What is Medicare? What is Medicaid?

Filed Under (Probate) on 12-12-2013

Medicare Eligibility, Medicaid Eligibility

People are often confused by the similarity of the names of these two government programs.  Both Medicare and Medicaid are Government programs that pay hospital, doctor and other provider costs on behalf of qualified individuals.  Beyond that general similarity, however, they are fundamentally different.

Medicare is a federal program that provides medical and hospital insurance to people who are 65 years of age and older. Eligibility is based on an individual’s work history or the work history of a spouse or deceased spouse. Some disabled people younger than 65 may also be eligible for Medicare. Income and asset ownership are irrelevant in qualifying for Medicare.

Medicaid is a joint state and federal program that requires needs-based qualification based on low income and very few assets. Generally, in Colorado people become eligible for Medicaid only if they are also eligible for other needs-based welfare programs. People over age 65 may also be eligible for Medicaid payment if their income and assets fall below the required levels. For eligible people under age 65 who are too young for Medicare, Medicaid can provide payment for medical treatment from physicians and hospitals.

One major difference between Medicare and Medicaid is that individuals eligible for Medicare must pay premiums for both the medical and hospital benefits. If premiums are not paid, coverage will be denied.  Another, significant difference is that Medicaid pays for nursing home care while Medicare does not cover long-term care costs.  Medicare will only pay for up to 20 days per year of skilled nursing care.

Congress has made it more difficult over time to become eligible for Medicaid payment of nursing home costs unless the applicant is essentially impoverished. At one time, it was possible for someone to give assets to other family members in order to preserve family wealth, and to become eligible for Medicaid payment of nursing home costs soon thereafter. This is no longer the case. Many people have heard stories about other people who have managed to accomplish this and have the misconception that giving assets to a spouse or adult children will result in immediate eligibility for Medicaid. Now, if assets are transferred to a spouse they are still counted as the applicant’s property. If they are given to other people (like adult children), the transfer will result in ineligibility for a period of time based on the value of the assets divided by the average monthly cost of nursing home care in the state if an application for Medicaid is made within 36 months of the transfer. There are different rules for married couples if one spouse remains outside of a nursing home.

There are some exceptions, but for widowed people over age 65 Medicaid will pay for nursing home care only in very specific instances, and after an application that requires exhaustive financial records. A single applicant can only retain very limited assets and must have monthly income below a level set each year in order to qualify.

You can find more basic information about Medicaid and Medicare in the book “Life After Death: A Legal and Practical Guide for Surviving Spouses”, but since these programs are so complex it’s beneficial to speak with an attorney if you think you may need to utilize Medicaid for nursing home care.