coverage), without having to pay a monthly premium. If the time worked was fewer than 10 years, you will pay a monthly premium for inpatient coverage (Part A).
There are some ways around having to pay the monthly premium for Medicare Part A. People with certain disabilities are exempted. If you are receiving or are eligible for Social Security or Railroad retirement benefits, you can also receive Part A premium-free.
Medicare does not care how much money you make for purposes of eligibility. Having a high income can affect the premiums you pay for Part A or Part B (outpatient care), but there is no limit to the amount of income you can have and still be eligible for Medicare. After all, you earned the right to get Medicare by paying Medicare taxes out of your paychecks for all those years.