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Deciphering Medicare and Medicaid

As you age, you will be faced with many difficult decisions, not the least of which is how to pay for mounting medical costs.  Medicare and Medicaid are two government programs that purport to help you pay for care.  But often, these programs are insufficient, encourage you to impoverish yourself, and offer poor quality of life.  Proper planning, however, can help you avoid these traps, and maintain your independence.

Medicaid.  Medicare.  These terms can be confusing.  People often mix them up, or think that one provides more medical coverage than it actually does.

Medicare is a program for anyone who is 65 years or older, or deemed disabled.  It is a program that is available regardless of your financial status.  It is, in a very broad sense, medical insurance for our elderly citizens.  Like insurance, it provides limited care for acute medical conditions.   Like insurance, there are deductibles, co-pays, and limitations on coverage.  For example, Medicare only provides coverage for 100 days in a skilled nursing facility in any calendar year.  While Medicare covers the first 20 days of costs, the next 80 days are subject to a co-pay by the patient.  After 100 days, the patient is 100% responsible for the cost.

Medicare, as you can see, is an incomplete solution for covering the cost of medical care.  The challenge many seniors are facing is how to pay for this gap in coverage.  Some consider using Medicaid.

Medicaid is a program to provide medical care for low income individuals.  In Nevada, to qualify for Medicaid, an unmarried individual must be over 65 or disabled, earn no more than $2,199 per month, and have no more than $2,000 in non-exempt assets.  (These precise amounts are revised annually by the government.)  Certain assets are not considered by Medicaid in determining your qualification, including a home with less than $552,000 in equity, or a vehicle.  However, as you can see, a person must essentially have no liquid assets and be living near or below the poverty level to qualify for Medicaid.

If you are married, the well spouse does not have to become impoverished to place the disabled spouse in skilled nursing.  As a married couple, you do not need to spend all of your assets on care for the sick spouse.  It is very poor planning to spend all of your hard earned retirement on the care of one spouse, and then have years or decades left in your own life with no way to pay for your basic necessities like food or shelter.  Instead, with proper planning, we can protect assets for the well spouse staying at home while still providing for the sick spouse’s care with the assistance of Medicaid.

Nevada Medicaid has specific rules that protect the well spouse staying at home when a sick spouse has to go into a nursing home.  These rules make it unnecessary to spend down your liquid assets to poverty levels.  Instead, the well spouse staying at home can keep the home, at least one car, and over $119,220 in other assets with a proper court order.  Additionally, with a proper court order, Nevada Medicaid rules permit the well spouse staying at home to keep $2,9820 of the parties’ joint monthly income, regardless of which spouse is earning or receiving that income.  This is important because, even though the sick spouse has been moved to a skilled nursing facility, the well spouse’s regular living expenses likely have not decreased.  The mortgage and utilities still have to be paid.

Medicaid is designed to be used for chronic conditions requiring long-term care, such as home caregivers, nursing home care, and the like.  It covers the cost of medical care 100%.

Medicaid rules can be complicated, but they are not impossible to navigate.  In taking care of both spouses, it is wise to plan so that you can access the benefits available to you.  This type of planning is done as soon as possible after the sick spouse is diagnosed with a condition that might require an eventual move to skilled nursing – even if that move is months or years away.  When properly planning, the well spouse at home can keep resources necessary for his or her own care and quality of life, while still getting long-term care for the sick spouse.

Medicaid is not the only solution for paying for the cost of medical care not covered by Medicare.  With proper planning, and support from appropriate professionals and family and friends, our seniors do not have to impoverish themselves to pay for medical coverage.  Medi-gap insurance programs, long-term care insurance, savings, and proper planning can protect your assets from having to be spent down to access government benefits while at the same time helping you maintain your independence and minimizing the burden on your family.

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