MEDICARE VERSUS MEDICAID IN THE NURSING HOME SETTING
When we talk about Medicaid asset protection, I often hear from clients “but I already have Medicare,” or “I have money, so I’ll never qualify for Medicaid.” But in the context of chronic care, there’s a lot of nuance to these issues.
1) Medicare is for Everyone; Medicaid has a Resource Test.
The key difference between Medicare and Medicaid is that Medicare is a program open to all Americans over 65 years old (and some younger Americans affected by disabilities), and Medicaid requires needs-based qualification. In 2022, an individual’s maximum net worth for chronic care Medicaid eligibility is $16,800. (Their non-applicant spouse may have up to $137,400.) Having your monthly income under a certain mark is less of a concern, but all except for $50 of income is due and payable to the nursing home each month.
Just because an individual has money does not mean that Medicaid eligibility is out of the question. If you have $300K to your name, you don’t have to spend it all down on the nursing home for a year and a half and then apply for Medicaid. If you speak to an attorney while you’re healthy, there are ways to protect your assets with trusts and other tools. Even if you consult an attorney after nursing home admission, there are some tools available to qualify without going broke.
2) Medicare covers a limited amount of long-term care. Medicaid coverage is unlimited.
Medicare covers most acute illnesses that necessitate hospital visits, but it only covers up to 100 days of long-term care—20 days in full and then another 80 days with a required co-pay of $194.50 per day. Supplemental health insurance will often pick up this co-pay. But if a patient does not have that, then out-of-pocket payment is expected. Further, the 100 days can be cut short if they are deemed medically unnecessary for rehabilitative purposes. If someone plateaus and fails to make any rehab progress, Medicare coverage can terminate earlier. (There is an appeals process for this.)
Medicaid can cover everything that Medicare does not. It can cover co-pays in the absence of sufficient supplemental insurance, and it can cover unlimited stays in a nursing home beyond day 100. Medicaid pays 100% of the bills (less your net available monthly income).
3) Medicaid, unlike Medicare, has estate recovery
Few things in life are truly free (and one can argue that Medicare certainly isn’t, if you look at your paystubs throughout your working life, and the deductions from your Social Security once you retire), but Medicare coverage has no strings attached. Although there are certain situations when co-pays are required, Medicare does not look to claw back or be recompensed for the benefits that it provides.
Conversely, Medicaid can actually recover against your estate and seek to be reimbursed for the benefits that it has provided to you. Most people on Medicaid for long-term care services do not leave much in their estates because of the stringent eligibility requirements. But this is not always the case. Sometimes the primary residence is still in an individual’s name when he/she is receiving benefits. Or an individual’s estate can include assets that were forgotten during life or new assets like an inheritance from a family member. Medicaid generally will make a claim to seek to recover every dollar it has spent on your care in the last ten years.
The best way to avoid Medicaid estate recovery is to disclose all of your assets in advance and work with an attorney on an asset protection strategy. Hiding assets is not an effective plan, but protecting them is. The key is to divest assets to qualify, and to avoid probate where estate recovery happens.
Everyone from the poorest to the wealthiest Americans can get Medicare coverage. Medicaid is not for everyone, but its scope and availability is wider than many people think. There are legal and ethical ways for people with money to qualify for Medicaid without first spending every dollar they have on their own care. You should not have to go broke because you get sick. Among the formative goals of elder law is to save and protect assets while making sure that clients get the best and most comfortable long-term care available to them.
This article appeared in the January edition of the Senior Gazette.
This is not intended to be legal advice. You should contact an attorney for advice regarding your specific situation.