Medicare versus Medicaid

Medicare versus Medicaid: What's the Difference?

Many people mistakenly believe that Medicare will pay for long-term nursing home care. Unfortunately, that is one of the most common misconceptions in elder law.

Although the names are similar, Medicare and Medicaid serve very different purposes. What follows is a brief review of Medicare versus Medicaid.

Medicare

Medicare is a federal health insurance program that primarily provides medical insurance for:

• Individuals age 65 and older;

• Certain younger individuals with qualifying disabilities; and

• Individuals with End-Stage Renal Disease (ESRD) or certain other qualifying medical conditions.

Medicare is not a need-based program. Eligibility is generally based on age, disability, and work history rather than financial need.

What Does Medicare Cover?

Medicare helps pay for many healthcare expenses, including:

• Hospital care

• Physician services

• Outpatient treatment

• Prescription drug coverage (through Medicare Part D or Medicare Advantage plans)

• Certain home health services

• Limited rehabilitation services

Does Medicare Pay for Nursing Home Care?

Only in limited circumstances.

If a patient has a qualifying hospital stay and meets Medicare's requirements for skilled nursing care, Medicare may cover a limited stay in a skilled nursing facility.

Generally:

• Medicare pays the full approved cost for the initial covered period.

• Additional covered days may require coinsurance.

• Medicare does not pay for indefinite custodial nursing home care.

Once rehabilitation ends and only custodial care is needed, Medicare coverage generally stops.

Many people purchase Medicare Supplement (Medigap) or Medicare Advantage plans to help cover deductibles, coinsurance, and other out-of-pocket costs.

Medicaid

Unlike Medicare, Medicaid is a needs-based program jointly funded by the federal government and the states.

Florida Medicaid helps pay for long-term nursing home care and certain other medical services for individuals who meet both the financial and medical eligibility requirements.

Because Florida administers its own Medicaid program, eligibility rules may differ from those of other states.

Medicaid Eligibility

To qualify for Florida Medicaid, an applicant generally must satisfy both:

• Medical eligibility (requiring a nursing-home level of care or other qualifying need); and

• Financial eligibility, including income and asset limitations established under Florida law.

These limits are adjusted periodically, so applicants should consult current guidelines before applying.

Countable Assets vs. Exempt Assets

Not every asset counts toward Medicaid eligibility.

Examples of assets that are often exempt include:

• A qualifying Florida homestead

• Certain automobiles

• Household furnishings and personal belongings

• Certain burial arrangements

• Certain retirement accounts

• Certain life insurance policies

• Other assets that qualify under federal and Florida law

Because the exemption rules are highly technical, professional guidance is strongly recommended before transferring or spending assets.

Income Requirements

Florida Medicaid also imposes income limitations.

Individuals whose income exceeds the applicable limit may still qualify in some circumstances through the use of a properly established Qualified Income Trust (QIT), commonly known as a Miller Trust.

Whether a Qualified Income Trust is appropriate depends upon the applicant's income and individual circumstances.

The Five-Year Look-Back Period

One of the most important Medicaid rules is the five-year look-back period.

When applying for long-term care Medicaid, the State reviews certain transfers made during the sixty months preceding the application.

If assets were transferred for less than fair market value during that period, Medicaid may impose a penalty period during which it will not pay for nursing home care.

Common Examples

Transfers that may trigger a penalty include:

• Giving cash to children or grandchildren;

• Transferring real estate for little or no consideration;

• Selling property for substantially less than fair market value;

• Forgiving loans; or

• Making other uncompensated gifts.

The length of the penalty depends on the value of the transferred assets and the penalty divisor in effect when the application is filed.

Because the penalty calculation changes periodically and the rules contain numerous exceptions, anyone considering gifts or transfers should consult an experienced Florida elder law attorney before applying for Medicaid.

Proper Planning Can Preserve Assets

Many families mistakenly believe they must spend every dollar before qualifying for Medicaid.

In reality, careful advance planning may allow families to:

• preserve their home;

• protect savings;

• avoid unnecessary penalties;

• maximize exemptions; and

• qualify for benefits sooner.

Because Medicaid planning is highly technical and mistakes can be extremely costly, obtaining legal advice before making gifts or transferring assets is one of the most important steps a family can take.

#medicare #medicaid