I was asked this question at a seminar recently, and thought a good definition of each might be of value. Medicare is health insurance at age 65. To qualify you must have paid income and Social Security taxes for at least 40 quarters (10 years). Medicare pays for doctor and hospital care, fixing us when we are “broken”.
Medicare is not free. Most of us qualify for part A which covers hospitals and certain other medical costs. There is a monthly premium for part B which covers doctor bills. This bill is typically deducted from your Social Security check. Most people also purchase a private “supplement” to cover deductibles, or a part C called Medicare Advantage which is similar but requires copays at point of care.
Medicaid is a welfare program. You qualify by being out of money as defined in the program. Most Medicaid dollars go towards long-term care (LTC) costs for elderly who exhausted all their assets due to the high costs of this care.
Medicaid, which is the largest payer of LTC costs in the US, treats single people differently than married couples. A single person who moves to a LTC facility for care in later life does not need a home, auto, etc. Thus the single person must spend all assets and savings down to less than $2000 to qualify.
$45/month can be retained for spending money (socks, underwear, toothpaste) and most life insurance must be cashed in as well. For those aware of the rules, an irrevocable burial trust of up to $15,000 for burial expenses can be established so children are not burdened with that bill.
Married couples are allowed to retain use of the home for the at-home spouse, along with one vehicle, some savings and income. At the at-home spouse’s death all of these items are recovered against by Medicaid to pay themselves back. Typically nothing is left for heirs.
Medicaid also “looks back” in your financial records at time of application to be sure money or other assets have not been given away. Any gifts in the past 60 months will be totaled up and a determination made of how long such funds could have paid for your care. That is how long you will not receive Medicaid once you are down to $2000. Whoever received those gifts may need to return them.
Medicaid pays LTC service providers much less than the going rate for care. Thus many providers will not accept Medicaid or prior to allowing your entry may require that you prove the ability to pay out of pocket for at least 2 or 3 years before applying for Medicaid. The more desirable and expensive the facility, the less likely it will accept Medicaid.
So, how does one avoid becoming impoverished and needing Medicaid? The answer is simple, have enough income and savings to pay for such care, or purchase insurance that pays LTC costs for you. You’ve probably had car insurance for most of your life, why not insure for LTC which can be far more expensive than an auto accident?
Many things need to be taken into consideration to choose LTC insurance benefits appropriately. This is where expert advice can save a lot of money.
Investigate with an expert, call www.TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 to schedule a time to discuss your situation. We also offer the irrevocable burial trusts to protect some funds for family.