Despite the similarity in the words, Medicare and Medicaid are two very different health care programs.
Medicare vs. Medicaid
Medicare is a federal health care program for people over the age of 65 and those people with disabilities who qualify for Medicare insurance. There is no other qualification. Income level does not matter with Medicare. Medicaid, however, is run by each state (with assistance from the federal government) and is a health care program for lower income people. Each state creates its own Medicaid program based on federal guidelines. Unlike Medicare, where benefits are automatic at a certain age, you have to qualify for Medicaid benefits.
This difference becomes very obvious when you are moving a loved one into assisted living. Medicare, the federal health insurance program, does not cover assisted living. Medicaid does. However, Medicaid requires a person to have a certain income and asset level in order to qualify for Medicaid payments to assisted living centers. Each state is different. For example, in Michigan, the asset level is $2,000.00. Again, Medicaid is for people with little financial means.
Assisted Living and Medicaid
If assisted living is required with your loved one and they do not qualify for Medicaid, then payments to the assisted living center come from personal income and assets. Medicaid requires you to “spend down” these assets until they reach a certain level before Medicaid begins paying. There are certain exempt assets, such as a home, a car, etc., but if your loved one has an IRA, savings account, stocks or any other assets, payments to the assisted living center come from your loved one’s income and assets first. This can financially devastate a family. So, the more time you have to plan for a loved one’s move to assisted living, the better. There are ways that you can decrease the amount of assets, but Medicaid typically has a 60 month look-back period, meaning they will look at all of the asset movement for the past 60 months to determine whether it was a legitimate transfer or whether the asset should be included as part of your loved one’s assets. The Medicaid rules get very tricky, so if you think that the government is going to help pay for your loved one’s stay at a facility, you need to become familiar with Medicaid rules in your state and perhaps seek an attorney for some estate planning for your loved one.
Some individuals are eligible for both Medicare and Medicaid and they are called “dual eligible.” For those that receive both coverages, most of their health care costs are covered. Medicare pays first, then Medicaid will pick up most, if not all, of the balance.