Disclaimer: With Medicaid, VA, and insurance regulations frequently changing, past blog posts may not be presently accurate or relevant. Please contact our office for information on current planning strategies, tips, and how-to's.
Do you have clients that are planning for long-term care? If so, you’ve probably received countless inquiries about the terms and programs involved, which can be incredibly puzzling for many individuals. Medicare and Medicaid are two programs that are often confused for one another, and the two terms are consistently misused and misunderstood. In order for you to help your clients navigate the ins and outs of long-term care, it’s crucial for you to be aware of the differences between Medicare and Medicaid, especially when it comes to skilled and long-term nursing care. And we want to help!
Similarities between Medicare and Medicaid
First, it’s important to understand that Medicare and Medicaid DO share some of the same elements. For starters, both are government entitlement programs that Americans can utilize based on eligibility. Both programs were signed into law in 1965 and are designed to assist with healthcare costs. In long-term care situations, Medicare and Medicaid often work in tandem but offer separate coverage. And that’s where the differences come into play.
What is Medicare?
The primary purpose of Medicare is to provide health insurance for elderly and disabled individuals. Medicare is federally funded and available for any individuals age 65 and older as well as disabled persons who are under age 65. It works similarly to other health insurance plans in that the insured individual is responsible for covering any applicable deductible and any services not covered under Medicare.
Medicare is split up into four available parts, each one covering a different portion of healthcare. Medicare Part A assists with hospital inpatient care costs, often referred to as Hospital Insurance. Medicare Part B, available at an additional cost (typically $135.50 per month in 2019), consists of some services and products not covered under Part A, such as outpatient or observation care. Medicare Part C is commonly known as Medicare Advantage and includes supplemental coverage not included in Parts A and B. Finally, Medicare Part D assists with prescription costs.
How does Medicare help with long-term hospital care?
As an inpatient in a hospital, Medicare patients are covered for 90 days under Medicare Part A. The first 60 days are paid in full by Medicare, apart from the Medicare copay (or deductible), and days 61-90 cost $341 coinsurance per day (as of 2019). If the individual requires skilled nursing care rather than full inpatient hospital care, Medicare also covers an extended, yet temporary, nursing home stay.
When does Medicare pay for a nursing home stay?
Medicare only covers skilled nursing care following a medically necessary, three-day-consecutive inpatient hospital stay. It’s important to note that Medicare will NOT cover a nursing home stay if the hospital care is classified as outpatient or observation care—only when the individual is admitted as an inpatient. The nursing care must be for the ailment diagnosed during the hospital stay and will not be covered if it is only for non-skilled activities of daily living (ADLs). The patient must also show signs of progress based on a schedule laid out by the doctor. The nursing home stay must either happen immediately after the hospital stay or within the following 30 days. Medicare covers eligible nursing home stays for up to 100 days. The first 20 days are covered in full by Medicare, while days 21-100 require a copayment of $170.50 per day (as of 2019). Medicare Part C may offer additional coverage in a skilled nursing facility.
What happens when Medicare benefits run out?
In many cases, the nursing home stay following a hospital visit lasts 100 days or less, and the individual can return to the community. In other cases, however, extended nursing home care is necessary. Unfortunately, beyond the 100 days, Medicare will not cover additional time at the skilled nursing facility. What are the options when Medicare benefits run out? That’s where Medicaid comes in.
What is Medicaid?
While Medicare is likened to healthcare for elderly and disabled individuals, Medicaid is considered medical assistance for individuals of all ages with limited income and resources who may not be able to afford traditional healthcare. Medicaid is funded on both the state and federal level but is managed by the state. Each state has its own set of Medicaid regulations that run parallel with the federal requirements, and some states even have specific names for their Medicaid programs, such as MassHealth (Massachusetts) and Soonercare (Oklahoma).
When it comes to long-term care, Medicaid eligibility is based on health and financial requirements. Medicaid applicants must require assistance with at least three activities of daily living (ADLs) and round-the-clock care. Applicants must also meet income and asset requirements. Income eligibility rules for Medicaid vary from state to state, but most states compare the cost of care to the individual’s income. If their cost of care exceeds their income, they may be eligible for Medicaid. For asset eligibility, non-exempt assets must be below a specific amount that varies greatly by state and depends on marital status.
How does Medicaid help with long-term nursing home care?
Once Medicaid eligibility is confirmed, individuals may receive long-term care in a Medicaid-approved facility, often a nursing home. For blind, disabled, and elderly individuals, Medicaid coverage never expires as long as the applicant remains within the eligibility requirements. In the vast majority of cases, the individual is in a nursing home on a permanent basis rather than for medical assistance. Some states also offer waiver programs that include Medicaid coverage for assisted living facilities or at-home care programs.
How can Krause Financial help?
Our team at Krause Financial is committed to helping your senior clients accelerate their Medicaid eligibility while also protecting their assets in the most economically beneficial way. Although many individuals are under the impression that Medicare will cover their nursing home costs indefinitely or that the only way to become eligible for Medicaid is to drain or spend away their assets, they deserve to know their options. Our Benefits Planners understand the limitations of Medicare coverage and the opportunities for Medicaid benefits in skilled nursing facilities. Do your senior clients understand the differences between these two programs? Make sure they are educated and informed—give us a call to learn how we can help!