Understand the Differences Between Medicaid and Medicare and Know What to Expect From these Two Government Health Insurance Programs
WHAT IS THE DIFFERENCE BETWEEN MEDICAID
AND MEDICARE?
DENNIS D. DUFFY Iowa Estate Planning Attorney
Elder law attorneys help clients who are interested in preparing for the eventualities of aging. When you are planning ahead for your active senior years and the twilight years to follow, you should understand what to expect from government programs like Medicaid and Medicare. In this paper we will look at these two programs and explain the differences between them.
MEDICARE When you pay taxes on your earnings, part of what you are paying goes toward future Medicare coverage. Medicare is a government-run health insurance program for senior citizens. As you are paying these taxes you are earning retirement credits. You can earn a maximum of four credits per year. Once you have accumulated 40 retirement credits, you qualify for Medicare. There is no higher level of Medicare that you can qualify for if your credit accrual exceeds 40 credits. How are credits issued? In 2013, you earn a credit for every $1160 that you earn. As a result, if you earn at least $4640 in 2013, you have earned the
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maximum four credits for this year. There are different parts to the Medicare program: Part A, Part B, Part C, and Part D. Medicare Part A is the part of the program that applies to inpatient hospital stays. You should understand the fact that every penny of your hospital stays will not be covered. There is a per-benefit-period deductible, and there are significant co-payments for long hospital stays. Part B covers outpatient treatment and visits to doctors. There is a modest deductible for this coverage, and you also have to pay a monthly premium. In 2013 the majority of participants have been paying $104.90 per month for Part B coverage. Most people have this deducted from their Social Security checks. Part C allows you to use your benefit to obtain private coverage that would streamline your insurance situation. Part D is an optional prescription drug plan. Medicare is specifically designed to provide health insurance for senior citizens. Under currently existing laws, you become eligible for Medicare coverage when you reach the age of 65 assuming you have accumulated the necessary 40 retirement credits.
HOW MEDICAID DIFFERS FROM MEDICARE What Is the Difference Between Medicaid and Medicare?
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Medicaid is different from Medicare in a number of different ways. First off, Medicare is a program that is available to everyone who has paid into it sufficiently. You can be the richest person in America and still qualify for Medicare. On the other hand, Medicaid is a need-based program. It provides health insurance for people who have virtually no financial resources. If you have more than $2000 in countable assets, you cannot qualify for Medicaid coverage. Another one of the differences is the fact that people of all ages can qualify for Medicaid. As we stated in the previous section, Medicare is designed to provide health care coverage to senior citizens. A third very important difference is the fact that Medicaid will assist with longterm care costs. Medicare does not pay for an extended stay in an assisted living community or a nursing home. This is a very important matter within the elder law community. Long-term care expenses are not easily paid out of pocket. If you are not aware of the present state of long-term care costs, you may be rather unpleasantly surprised when
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you hear the facts. The MetLife Mature Market Institute publishes an annual survey on the subject. According to the 2012 survey, the average cost for a year in a private room in a nursing home across the United States exceeded $90,000. The average length of stay is about 2.2 years. Of course, some people remain in the facilities beyond the average length of stay. When you do the math you're looking at some big numbers. A high percentage of people simply don't have that kind of money. There are those who could possibly use their savings to pay for long-term care, but it would wipe them out. They would have nothing left to leave behind to their loved ones. Because of these expenses many people who were qualified for Medicare ultimately apply for Medicaid to pay for long-term care.
Conclusion Unlike Medicare, Medicaid is a need-based program that is available to people of all ages. It will pay for long-term care while Medicare will not.
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Though Medicaid has a very low upper asset
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limit, it is possible to qualify without losing everything. You may be able to retain ownership of your home, and asset divestiture in advance of applying is possible as well. The key is to plan ahead well in advance of applying for eligibility with a full understanding of program rules and regulations. People who are concerned about future longterm care costs should certainly discuss Medicaid planning with a licensed elder law attorney.
REFERENCES Medicare http://www.medicare.gov/your-medicarecosts/costs-at-a-glance/costs-at-glance.html AARP http://www.aarp.org/health/medicareinsurance/info-04-2011/medicare-eligibility.html
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About the Author Dennis D Duffy Dennis Duffy combines an extensive background in business with a wide range of legal experience to provide his clients with a uniquely practical perspective. An attorney since 1989, he practices primarily in Estate Planning, Wills, Trusts and Probate. Mr. Duffy also offers frequent educational seminars on a variety of estate planning topics to both the general public and private groups in the Quad Cities area. Experience Mr. Duffy has been practicing law since 1989, when he joined the general practice firm of Bozeman, Neighbour, Patton & Noe in Moline Illinois. In 1990, Mr. Duffy and five other attorneys founded the law firm of Anderson & Nelson, with offices in Rock Island, Illinois and Davenport Iowa; the firm eventually grew to 12 attorneys, with Mr. Duffy as managing partner. He founded Duffy Law Office in 1995. Before returning to school for his advanced law and business degrees, Mr. Duffy worked for nearly a decade for Per Mar Security & Research Corp. in Davenport, as Vice President. Mr. Duffy is a member of the American and state bar associations of both Iowa and Illinois as well as the Scott and Rock Island County Bar Associations. He is an executive member of the American Academy of Estate Planning Attorneys. He is coauthor of the book Estate Planning Basics – A Crash Course in Safeguarding Your Legacy. Also, the American Academy of Estate Planning Attorneys announced that Mr. Duffy was honored with the Academy Fellow designation. The Fellow program recognizes Academy Members who demonstrate advanced expertise and significant practical experience in the estate planning, trust, tax planning, guardianship, probate and estate administration fields.
Duffy Law Office Helping Families Preserve their Wealth www.duffylawoffice.com 1840 E. 54th Street Davenport, IA 52807 (563) 445-7400
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