What’s the Difference Between Medicare and Medicaid in the Context of Long-Term Care?

 Although their names are confusingly alike, Medicaid and Medicare are quite different programs. Both programs provide health coverage, but Medicare is an “entitlement” program, meaning that everyone who reaches age 65 and is entitled to receive Social Security benefits also receives Medicare. (Medicare also covers people of any age who are permanently disabled or who have end-stage renal disease.)

Medicaid, on the other hand, is a public assistance program that helps pay medical costs for individuals with limited income and assets. To be eligible for Medicaid coverage, you must meet the program’s strict income and asset guidelines. Also, unlike Medicare, which is entirely federal, Medicaid is a joint state-federal program. Each state operates its own Medicaid system, however this system must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state’s Medicaid costs. The state then picks up the rest of the tab.

The most significant difference between Medicare and Medicaid is in the realm of long-term care planning. Medicaid covers nursing home care, while Medicare, for the most part, does not.  Medicare Part A covers only up to 100 days of care in a “skilled nursing” facility per incident of illness. The care in the skilled nursing facility must follow a stay of at least three days in a hospital. For days 21 through 100, you will have a copayment of $164.50 a day in 2017. (This co-pay is generally covered by Medigap insurance). In addition, the definition of “skilled nursing” and the other conditions for obtaining this coverage are quite stringent, meaning that few nursing home residents receive the full 100 days of coverage. As a result, Medicare pays for less than a quarter of long-term care costs in the U.S.

In the absence of any other public program covering long-term care, Medicaid has become the default nursing home insurance of the middle class. Lacking access to alternatives such as paying privately or being covered by a long-term care insurance policy, most people believe that they need pay out of their own pockets for long-term care until they become eligible for Medicaid. While that may be the case in some situations, there are also a number of planning strategies that can preserve assets for a healthy spouse while still adhering to Medicaid rules.

The fact that Medicaid is a joint state-federal program further complicates matters. This is due to the fact that Medicaid eligibility rules vary from state to state, and in addition, these rules keep changing. Both the federal government and most state governments seem to be continually tinkering with the eligibility requirements and restrictions. That is why consulting with an knowledgeable attorney at Zacharia Brown is so important.

With regard to care for individuals who remain at home, more and more states are recognizing that home care costs are far less than nursing home care. In Pennsylvania, there are various programs that can provide Medicaid-covered services to those who choose to remain at home.

Medicaid is a complex program with many restrictions and rules that are hard to decipher if you are not familiar with the system. In order to ensure that you are making wise planning decisions, please contact the attorneys at Zacharia Brown who can advise you about Medicaid, along with many other Elder Law and Estate Planning issues.  Call 724.942.6200 or visit us at PittsburghElderLaw.com  to schedule an appointment today.