Articles
Medicare and Medicaid for Long Term Care
Compared
by William King Self , Jr., CELA
updated March, 2008
Medicare and Medicaid are terms that often confuse people. Medicare is a federal program financed by the Social Security system and the Medicare insurance premiums that are paid by workers prior to age 65. Medicaid, on the other hand, is a state and federal program for lower income persons. It is generally administered by the states, and eligibility is limited by the income and resources of the applicant. Though both Medicare and Medicaid are government entitlement programs, it is helpful to think of Medicare as an insurance program, which it is, even though it has a large government component.
Medicare
Medicare is a health insurance program providing benefits to people 65 and older, and also to some disabled persons. Medicare does not pay for long term “custodial” care like long term nursing home care. Medicare can sometimes pay nursing home expenses for a limited time after a patient leaves the hospital and is admitted to a nursing home for skilled nursing services or for rehabilitation. To be eligible for Medicare benefits for rehabilitation, the patient must have had a three day hospital stay and a doctor must have directed that the patient get rehabilitation or skilled care in a nursing home after leaving the hospital. Up to the first 20 days of nursing home care may be paid by Medicare, with up to another 80 days being subject to a co-pay of $128.00 per day (2008). Many Medicare supplement policies will pay this co-payment. Medicare is strict in its approval of Medicare coverage, and often coverage will not last even as much as the first 20 days.
Medicaid
Medicaid pays many medical expenses not paid by Medicare, but Medicaid is available only for eligible people who have limited resources and income. The chief difference for nursing home services is that only Medicaid pays for “custodial care,” which is the routine nursing services provided in a nursing home.
Medicaid coverage for long term care in Tennessee and Mississippi is limited to nursing home care. Medicaid is also available for needy individuals who are not confined to nursing homes, but the eligibility and coverage rules are different from the nursing home rules. Assisted living facilities are not covered by Medicaid in Tennessee or Mississippi, though they are in some other states.
For those who are both medically and financially eligible, Medicaid pays all the recipient’s nursing home and medical expenses that are not paid by Medicare, except prescriptions. Persons who receive both Medicare and Medicaid are called “Dual Eligibles.” Since January 1, 2006, dual eligibles no longer have prescription coverage through Medicaid, but are automatically enrolled in Medicare Part D prescription coverage without charge. The prescription benefits under Medicare Part D for dual eligibles are generally better than is available for Medicaid recipients who are not on Medicare.
Financial eligibility for Medicaid is dependent on the recipient having limited income and assets. An individual applicant for Medicaid may generally have no more than $2,000 in “available assets” ($4,000 in Mississippi), though some important assets, such as the family home and one automobile are not counted. All assets owned by both spouses may be counted, but married couples benefit from rules designed to prevent “spousal impoverishment.” In Tennessee, the well spouse is allocated half of the available assets up to a protected amount of $104,400, and for those with fewer assets, the well spouse is allocated a minimum of $20,328 of the “available assets” in addition to the exempt assets. (2007)
Medicaid applicants with more than $1,911 per month in gross income (the “income cap”) are generally ineligible for coverage, though the applicant’s income may be put into a “qualified income trust” so that he may qualify. The well spouse is allocated a minimum of $1,711 of the couple’s income before any money is paid to the nursing home, and the well spouse’s allocation can rise to $2,541 for those who have high costs of housing.
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