Like most people, you probably know something about both Medicaid and Medicare; however, do you know enough about them to know when you can rely on them and if you qualify for benefits? You may be counting on Medicare to cover your healthcare expenses when you reach retirement age, but did you know that Medicare won’t cover some of your most costly medical care? Conversely, you may have assumed you would never need to rely on Medicaid because you have always had private health insurance, but there is actually a very good chance you will need help from Medicaid during your retirement years. To ensure that you are covered when you need it, you first need to have a firm understanding of the difference between Medicaid and Medicare.
Medicaid is a healthcare program that is primarily funded by the federal government; however, the individual states have the option to supplement funding. Although Medicaid is a federal program, it is administered by the states which is why you will find differences in the eligibility criteria and benefits offered from one state to the next. Medicaid is a “needs based” program, meaning that an applicant must prove the need for benefits to qualify. In the case of Medicaid, that means an applicant must have both income and assets that are below the program limits because Medicaid is intended to provide healthcare benefits to low income individuals, families, the disabled, and the aged.
Income limits are based on the Federal Poverty Level (FPL) for the area and household size of the applicant. The FPL changes each year. In addition, the Medicaid category under which an applicant is applying will determine how much income, in relation to the FPL, the applicant may have and still qualify. The asset, or countable resources, limit for Medicaid applicants is very low – sometimes as low as $2,000 for an individual. This means an applicant cannot have countable resources that are worth more than $2,000. Some assets are exempt from being counted. Each state decides which assets are exempt; however, most states exempt a primary home, a vehicle, and household goods. If an applicant’s assets exceed the limit, Medicaid will impose a waiting period. Commonly known as the Medicaid “spend-down” requirements, an applicant is expected to rely on his/her own assets during the waiting period to cover healthcare expenses.
If you qualify for Medicaid benefits, there are no premiums or co-payments. Every state must provide certain mandatory benefits under its Medicaid program, including inpatient and outpatient hospital services, nursing-home and home healthcare, laboratory and x-ray diagnostic services, transport to a medical facility and tobacco-cessation counseling for pregnant women. A state may provide additional benefits, but may not include less.
Medicaid planning should be part of most estate plans because of the strong possibility that Medicaid benefits will be needed to help defray the high cost of long-term care. Medicare does not cover LTC costs which is why most people should plan ahead for the likelihood of needing to qualify for Medicaid benefits down the road.
Medicare is also a federal healthcare program. Unlike Medicaid, however, Medicare is an “entitlement program.” Meaning if an applicant meets the basic qualifications he or she is entitled to benefits. Basically, if you have reached retirement age and you, or a spouse, paid into the Medicare system during your working years you will qualify for benefits. You may also qualify of you are under 65 with a disability. Medicare offers four levels of benefits, some of which require the recipient to pay a premium:
- 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.
If you have additional questions or concerns about Medicaid and/or Medicare, contact the experienced Massachusetts Medicaid attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.