Medicaid and Medicare Planning
Here to answer your questions
What is the difference between Medicare and Medicaid? Medicare and Medicaid sound very similar and many people use the terms interchangeably. They are both federal government health care programs, but serve different needs. Medicaid is a federal program administered by the states. In Utah, people can apply for Medicaid benefits through the Department of Health. Medicare is a federal program that provides health insurance to citizens over the age of 65, as well as prescription drug benefits. Although Medicare is available to everyone over age 65, it can be a confusing program and difficult to navigate. Let us help you understand the program and plan how Medicare can be used to meet your needs after age 65.
Written by: Zachary W. Derr
For: LegalZoom – https://www.legalzoom.com/articles/the-basics-of-medicaid-planning
Of the political issues at the forefront of the national discourse over the last five years, none has been as impassioned, polarizing and confusing as the debate about health care. Terms like Medicare, Obamacare and Medicaid play a key role in the discussion and are often confusing. This article will explain Medicaid, what it is, eligibility for Medicaid, and how individuals and families can plan for Medicaid and apply for the benefit.What Is Medicaid?
Medicaid is a combined federal and state program that can help pay for medical, custodial or long-term care for people with limited income or resources. Medicaid is not a new program, in fact, it was created in 1965. Medicaid is often confused with Medicare, which is a federal insurance program paid out of Social Security deductions. Medicaid provides benefits not covered by Medicare, such as nursing home care and personal care services. One of the key components of the Patient Protection and Affordable Care Act, commonly known as Obamacare, was Medicaid expansion, allowing individuals to qualify whose income is up to 133% of the poverty line. However, the Supreme Court ruled in 2012 that states could opt-out of the extended Medicaid coverage. In Utah, for example, the state is still trying to decide whether to opt out—three years later.
Who is Eligible for Medicaid?
Medicaid is designed to provide health coverage to seniors, individuals with disabilities, pregnant women and children. Medicaid eligibility is available to all U.S. citizens (and some groups of non-U.S. citizens). Income proportional to family size is the primary way the government determines eligibility.
Who Qualifies for Medicaid?
Every year, the federal government publishes numbers on the federal poverty guidelines. The 2015 numbers can be found here. Income and family size largely determine Medicaid qualifications. The percentage of poverty level needed to qualify for Medicaid varies from state to state. The Children’s Health Insurance Plan, or CHIP, has higher income allowances than other Medicaid programs. Seniors applying for Medicaid coverage of nursing home, often called Medicaid Long Term, fill out a Long-term Care Addendum to the Medicaid application which looks at money given away over the last five years and a more comprehensive required disclosure of income and assets.
What Is Medicaid Spend Down?
Some individuals and families are otherwise eligible for Medicaid benefits, but have too much income to qualify. They may qualify if they spend excess income on qualifying medical expenses, such as medical bills. Eligibility for spend down programs vary from state to state. In some states, only children, seniors or the blind or disabled are eligible for spend down. In other states, the spend down program is available to almost all applicants. Medical expenses that qualify for spend down also vary from state to state, but generally include most medical bills.
Why Is the Application Process So Complicated?
Health care costs increase each year, making Medicaid an expensive program for both the federal government and the states. Because Medicaid is expensive, the government wants to make sure only qualified applicants receive the benefit. Medicaid requirements are intentionally stringent and the application process is complex, in part to deter more people from applying.
Penalties for Abuse
There are strict civil and criminal penalties for Medicaid fraud. When applying for Medicaid, it is extremely important to be truthful and accurate, to avoid the harsh penalties in place for abuse. In fact, the Internal Revenue Service (IRS) posts a “wall of shame” of health care fraud cases each year. Most of these involve large-scale fraud for reimbursement or identity theft. However, state attorneys general actively investigate and prosecute individual Medicaid fraud cases.
How Can an Attorney Help With Medicaid Planning?
An attorney can advise applicants on the status of the law and the proper way to submit the Medicaid application. An attorney can also cut through some of the red tape and bureaucracy in a state Medicaid office. With long-term care Medicaid, an attorney can be especially valuable in helping form and execute Medicaid planning strategies to preserve assets. An attorney can also advocate for an applicant who is denied Medicaid eligibility at a hearing and may be able to help reverse an adverse decision.
Written by: Zachary W. Derr
For: LegalZoom – https://www.legalzoom.com/articles/medicaid-long-term-care-planning
Planning for Medicaid is more important than ever before. According to the U.S. Department of Health and Human Services, more than 70% of Americans over the age of 65 will need long-term care at some point in their lives. Nursing homes can cost anywhere from $7,000–$12,000 a month, and costs are rising. Most people will run out of money before they die and have nothing to leave to their families. With proper Medicaid planning, however, you will be able to offset the high cost of care and preserve some of your assets.What Is Medicaid?
Medicaid is a combined federal and state program that can help pay for medical care for some people with limited income or resources. Medicaid is often confused with Medicare, which is a federal insurance program paid out of Social Security deductions. Medicaid provides benefits not covered by Medicare, such as nursing home care and personal care services.
As seniors enter long-term care, their cost of living rapidly increases. Depending on the state, nursing homes can charge as much as $7,000-$12,000 a month. Someone who needs 5-10 years of long-term care may easily outlive their retirement savings. Medicaid Long-Term Care Services in Nursing Facilities (also known as Medicaid Long-Term Care) is designed specifically to help people in this situation.
Who Is Eligible for Medicaid?
Because the government is paying the cost of nursing home care, which can be expensive, they determine who qualifies for Medicaid and have set strict standards for Medicaid eligibility.
First, to be eligible, you must be receiving the appropriate level of medical care, which is typically in a nursing home. Next, the government will look at all of your assets, income and gifts.
Medicaid Spend Down
One of the well-known Medicaid requirements is the Medicaid “spend down.” The government will examine all of your assets. There are some assets, like a home, car and pre-paid funeral expenses that are considered protected assets. There is also an “Individual Countable Resource Allowance” (ICRA), which is what the government will let you keep. This amount is usually around $2000. Anything not protected and over the ICRA must be spent down. There are rules about how the money can be spent; for example, the government permits spending on home improvements or funeral plans, but does not allow money to be given away to other family members.
The government will also look back for 60 months and see if there were any “divestments” (gifts or partial gifts of assets). This generally means anything given to family members or sold for less than fair-market value. These divestments are used to calculate a penalty period (time you are required to pay for care out of your pocket before you may apply for Medicaid). There are different calculations that will determine the penalty period and “co-pay” (the amount of money each month that you will have to pay toward care).
Without planning, Medicaid forces most people to spend as much as they have toward long-term care costs. Medicaid pays for care, after the senior has only $2,000 in assets remaining. Medicaid allows an asset exemption of a home, but states will often use the Attorney General’s Office to recover the amount spent on care from the home after death.
This means that if Medicaid spent $100,000 for your care, and after your death your home sold for $150,000, the Attorney General’s Office would recover $100,000 from the sale of the home and leave the estate with $50,000.
Personal Needs Allowance
In many states, dental care, vision and haircuts are not covered by Medicaid. In fact, Medicaid will give the senior a paltry $45 a month as a Personal Needs Allowance. If Medicaid is paying for a nursing home, they will likely put you in a shared room to save money.
Medicaid Planning Strategies
Determining eligibility for Medicaid is notoriously complex. Fortunately, an attorney who specializes in elder law can present you with many Medicaid planning strategies that can help you preserve as many assets as possible.
People who plan early can take advantage of several Medicaid planning strategies and are often able to keep most of their assets, avoid the spend down and still meet the Medicaid qualifications standards set by the states. By protecting assets from Medicaid early on, you will have money set aside to supplement the $45 a month personal needs allowance and pay for things like dental work, vision and a private room.
With proper Medicaid planning, an elder law attorney can advise you when to divest assets, how to work with the lookback and how to spend down money before you apply.