Though most people have heard of Medicare and Medicaid, many have a hard time differentiating between the two. However, as people age and begin to look to their future, it is important to understand the difference with regards to long-term care.
The first thing that you need to understand is that although Medicare and Medicaid may sound very similar, the two are very different. While both programs are social insurance programs provided by the government and are constructed to assist individuals with health care costs, their coverage and eligibility requirements differ greatly.
Medicare, a program that is provided by the federal government, is available to anyone who is 65 or older or certain people with disabilities who are under age 65. People with disabilities must have received Social Security Disability benefits for 24 months or have End Stage Renal Disease (ESRD) or Amyotropic Lateral Sclerosis (ALS, also known as Lou Gehrig's disease).
There are no income qualifications for Medicare and only has limited long-term care coverage.
Medicaid, on the other hand, is administered on both a state and federal level, and is meant only for those who have extremely low income and assets. However, people who do not initially meet the financial requirement, may eventually be eligible for Medicaid once they have exhausted enough of their personal assets to qualify.
In order to be eligible for Medicaid, applicants are limited to no more than $2,000 in “countable” assets, which represents a need to spend down almost all of the assets that a person has. In lieu of going through this difficult process and in order to preserve a lifetime worth of savings and property, many people choose to protect their savings through careful estate planning techniques.
What about home health care costs?
Home health care services through the Medicare benefit must be prescribed by a physician to help with rehabilitation after an illness, injury, hospital stay, or surgery, or to help manage a chronic medical condition with the goal of preventing an unnecessary hospitalization. This care is provided through one-hour home visits from specialized clinicians, such as nurses and therapists, and continues until recovery goals have been met. Home health care visits are generally covered 100 percent by Medicare through the Medicare home health benefit.
Medicaid can provide long-term coverage for home health care. In addition to clinical care services from nurses and therapists, home health aides or certified nursing assistants can provide ongoing assistance with personal care, such as bathing and dressing.
Between the rising cost of long-term care and Americans’ life expectancy increasing, it’s important to understand your options. Based on research conducted by the Centers for Medicare & Medicaid Services, 70 percent of people over age 65 will need long-term care services at some point in their lives. By planning ahead, it is possible to preserve what you have worked so hard for.
Estate planning and elder law is a complex process that requires expertise in a wide range of legal areas. It is highly recommended you seek the guidance of an attorney who is knowledgeable in Medicaid planning, as well as other areas that may benefit you as you plan for your future.