If you are like many people, you may reach retirement age knowing very little about both Medicaid and Medicare. Over the course of your retirement years, however, you may find that you need to rely on both Medicaid and Medicare for assistance with your healthcare expenses. For this reason alone, it is important to have at least a basic understanding of the eligibility requirements and benefits offered by both programs.
Medicare is a federally funded and administered healthcare program. Medicare is intended to be used by people over age 65 and for certain individuals under age 65 who are also disabled. Medicare is referred to as an “entitlement” program instead of a “needs based” program. This means that if you, or a spouse, worked for the required amount of time (10 years) and paid into the system, you are entitled to benefits when you reach retirement age. This is why most people simply expect to qualify for Medicare when they reach retirement age.
Medicare comes in four parts. Part A, or basic Medicare, does not require a recipient to pay a premium. If you wish to sign up for the additional parts of Medicare, however, it may require payment of a monthly premium similar to private health insurance. The four parts of Medicare and the benefits included in each part are as follows:
- Part A – Hospital care – Covers the cost of being in a medical facility.
- Part B – Covers doctors, medical tests and procedures – basically, anything done to you. There is a monthly premium for Part B coverage.
- Part C – Medicare Advantage – Part C is an alternative to traditional Medicare coverage. Coverage often includes Parts A, B and D. Medicare Advantage plans are administered by private insurance companies.
- Part D – Prescription drug coverage – Part D is administered by private insurance companies, and you are required to have it unless you have coverage from another source. Part D requires you to pay a monthly premium in most cases.
Medicaid is a healthcare program that is primarily funded by the federal government; however, the individual states have the option to supplement funding. Although Medicaid is a federal program, it is administered by the states which is why you will find differences in the eligibility criteria and benefits offered from one state to the next. Unlike Medicare, Medicaid is a “needs based” program, meaning that an applicant must prove the need for benefits to qualify. In the case of Medicaid, that means an applicant must have both income and assets that are below the program limits because Medicaid is intended to provide healthcare benefits to low income individuals, families, the disabled, and the aged.
If you qualify for Medicaid benefits, there are no premiums or co-payments. Every state must provide certain mandatory benefits under its Medicaid program, including inpatient and outpatient hospital services, nursing-home and home healthcare, laboratory and x-ray diagnostic services, transport to a medical facility and tobacco-cessation counseling for pregnant women. A state may provide additional benefits, but may not include less.
Qualifying for Medicaid requires an applicant to meet state income and asset limits. Income limits are directly tied to the Federal Poverty Level for the area where the applicant lives. Asset limits are typically extremely low — $3,000 for an individual in North Dakota & Minnesota. If your non-exempt assets exceed the limit, Medicaid will impose a waiting period during which you will be expected to “spend-down” your assets until their value falls below the program limit.
Medicaid and Medicare and Long-Term Care
One of the most important differences between Medicaid and Medicare is that Medicare will not pay for long-term care (LTC). Although Medicaid does cover LTC expenses, you must first be eligible for benefits. In order to ensure that you are eligible for Medicaid if you need it down the road without losing your assets, be sure to include Medicaid planning in your comprehensive estate plan now.
If you have additional question or concerns regarding Medicaid and Medicare, contact the experienced North Dakota & Minnesota Medicaid planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.