Medicare is a health-care benefit provided by the federal government to individuals over age 65, or under age 65 and disabled. Medicare covers doctor visits, tests and care provided in a hospital and limited benefits in a nursing home (see below).
Medicaid is health insurance for the poor. To qualify, you must not exceed certain income and asset limits. If your income or assets exceed the qualifying limits, you will not be eligible. There is no age restriction to qualify. Medicaid will pay for Nursing Home expenses.
To qualify for Medicare, you must be over 65, and eligible for Social Security benefits. You may also qualify if you are under age 65 and have been disabled for two years. An application at the Social Security office will get your benefits started.
To qualify for Medicaid, you must submit a multiple-page application and provide detailed proof of all your financial transactions (banking, CDs, stocks, bonds, income, expenses, annuities, etc.) for the previous 60 months.
Medicare will only pay for 20 days in a nursing home (in limited circumstances, it can pay the partial cost of 80 additional days) while Medicaid will pay the entire cost of a nursing home.
The laws around Medicaid qualification are extensive, and there are many exceptions. Often, hospitals and nursing homes will offer to do an application for you at no cost. Be careful, they do not represent you, but rather, the institution for which they work. Even with the best of intentions, they often do not have the legal knowledge necessary to determine whether or not your qualification is accurate. They will typically have you spend down assets unnecessarily. This is where a legal professional can really be of value and oftentimes, be able to get you benefits much sooner.
Medicaid Pre-Planning involves using properly designed Irrevocable Trusts (see Asset Protection Trusts above) to protect assets from nursing homes. Once assets are put into properly drafted trusts, you must wait five years before making a claim for Medicaid benefits. Once the five years have passed, these assets are not countable and therefore fully protected from nursing home expenses. It is often a good idea to purchase single premium long term care insurance so that any care expenses during the five year waiting period can be better handled without having to make an application for Medicaid. Pre-Planning is the best way to fully protect your assets in all circumstances.
Medicaid Crisis Planning is when a loved one is either already in the Nursing Home or is about to enter the Nursing Home. If the individual is married with a healthy spouse, the vast majority of assets can be preserved. If however the individual is single, approximately half of the assets can still be saved. Be careful if a Nursing Home offers to complete your Medicaid application. They will advise you that you need to spend your assets on their monthly fees until are eligible to qualify. This is not correct. Assets can always be saved.