Our law firm represents estate planning clients in Pennsylvania and New Jersey. During our conversations with these families, we often must answer questions about Medicare, Medicaid, and long-term care options. These families, in addition to caring for a sick loved one, are also concerned about spouses who don’t require care but must live independently. Here are some of the common questions and answers:
- QUESTION – What is Medicare?
ANSWER: Medicare is a federal government health insurance program for persons 65 years of age or older along with individuals under 65 with certain disabilities. Medicare pays certain but not all healthcare costs. It does not cover the cost of long-term care in the home or in a nursing home setting. Medicare does cover hospital stays, limited days in a skilled nursing facility, along with limited home care and hospice services.
- QUESTION – What type of hospital coverage does Medicare provide?
Medicare provides coverage based on the length of stay in a hospital.
- Days 1-60 Medicare pays in full minus a $1,316 deductible
- Days 61-90 there is a co-payment of $329 per day
- Days 91-150 there is a copayment of $300 per day
- After the 150th day Medicare does not cover the hospital stay
Medicare also covers care in a skilled nursing facility
- Days 1-20 Medicare pays in full provided there is a skilled need required for treatment
- Days 21-100 Medicare will pay for the care minus $164.50 per day copayment, as the skilled need continues
- QUESTION – Explain the different parts of the Medicare program
Medicare A covers hospital stays and stays in a skilled nursing facility. Medicare Part B covers doctors’ visits, emergency room treatment, outpatient care, and other medical and preventive services. Part B monthly premium in 2021 is $148 for single persons earning less than $88,000 per year or couples earning less than $176,000 per year.
Medicare Parts A & B will not cover any of the following:
- Long term care
- Dental care
- Eye exams
- Cosmetic surgery
- Hearing aids
- Foot care
Medicare Part C is a Medicare advance plan healthcare option like an HMO or PPO. These plans provide all Part A & B services while offering extra coverage such as vision, hearing, dental, and wellness programs.
Medicare Part D is Medicare’s prescription drug coverage where a patient pays a monthly premium and a copay based on whether they obtain a name brand or generic.
- QUESTION – What is Medicaid?
Medicaid is a state and federal program that will pay most nursing home costs for people with limited income and assets. Medicaid will also pay some long-term care services at home or in the community. To qualify for Medicaid the government requires that one’s non-exempt assets are less than $2,000. Assets which count for the purpose of Medicaid eligibility include any assets which the applicant has access to or otherwise owns.
Assets include any of the following:
- Checking account
- Savings account
- Stocks & bonds
- Social security
- IRA distribution
- QUESTION – What assets are excluded from Medicaid eligibility consideration?
- Home equity is limited to the first $603,000 but the applicant must have an intent to return to the home or the asset is included against Medicaid eligibility. Further, the home is an exempt asset if the applicant’s spouse or child, or disabled adult child still resides in the home. In addition to a home the following are considered exempt assets:
- Business property
- Household goods and personal effects
- One motor vehicle
- Burial trust
- QUESTION – How does Medicaid treat applicants with spouses?
Medicaid refers to the applicant’s spouse who does not require care as the community spouse. As the community spouse, these persons are entitled to ½ of the applicants’ assets with a maximum limit of $133,380 (standard community spouse reserve allowance). In addition, the applicant spouse is entitled to a needs allowance of $3,260 per month plus a shelter allowance of $654 per month (total monthly allowance $3,914). There is no penalty for asset transfers between spouses and it will not affect eligibility.
- QUESTION – What is the 5-year Medicaid look back period?
Medicaid will evaluate all transfers made in a 5-year period to determine if they violate acceptable transfers. These transfers would include any transfers made for less than fair market value of the asset, as well as gifts made to family and friends.