MEDICARE AND MEDICAID…
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.
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.
Nursing Home Costs
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. This is where a legal professional can really be of value and oftentimes, be able to get you benefits much sooner.
- Assets in a revocable living trust are not protected and must be used to pay for the costs of long-term care.
- If you are married, your home is exempt and cannot be taken when applying for Medicaid. If you are single or widowed, your home is exempt up to $750,000. If you transfer your home to your children, not only will it result in immediate ineligibility for Medicaid, but it could also:
- Trigger a gift tax,
- Result in the loss of any property tax exemption, and,
- Result in your child’s spouse (the in-laws) inheriting your home.
- Giving your assets away means losing control. It’s not safe even if you “trust” who you give it to. If that person divorces, goes bankrupt or is sued, all of the money you transferred is at risk. There are asset protection trusts that permit you to keep 100% control of your assets without the risk of losing them if long-term care is needed.
- You do not have to wait 60 months to qualify for Medicaid. Eligibility is calculated on a case-by-case basis. It is possible to have over $250,000 in cash and qualify immediately. Get professional advice and learn the facts.
- It is never too late to protect your assets even if you are already in a nursing home. In fact, you can qualify for Medicaid sooner if you are already in a nursing home, than if you aren’t.
- A nursing home or hospital that offers to file a Medicaid application for you has no obligation (and often can’t) advise you on how to protect your assets. Only a qualified Medicaid planning attorney will be looking out for your interests.
- Applying for Medicaid prior to qualification could result in being disqualified for a longer period of time than you otherwise would have been (it’s not limited to 36 months).
- Make sure the attorney you hire is experienced in Medicaid planning. Would you go to your regular doctor for a heart problem?
- Consider long-term care insurance. An annual premium for a couple is usually less expensive than one month of nursing home care and with proper planning; it may also enable you to stay home if you become ill.