Many people have questions about the differences between Medicaid and Medicare. These programs are often confused. In this post we will shed some light on the matter.
Medicare is a federal health insurance program that provides benefits to the aged, blind, and disabled.
If you are not blind or disabled, the age for Medicare eligibility is currently 65. However, this is a benefit to keep tabs on when planning ahead for retirement. There have been proposals introduced that would raise the age of Medicare eligibility. The logic here is that the federal government can save money if people have to wait longer for benefits.
One myth about Medicare is that it’s 100% free health care. In fact, there are deductibles, co-payments, and premiums that you have to pay out of your own pocket. Examining the Medicare guidelines can help you anticipate potential out-of-pocket expenses.
Long-term care costs are also an important part of retirement budget projections. Most senior citizens are going to need assistance with their day-to-day needs at some point. Long-term care is expensive, and depending on where somebody lives and the level of care he or she needs, the average stay in a nursing home could easily exceed $100,000 a year.
Medicare does not pay for nursing care, except for 20 days if you enter a nursing facility directly after a 3 day minimum hospital stay. After that, Medicare will pay up to another 80 days if you are in rehabilitation and have not reached maximum medical improvement. Once you do, the coverage stops. Also, there is a daily co-pay obligation during this period.
The Medicaid program was put into place to provide access to health care and nursing care for people of very limited financial means. It is jointly run by the federal government and the individual states. Unlike Medicare, it is a needs-based program. You can be a billionaire and qualify for Medicare, but you cannot get Medicaid if you are over the income or resource (asset) limits.
In Ohio, you can be resource-eligible if your available assets are not more than $1500. If you are married, then Medicaid does not require your spouse to become impoverished so that you can receive Medicaid nursing home benefits. The “Community Spouse” living in the couple’s home can keep the home if the equity is not more than a certain limit, which is $536,000 in 2013. The Community Spouse can keep half the couple’s assets up to a total of about $120,000.00 in Ohio in 2013, including the Institutionalized Spouse’s personal exemption of $1500. There is a minimum amount the Community Spouse can keep even if it is more than half the couple’s assets. These maximums and minimums vary by state and may change each year.
Another difference between Medicaid and Medicare is that Medicaid is not exclusively designed to assist senior citizens. However, many senior citizens do wind up relying on Medicaid because it will assist with long-term care costs if you can qualify.
Medicaid planning is implemented by some people who want to keep assets in the family while still qualifying for Medicaid to pay for long-term care.