Medicare, Medicaid, and Planning for Long-Term Care, Continued

Older couple looking over paperworkLast time we looked at the difference between Medicare and Medicaid. Now let’s look at how they differ with respect to long-term care planning.

Medicare, by and large, does not cover long-term nursing home care. For example, Medicare Part A will only cover up to 100 days in a skilled nursing facility for a particular illness, and only after the patient has spent at least three days in a hospital. Worse, from day 21 to day 100, the individual in the skilled nursing facility must make a copayment of $167.50 per day. Few people actually receive Medicare coverage for the full 100 days, in part because of the copay, and in part because restrictions and conditions for coverage are quite stringent.

Medicaid, on the other, does cover long-term nursing home care for people who meet its income and asset limits. 100 days, one year, five years—Medicaid will pay for the care as long as the recipient is eligible. Given the high cost of nursing home care, the dearth of affordable alternatives, and the restrictions inherent in Medicare coverage, Medicaid is now the single largest payer of nursing home stays in the United States.

So, can you get assistance from Medicaid to pay for nursing home care? If your income and assets are less than your state’s guidelines, you are already eligible. If your income and assets exceed state limits, you have to take the appropriate steps to become eligible. The sooner you take these steps, the better, and you have to be careful.

For example, you can’t simply give your “stuff” away a few weeks before entering a nursing home and expect Medicaid to pay for your stay. When you apply for Medicaid, any gifts or transfers of assets made within five years of the date of application are subject to penalties. This is known as the look back period. And what is the “penalty?” It is the amount of time during which the person transferring the assets will be ineligible for Medicaid. The penalty period is determined by dividing the amount transferred by what Medicaid determines to be the average private pay cost of a nursing home in your state.

The bottom line is this: While Medicare can help pay for a short-term stay in a nursing home, Medicaid can pay for long-term care. Through proper planning, you can obtain assistance from Medicaid to pay for nursing home care, and protect your hard-earned assets in the process. The sooner you start planning, the better your chances of getting the care you need while protecting most, if not all, of your assets.

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