PLANS FOR LONG-TERM CARE: MEDICARE VS. MEDICAID

By and large, Medicare does not provide adequate coverage for nursing home care. For example, Medicare Part A only covers 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. To make matters worse, from day 21 to day 100 the individual in the skilled nursing facility must make a co-payment of $170.50 per day. Few people actually receive Medicare coverage for the full 100 days, in part because of the substantial copay, and in part because restrictions and conditions for coverage are rather stringent.

Medicaid, on the other, does cover long-term nursing home care for people who meet its asset and income and limits. One hundred days, one year, ten years—Medicaid will pay for the care as long as the recipient is eligible. Given the high cost of nursing home care, the shortage of affordable alternatives, and the restrictions inherent in Medicare coverage, it is not surprising that Medicaid is now the single largest payer of nursing home care in the United States.

At this point, you are probably wondering if you can you get assistance from Medicaid to pay for nursing home care. If your assets and income are less than your state’s guidelines, the answer is yes. If your assets and income 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 very careful.

You can’t simply give all of your “stuff” away a few weeks before entering a nursing home and expect Medicaid to pay for your stay. Why? When you apply for Medicaid, any gifts or asset transfers 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 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.

Let’s cut to the chase: 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.