Medicare & Medicaid Facts

Medicare and Medicaid. Is there a difference? For adult children who are starting to consider eldercare solutions, these programs can trigger a bout of head scratching. Will they pay for eldercare at home? Will Mom be forced into the poorhouse before receiving benefits? This guide will give you an overview of basic Medicare and Medicaid facts.

Fact #1 - Medicaid does not necessarily pick up the bill when Medicare stops paying.
The federal Medicare program provides benefits regardless of income or the value of assets. In contrast, the federal/state-funded Medicaid program is specifically designed to provide medical benefits for those in need, such as people with low-income or disabilities. Once a senior has exhausted Medicare benefits for eldercare solutions, he or she will only receive Medicaid if they meet their state’s standard of eligibility.

Fact #2 – Medicare pays for home care or nursing care under very specific conditions.
The Medicare program will cover the cost of certain levels of care—but only in certain situations. For example, it will pay for skilled care or rehabilitation services only after your loved one has been hospitalized. Even then Medicare only covers the costs for up to 100 days. The result is that your family won’t be able to count on this program as a primary source of eldercare solutions funds. Medicare also doesn’t cover most eldercare at home situations either.

Fact #3 – Medicaid applications can be a time-consuming process.
There’s nothing simple about applying for this government program. One reason is that although the program receives federal funds, it’s administered by each individual state. That means there are 50 different ways to apply for this program, and you’ll need to research to find out what your state requires.

Despite the varying application processes, your senior parent will need demonstrate that they are financially needy enough for Medicaid. In general, applicants are asked to produce bank statements, pay stubs, proof of age, proof of citizenship, income sources (such as social security or veteran’s benefits), and insurance policies.

Perhaps Mom isn’t ready to apply for Medicaid yet. It’s still a smart idea to make sure you know exactly what your state’s application process entails and what documents your parent will need to show. Then, if Mom suddenly suffers a catastrophic illness, you’ll be saved the trouble of digging through shoe boxes for important documents.

Fact #4 – Seniors are penalized if they transfer assets to become Medicaid eligible.
Think that Dad can qualify for Medicaid faster if he sells you his $10,000 boat for $100? Think again. The system imposes a penalty for asset transfers that are less than fair market value. What’s more, the state will look for transfers that go back as far as five years. If transfers are made, they’ll use a formula to determine how long Dad will have to wait to receive benefits.

Medicare and Medicaid can be a baffling bureaucratic conundrum for many. Help your parent find an eldercare solution that works by learning how these two programs operate.

Fact #5 – Seniors must sell their homes to qualify for Medicaid.
Although state requirements vary, the home doesn’t count as an asset unless it’s worth more than $500,000. In addition, some states don’t consider the home as an asset if the patient intends to return there. It also won’t be counted as an asset if a spouse, minor child or disabled child lives in the home.