Long Term Care Insurance - Medicare vs Medicaid, What’s the Difference?

Long Term Care Insurance

As National Long Term Care Insurance Awareness Month comes to a close, I thought I’d do one final related topic on the subject long term care insurance, Medicaid and Medicare. Sometimes there is some confusion between the difference of Medicare and Medicaid. Medicare is basically your health insurance in your retirement years, thanks to Uncle Sam. It pays for your doctor’s visits, your medication and any surgeries or hospitalizations you might need. Just remember one very important fact: Medicare is extremely limited as to what it covers for “custodial care”. This is why the long term care insurance industry exists. Medicare will typically pay for the first 20 days of your custodial care, then there is a deductible from day 21 to 100, after that you’re on your own and self funding.

But what about Medicaid? When you hear this term, in your mind, it may be synonymous with the term “welfare”. If you apply for Medicaid with the state, you are basically telling the state that you cannot afford health insurance and need their help. However, while the state is willing to do this, you’re going to have to prove this. If you apply for Medicaid, the state will do a financial audit. If you haven’t spent your assets down to the state thresholds that are set, then you won’t be eligible.

So what are those financial thresholds? The states set the thresholds for eligibility and every state is different. Medicaid was created in 1965 and it is a program that is financed jointly by both the federal and state governments. To the point that in some states it’s not even called Medicaid. In California, it’s called MediCAL. In Pennsylvania it’s called “Medical Services”.

The eligibility rules for Medicaid are complex and vary widely from state to state. They typically are linked to both your income and other factors such as family or disability status. The one thing to be aware of is what is referred to as the “look back period”. This is the length of time in which Medicaid will look back to review your financial records to determine your eligibility. For the most part nationally, this look back period is 5 years. In some states, like New Hampshire, there is an unlimited look back period.

Many times you think of estate planning lawyers as source to help you secure your assets. One of the first things they are looking to evaluate is what your tangible assets are, should you end up in a Medicaid scenario. For example, if you’re married, own a home and one of you goes into a nursing home on Medicaid, they can’t put a lien on the house because the opposite spouse is still living there. In some states they refer to this as the “spouse in the house” rule. However, if the second spouse goes in, then in most states, the home is an asset that is counted for Medicaid.

So the gist of this blog is to really bring out the differences between Medicare and Medicaid, with a high recommendation to consider a meeting with an estate planning lawyer to have an “end” game plan in place. You often hear people say their parents lost their home to the nursing home. Financial planning is key to preserving and protecting all the assets you have accumulated over the years. 

About the author: Mark Yurkovic has been in the life insurance business for over 12 years, and holds CLTC, LUTCF, and CES designations. He enjoys building remote control boats, and playing instruments including the piano, guitar, banjo, and mandolin. Mark would love to discuss life insurance options and work towards finding the best policy fit for your family. You can contact Mark at 1-800-651-1953 or MYurkovic@Pivot.com