Tuesday, March 29, 2011
By Mr. Noah Kaminer, Administrator
You don’t have to be anywhere near retirement age to have heard of Medicaid and Medicare – you only have to listen to the news. However, while many people have heard of these programs, they have no idea how they work, what they offer or the differences between the two.
Although their names sound similar, they are actually very different programs with very different eligibility requirements and coverage. In the most simplistic terms, Medicare is essentially health insurance for individuals 65 and over, while Medicaid is health insurance for the poor. In actuality though, there is much more to it.
Medicare is a federal program available to any U.S. citizen 65 or over, regardless of income. Its coverage is divided into four alphabetized parts.
Part A: Hospitalization coverage helps pay for inpatient hospitalization, skilled nursing facilities, home health care and hospice. Medicare does not cover long term care. Medicare pays all covered costs during the first 60 days of hospitalization except for the deductible of $1,132. Days 61 to 90 have a co-pay of $283 per day, days 91 – 150 have a co-pay of $566 per day; nothing further is covered. Nursing home care is limited to 100 days of which 20 are covered in full, and 80 are covered with a $141.50 per day co-pay.
Most people get Part A automatically when they turn 65 since it’s available at no cost to people who have worked (or whose spouses have worked) for at least 10 years and have paid payroll taxes.
Part B: Medical Coverage helps cover doctor visits, outpatient care, medical supplies and services. There is an annual $162 deductible, after which Medicare reimburses only 80% of its allowed charges. One signs up for Part B anytime during a 7-month period beginning 3 months before your 65th birthday. Part B requires a monthly premium (around $100) which is generally deducted from your Social Security check. The premium increases 10% for each year you could have enrolled, but didn’t. Therefore, it’s a good idea to enroll in as soon as one becomes eligible.
Part C: Medicare Advantage is privately purchased supplemental insurance that gives people a choice of more healthcare plans, including managed care plans. You get the same services covered under Parts A and B, plus any other additional services this plan provides. Most of these plans incorporate prescription drug coverage.
Part D: Prescription Coverage is available to anyone enrolled in Parts A, B and/or C. There are a variety of plans to choose from; premiums and deductibles vary widely based on coverage. Under a standard Part D program, enrollees pay a deductible and then 25% of drug costs until annual out-of-pocket costs reach $2,840. Anything over that, up to $6,448, is paid 100% by the Part D enrollee. This gap is known as the “doughnut hole.” Plans have different sized doughnut holes, but NY State has a program which helps seniors with drug costs and getting through the doughnut hole.
Medicaid is a federal and state program that helps low-income individuals and families pay medical and long term care costs. While each state has different eligibility requirements, the Medicaid recipient generally must have minimal income and minimal liquid assets. Once eligible, Medicaid covers all types of medical care including hospitalization, doctor visits, nursing homes, home health care, and prescriptions. Medicaid even covers Medicare’s deductibles, premiums and co-pays.
Medicaid is used to fund long-term care (i.e., nursing homes), as it has the most comprehensive funding with the least limitations, and is the nation’s largest single source of long-term care funding. This is why many people engage in Medicaid planning to divest assets to qualify for Medicaid.
Since the benefits of obtaining eligibility for Medicaid are so immense, future Senior Circle articles will explore techniques and strategies to help you or your loved one qualify for Medicaid benefits and have an affordable plan in place for future long term care.
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