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Estate Planning & Probate
Medicaid
Eligibility Planning
Conservatorships
and Guardianships
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by William King Self, Jr., CELA
Updated June 2005
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 $109.50 per day. 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 seniors is that only Medicaid
pays for “custodial care,” which is the routine nursing
services provided in a nursing home.
There are several types of Medicaid coverage, but the elderly are
mainly concerned with the Medicaid programs that cover the costs
of long term care. Medicaid coverage for long term care in Tennessee
and Mississippi is limited to nursing home care. For those who are
both medically and financially eligible, Medicaid pays all nursing
home and medical expenses, including prescriptions, which are not
paid by Medicare. Assisted living facilities are not covered by Medicaid
in Tennessee or Mississippi, though they are in some other states.
Financial eligibility is dependent on the recipient having limited
income and assets. The individual may generally have no more than
$2,000 in “available assets,” 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.” Medicaid
applicants with more than $1,737 per month are ineligible for coverage,
though under certain circumstances the applicant’s income over
this “income cap” may be put into a special trust in
order to qualify him for Medicaid. (See “qualified
income trusts.”)
There is no limit to the amount of income the healthy spouse may
receive.
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