Medicare vs Medicaid

is a discussion that confuses many. Today we will discuss four distinguishing factors that separate the two. Understanding the differences between Medicare and Medicaid is crucial, particularly when considering how expensive long-term care is. Even though both Medicare and Medicaid provide medical assistance, there are significant differences between the two programs.

The Availability of Medicare vs Medicaid

The availability of Medicare and Medicaid varies just enough to have some overlap. Medicare is an entitlement program; it is automatically available to individuals aged 65 and older who are eligible for Social Security benefits. Alternatively, Medicaid is a public assistance program; it aims to aid those with limited income and assets. Eligibility for Medicaid is contingent upon meeting specific income and asset criteria regardless of age, which will vary from state to state.

The Funding of Medicare vs Medicaid

The funding of Medicare and Medicaid are similar to the availability also has some overlap. Medicare is solely managed by the federal government while Medicaid operates as a collaboration between the federal government and individual states. Each state maintains its own Medicaid system. Thus, each state has different eligibility criteria and program names – for example, Medi-Cal in California and MassHealth in Massachusetts. However, regardless of the state-specific program, every state has to follow federal guidelines to receive federal funding. Typically, the federal government covers roughly half of a state’s Medicaid program costs, with the state paying the rest.

The Coverage of Medicare vs Medicaid

The coverage of Medicare and Medicaid is where we start to see some major differences. Medicare primarily covers acute medical needs and is not tailored for long-term care. For instance, Medicare Part A may only cover up to 100 days of skilled nursing facility care for a particular illness following a three-day hospital stay, and it may be subject to stringent conditions and copayments. Conversely, Medicaid does cover long-term nursing home care for those meeting income and asset thresholds. Medicaid will pay for care as long as the recipient is eligible – making it the single largest payer for such services in the United States.

The Defining Factor: Medicaid Qualifications

To qualify for Medicaid’s assistance with nursing home expenses, individuals must adhere to their state’s income and asset limits. If your income and assets exceed state limits, then you will have to take the appropriate steps to become eligible. Caution and strategic planning are essential.

For example, you can’t just give your “stuff” away a few weeks before entering a nursing home and expect Medicaid to pay for your stay. When you apply for Medicaid, any gifts or transfers of assets made less within five years of the date you apply are subject to penalties. This is known as the five-year lookback period. And what is the “penalty?” It is the amount of time you will have to pay for care out of your own pocket before Medicaid will help you pay for your care. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state. You should always consult a Long-Term Care Attorney before applying or moving assets so you don’t create a Medicaid look-back penalty.

In essence, while Medicare assists with short-term nursing home stays, Medicaid offers coverage for long-term care, making early planning imperative to secure necessary care while safeguarding assets. By understanding and navigating the intricacies of these programs, individuals can make informed decisions regarding their long-term care needs. If you or one of your loved ones are about to go into a home or are losing their life savings to long-term care costs, please contact our office today to schedule a free consultation to discuss how we can help you preserve your assets.