Is My Loved One Eligible for Medicaid?

Article Summary

This article provides an overview of the differences between Medicare and Medicaid, and how they relate to elder care.

Key takeaways:

1. Medicare is a federal program that is open to all seniors once they reach age 65, while Medicaid is a joint program between the federal government and each individual state.
2. Medicare is divided into four parts that provide coverage in different situations, while Medicaid provides health insurance and covers the cost of long-term care under certain circumstances.
3. Medicare does not pay for personal or long-term care, while Medicaid covers care in a nursing home for those who qualify.

Introduction

If you’re feeling confused about the differences between Medicare and Medicaid, and what each program does – or doesn’t – cover, take comfort in knowing that you’re not alone! They’re both incredibly complex systems that are hard for most people to untangle. We’ll lay out the basics of both and help get you pointed in the right direction for your senior loved one’s situation.

What are the Differences Between Medicare and Medicaid?

Both Medicare and Medicaid are government programs that provide health care benefits for American citizens or permanent residents who meet their eligibility requirements.

Medicare is a federal program that is consistent throughout the nation. It’s generally open to all seniors once they reach age 65.

Medicaid is a joint program between the federal government and each individual state. It’s run at the state level, so details can vary widely from one to the next. Even the name of the program differs in many states! Some simply call it their State Plan or Title XIX, but others have special names such as Medi-Cal (California), KanCare (Kansas), or MassHealth (Massachusetts).

What Does Medicare Cover?

Medicare is divided into four parts that provide coverage in different situations.

Part A - Hospice, Skilled Nursing Facility, Inpatient Hospital Care

Part B - Outpatient Care, Durable Medical Equipment, Home Health Care

Part C - Medicare Advantage Plans

• These special plans are sometimes available through private insurance companies. They provide the same benefits as Parts A and B – and sometimes D – plus additional areas, such as dental, vision, or hearing. Some plans now also include adult daycare, respite care, personal care assistance, housekeeping, home modifications, or meal delivery. Coverage varies from plan to plan, so check with your loved one’s plan administrator about any questions.

Part D - Prescription Coverage

What Does Medicaid Cover?

Medicaid provides health insurance and also covers the cost of long-term care under certain circumstances.

Medicaid health insurance benefits include many common medical expenses, such as doctor or hospital visits or lab and x-ray services. Beyond these basics, Medicaid benefits vary tremendously from state to state.

Will Medicare or Medicaid Pay for Long Term Care?

Under most circumstances, Medicare will NOT pay for personal or long-term care. Skilled nursing coverage is limited, and is reserved for those recovering from a significant hospitalization.

On the other hand, Medicaid is the largest source of long-term care coverage in the nation, supporting over sixty percent of nursing home residents.

Medicaid covers care in a nursing home for those who qualify. It also pays for personal care in other settings to a limited extent.

Nursing Home Care is an Entitlement

Nursing home care is considered an “entitlement”, which means that the state will always cover it for enrolled seniors who require that level of care.

If a medical specialist determines that your loved one doesn’t need a “nursing home level of care” they may still be eligible for “home and community-based services” (HCBS), such as care in the home, at an adult day care program, or in an assisted living facility.

Long Term Care Waivers

In many states, Medicaid will cover the cost of care in a home or assisted living facility, but not room and board (which is often the bulk of the charges). Additionally, home and community-based care is not an entitlement – it’s considered a “waiver”.

Waivers are special Medicaid programs that cover costs outside of nursing homes under certain circumstances. However, even if your loved one is eligible, they may not be able to participate, because enrollment is limited to a certain number of “slots”. There are sometimes long waitlists for waivers.

Waivers vary by state. They sometimes have different eligibility requirements than the regular state Medicaid plan. Even the exact definition of terms like “assisted living” can vary from state to state, so it’s important to get information directly from your state’s Medicaid office, or from an advisor familiar with your state’s specific rules.

Call 1-800-MEDICARE (1-800-633-4227) to find contact information for your state's Medicaid office.

“Dual Eligibility” for Medicare and Medicaid

Seniors can be eligible for both Medicare and Medicaid at the same time. Medicare’s eligibility is based on age while Medicaid’s is based primarily on financial need.

Is My Loved One Eligible for Medicaid?

In some cases – such as when a senior has less than $2,000 in assets and less than $2,000 in monthly income – Medicaid eligibility is fairly straightforward.

You can apply for Medicaid directly at your state’s Medicaid website.

However, in many cases, the application process can be pretty complex. The rules change frequently and vary based on many things, including marital status, state of residence, and which assets are “countable” and which are exempt. Depending on the situation, there are different pathways to eligibility.

A few examples of common circumstances include:

• A Single Senior with High Medical Expenses
  • A single senior who has high medical expenses may be considered “medically needy”, which may allow them to qualify even if their income exceeds limits for other pathways.
• Only One Spouse Needs Long Term Care
  • The cost of care for one spouse can easily deplete a couple’s resources. Fortunately, Medicaid’s spousal impoverishment rules make allowances for the healthy spouse to retain their home, vehicle, and a moderate amount of income and assets. They don’t have to deplete all their resources in order for their partner to become eligible for long-term care assistance.
• Both Spouses Require Care
  • When both spouses require long-term care, their financial and care needs can quickly overwhelm the entire family. It’s advisable to start consulting with a professional Medicaid planner early in the process to ensure that support is available when needed.

Many seniors aren’t eligible for Medicaid when they initially begin the application process. Ultimately they become eligible through strategies such as “spending down” their assets or rearranging them through trusts. This process often requires professional help to navigate.

How Can My Loved One Become Eligible for Medicaid?

If your loved one has too much income to qualify for Medicaid but is considered “medically needy”, some states will allow them to “spend down” their assets to become eligible. Spending down is a defined process. Seniors who just give away their assets will be denied coverage, so it’s important to understand and follow the rules!

For more information on spending down or becoming eligible in other ways, such as creating an irrevocable funeral trust, contact your state’s Medicaid program or a professional Medicaid Planner.

Medicaid Planning

Many seniors find it worthwhile to consult with a Medicaid Planner to help navigate the confusing process of becoming eligible for the program. More than a matter of convenience, professional assistance can make the difference between qualifying for the program or not.

There are different kinds of Medicaid Planners, each with their own strengths and weaknesses.

Commission-based Medicaid Planners won’t charge your loved one for their service, but they won’t have any incentive to advise in any direction other than purchasing Medicaid-compliant annuities (one way to spend down to create Medicaid eligibility).

Elder law attorneys usually charge several hundred dollars per hour, with the total cost of service coming in between $3,000-$15,000, depending on the complexity of the case and where it’s located. Elder law attorneys offer well-rounded advice and have no conflict of interest in representing the best interests of your loved one. They can also assist with the creation of trusts to meet eligibility requirements.

Eldercare Resource Planners tend to charge lower fees than attorneys (in the range of $1,500-$2,500) and can assist your loved one to create a holistic, long-term plan for managing their complete financial and care situation.

Public benefits counselors work through your local Area Agency on Aging or Medicaid office. They won’t charge for their service, but are often very busy and may not be able to provide the same level of service as a privately-paid planner. They don’t advise on how to restructure assets in order to qualify for Medicaid, but they can be a good resource for those who already meet their state’s eligibility requirements.

There are also many other types of professionals who can assist with Medicaid Planning. Finding the right one to assist you through this process can make a big difference in minimizing the hassle, and ultimately securing the best outcome for your loved one’s financial and health care future.

Take it One Step at a Time

The process of applying for Medicaid is complex and can be overwhelming. Take comfort in the knowledge that over 75 million people – around one in five Americans – have navigated it successfully and are covered as of May 2021. And you can too! Just take it one step at a time and seek the support you need along the way.

Author Bio

Laura Herman is an elder and dementia care professional who advocates for better senior care in America. This article has been reviewed by TJ Falohun, co-founder and CEO of Olera. He is a trained biomedical engineer and writes about the cost of healthcare in America for seniors.

Sources

ElderCare Resource Planning: Services, Fees, Pros & Cons

A Beginner's Guide to Medicaid and Eldercare

Medicaid Planning: Pros & Cons, Costs and Strategies

Find a Medicaid Planner / Determine Eligibility Status

Frequently Asked Questions on Medicaid Long Term Care