I often have clients ask me about the difference between Medicare and Medicaid. Although most of them have heard of both programs, they may never have needed to rely on them until they reach retirement age. Unfortunately, waiting until you need to qualify for Medicaid, in particular, can put your retirement nest egg at risk. That is one of the many reasons why I try to educate my clients about Medicare and Medicaid when they are still relatively young. My hope is to help my clients understand what each program covers, what the eligibility requirements are, and how Medicare and Medicaid fit into their estate plan.
Medicare Basics
Medicare is a federally funded healthcare program; however, Medicare is exclusively for people over age 65 and for certain individuals under age 65 who are also disabled. Medicare is an “entitlement” program, meaning if you (or your spouse) paid into the program for the required length of time – 10 years — through your payroll taxes during your working years you are automatically entitled to Medicare benefits. In effect, you earned the benefit. Medicare comes in four parts. Part A, or basic Medicare is free. If you wish to sign up for the additional parts of Medicare, however, it may require payment of a monthly premium similar to private health insurance. The four parts of Medicare and the benefits included in each part are as follows:
- Part A – Hospital care – Covers the cost of being in a medical facility.
- Part B – Covers doctors, medical tests and procedures – basically, anything done to you. There is a monthly premium for Part B coverage.
- Part C – Medicare Advantage – Part C is an alternative to traditional Medicare coverage. Coverage often includes Parts A, B and D. Medicare Advantage plans are administered by private insurance companies.
- Part D – Prescription drug coverage – D is administered by private insurance companies, and you are required to have it unless you have coverage from another source. Part D requires you to pay a monthly premium in most cases.
Medicaid Basics
Medicaid is a healthcare program that is primarily funded by the federal government; however, the individual states have the option to supplement funding for Medicaid if they choose to do so. Although the federal government provides oversight for Medicaid, it is administered by the individual states which explains why you will notice differences in the eligibility criteria and benefits offered from state to state. In all states, however, Medicaid covers basic healthcare, such as:
- Certain inpatient and outpatient hospital services
- Early and Periodic Screening, and Diagnostic, and Treatment (EPSDT) services for children
- Nursing facility services
- Home health services
- Doctor’s services
- Rural health clinic services
- X-ray and laboratory services
- Family planning services
- Midwife services
- Freestanding Birth Center services
- Certified pediatric and family nurse practitioner services
- Tobacco cessation counseling for expectant mothers
Every state is required to provide these basic services. States may, if they choose to, provide additional benefits; however, they must include the basic benefits. If you qualify for Medicaid benefits, there are no monthly premiums nor co-payments.
Because each state is given a substantial amount of discretion as to how to administer Medicaid, the rules and benefits can differ quite a bit from state to state.
Medicaid is a “needs based” program, meaning that an applicant must prove the need for benefits in order to qualify. To be eligible for Medicaid, an applicant must have both assets that are below the program limits. In some states there are income limits as well, such that if you are over the income limit you are ineligible for Medicaid programs. In North Carolina, being over the income threshold will reduce your benefits but not render you ineligible. Asset limits are typically extremely low — $2,000 for the for Medicaid. Where that individual is married, there are separate, and frankly, quite frankly oppressive limits on what the spouse not applying can have in the way of assets (although not as to income). At Clarity Legal Group® we do a lot of pre-planning for those who need or think they might need Medicaid. This can help people to qualify as well as protecting the integrity of their estate plan for their family. It is never too late to do something to protect the assets of someone who might need Medicaid. However, always do this planning before you apply and consider it at the earliest possible time, preferably even years before the need arises.
How Do Medicare and Medicaid Factor into Paying for Long-Term Care?
One of the most important differences between Medicaid and Medicare becomes apparent if you are ever faced with the high cost of long-term care (LTC). Medicare will not pay for long-term care while Medicaid does cover LTC expenses. You must first qualify for benefits. In order to ensure that you are eligible for Medicaid, without putting your assets at risk, down the road, be sure to include Medicaid planning in your comprehensive estate plan now.
Contact Chapel Hill Medicaid and Long-Term Care Planning Lawyers
If you have questions or concerns about Medicaid or Medicare, or paying for long-term care through Medicaid planning, please contact the Chapel Hill Medicaid lawyers at Clarity Legal Group® by calling us at 919-484-0012 or contact us online.
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