by Erica Erickson
Most Americans have heard of Medicare and Medicaid, but many do not have a clear understanding of the differences between these two programs or the types of coverage they provide. The following is a brief overview of Medicare and Medicaid to help clarify the major differences between the programs.
Medicare is the federal health insurance program that offers coverage to everyone over 65 years of age and people under 65 with certain disabilities. Medicare Part A is the standard coverage, which covers hospitalizations, short term nursing home stays, and hospice care. Medicare Part B covers outpatient doctor visits and related appointments. Medicare Part D is prescription drug coverage. Medicare Part C is often referred to as a Medicare Advantage Plan, and is purchased through a separate insurance company. Part C policies typically cover Parts A, B, and D and may help cover copays and services not covered by standard Medicare coverage. Private insurance companies also offer a variety of other plans to help cover gaps in Medicare coverage.
Medicaid is a separate insurance program focused on providing coverage to people with limited resources. Medicaid is funded by both the federal and state governments and is administered by the state. There are many different Medicaid programs, most of which have specific income and asset limits. Most seniors who apply for Medicaid apply for programs to help them pay for their Medicare premiums and copays or to help them pay for assisted living, memory care, or long term skilled nursing care in a nursing home.
Because Medicare will only pay for up to 100 days of nursing home care, if a senior needs to stay in a nursing home for a longer period of time and cannot afford the cost (often exceeding $7,000 per month), the senior should apply for Medicaid for Long Term Care. There is no income limit to qualify for this Medicaid program, but the senior’s monthly income will go to pay the nursing home and then Medicaid will cover the balance. There are asset limits, but the senior can keep their home, one car, their household and personal belongings, and certain other assets, including cash and investments. If the senior is married and there is a spouse who will remain at home, that spouse can keep all of the assets listed above, their own income, plus up to about $119,000 cash or other assets, depending on their specific situation.
Medicaid has a 5 year look back period for gifts and if a senior gives away assets within 5 years of applying for Medicaid, they may be disqualified or penalized. The Medicaid application process is complicated and many seniors who may not think they qualify or who have been turned down in the past, may actually qualify for coverage. Additionally, there are many landmines and many ways seniors may inadvertently disqualify themselves from coverage, so before applying or after being turned down for coverage, it is strongly recommended that the senior consult an elder law attorney for guidance.