The government programs that are utilized by senior citizens can be somewhat confusing. With this in mind, we would like to examine the differences between Medicaid and Medicare, and we will provide some updated figures.
Age of Eligibility
One of the differences between Medicaid and Medicare is the fact that Medicare is a program that is available to senior citizens. There are no age requirements when it comes to Medicaid eligibility. In fact, many children are enrolled in the Medicaid health insurance program.
Under the laws as they exist at the present time, you become eligible for Medicare coverage when you reach the age of 65 if you qualify. Whether or not you qualify is determined based on the number of retirement credits you earned during your working career.
You have to earn at least 40 credits to qualify for retirement benefits. The maximum annual accrual is four credits. In 2016 you get four credits if you earn a minimum of $5040.
When you are planning for retirement, you should be aware of the fact that the age of eligibility could change. Some cost cutters on Capitol Hill have argued in favor of an increase in the age of Medicare eligibility.
Financial Resources
The allowable financial resources are another difference between these two government health insurance programs. As long as you have earned 40 retirement credits, you qualify for Medicare. You could be the richest person in the country, and you would still qualify for Medicare if you have those 40 credits.
On the other hand, Medicaid is a program that is intended for people who are in possession of very limited financial resources. Because of this, you have to be able to prove that you have financial need if you want to qualify for Medicaid.
The maximum store of assets that you may retain is just $2000. However, this does not include the value of your home, but there is an equity limit. In 2016, the limit is $828,000 in New Jersey.
The vehicle that you use for transportation is not counted when your Medicaid eligibility is being determined. You may also retain ownership of your wedding ring and family heirloom jewelry. Your personal effects and the household goods that you have would not be counted by Medicaid evaluators.
Assisted Living Expenses
Assisted living expenses are something to take seriously when you are looking ahead toward your active retirement years and the twilight years that will follow.
It may be natural to assume that Medicare will pay for a stay in a nursing home or assisted living community. In fact, Medicare does not pay for long-term care. It will pay for up to 100 days of convalescent care, but it doesn’t pay for custodial care at all.
Here is where we see another big difference between Medicaid and Medicare. Medicaid will assist with long-term care expenses.
Possibility or Probability?
You know that it is possible that you may need long-term care someday. However, if you are in good health, you may assume that it is a remote possibility rather than a probability.
In fact, statistically speaking, it is more likely than not that you will need long-term care eventually.
Even if you are in good health entering retirement, there is certainly no reason to believe that you will never need long-term care.
When you are in good health, you may well live a long life. As you get older, it becomes more and more likely that you will need long-term care.
Forty-five percent of people who are least 85 years old have Alzheimer’s disease. A significant percentage of seniors in nursing homes are Alzheimer’s sufferers. And of course, there are many people without Alzheimer’s disease who need living assistance.
Gaining Medicaid Eligibility
Because long-term care is expensive, many people who were never really poor rely on Medicaid to pay for nursing home and assisted living expenses. Although there is a $2000 countable asset limit, you can take certain steps that will allow you to keep financial assets in the family.
This will often involve “spending down” your resources in an effort to fall within the $2000 upper asset limit. This is something that must be done well in advance of applying for the program, because you are penalized if you divest yourself of assets within five years of submitting your application.
It should be noted that the healthy or community spouse can retain ownership of half of community assets up to a certain prescribed limit. This limit can be adjusted annually to account for inflation, but in 2016 it is $119,220.
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Alan Augulis, Estate Planning Attorney
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