Medicare. Medicaid. What’s in a Name?
Clients regularly ask us a multitude of questions regarding Medicare and Medicaid. While the Centers for Medicare and Medicaid Services (CMS), part of the Department of Health and Human Services (HHS), issues rules and regulations for both, there are major differences between the two programs.
Medicare and Medicaid both provide healthcare coverage via government programs, however, Medicaid is run at the state level (even though CMS oversees it) and Medicare is run at the federal level. What that means is that the Medicaid rules vary state by state while the Medicare rules are the same no matter which state you live in. Medicare is for people who are at least age 65 or have a qualifying disability, while Medicaid is for people with minimal assets. Some people are eligible for both.
Medicare is divided into four parts: Part A, B, C, and D. Part A covers inpatient hospital and skilled nursing care, or rehabilitation provided by licensed health professionals such as nurses or physical therapists and pursuant to a doctor’s order. Medicare does not pay for custodial care, which is non-medical care generally provided by nurse’s aides that help individuals with their activities of daily living such as eating, bathing, and dressing. Part B covers doctors’ visits and outpatient care.
Part C, sometimes referred to as Medicare Advantage, is an optional alternative to regular Medicare and combines parts A and B. Often, Medicare Advantage plans include certain benefits you do not get with regular Medicare and may also have differences in doctor networks. Part D covers prescription drugs.
In addition to monthly premium charges for certain parts of Medicare, there are significant deductibles, copays and coinsurance. Substantially all Medicare beneficiaries do not pay a premium for Part A since they (or a spouse) have at least 10 years of Medicare-covered employment. If you haven’t paid sufficient Medicare payroll taxes, you will have to pay as much as $506 a month for Part A. For most people, Medicare Part B premiums are $164.90 a month in 2023. However, you will be required to pay higher premiums for Medicare Part B and Part D if your income is more than $97,000 per year for a single person, or $194,000 per year for a married couple. These amounts are adjusted annually based on inflation. Many Medicare beneficiaries also add Medigap coverage, which covers some of the gaps (co-pays and deductibles) in Medicare coverage. These policies must follow federal and state laws and are standardized to simplify comparing one plan to another. It is important to review these policies carefully to ensure that you are getting the benefits you need and not paying for benefits you don’t need or will not use.
Unlike Medicare, which is available to you no matter how wealthy you are, Medicaid is a means-tested program and is available only to people who meet the program’s strict income and asset requirements.
Unlike Medicare, Medicaid does pay for custodial care received either at home or in a nursing home. In fact, the majority of nursing home residents in the U.S. are enrolled in Medicaid. This is no surprise since the average cost of long-term care in our area can exceed $200,000 a year. Medicaid benefits vary from state to state, but each state’s Medicaid program must provide certain minimum benefits. There are also different rules for single individuals and folks who married. In addition, there are rules restricting your right to make gifts to family members and others during the look-back period prior to filing a Medicaid application. Of course, as with any rule, there are numerous exceptions that may or may not be applicable to you. Thus, it is very important for you to consult with a Certified Elder Law Attorney in the state where you or your loved one is seeking to qualify for Medicaid.
Medicare and Medicaid both provide crucial health coverage to millions of Americans. Medicaid becomes increasingly important for older people who end up needing long-term care, as Medicare does not provide that coverage. Nearly all Americans will eventually rely on Medicare as their health insurance as they get older, and millions of others may also access the Medicaid program at some point in their lives. Fortunately, these two programs provide a good safety net for those who know how to navigate the system.
Bernard A. Krooks, Esq., is a founding partner of Littman Krooks LLP. He was named 2021 “Lawyer of the Year” by Best Lawyers in America® for excellence in Elder Law and has been honored as one of the “Best Lawyers” in America since 2008. He was elected to the Estate Planning Hall of Fame by the National Association of Estate Planners & Councils (NAEPC). Krooks is past Chair of the Elder Law Committee of the American College of Trust and Estate Counsel (ACTEC). Mr. Krooks may be reached at (914-684-2100) or by visiting the firm’s website at www.littmankrooks.com.