It is kind of amazing to think that 10,000 people are applying for Social Security every week. This volume of applications is going to be accepted by the Social Security Administration for the next 20 years or so.
Because so many individuals are reaching the age of retirement right around now there are a great deal of questions being asked about Medicare and Medicaid. With this in mind we would like to clear up the differences between these programs.
A Look at Medicare
When you reach the age of 65 you become eligible for Medicare assuming you paid sufficiently into the program throughout your working career. Medicare is a federal program that provides assistance with health care expenses.
We say “assistance” because it doesn’t pay for everything in full. There are deductibles that must be met, co-payments, and premiums for Medicare Part B coverage. Medicare Part B is a portion of the coverage that is devoted to outpatient care and visits to doctors. There is a monthly premium that is based on the amount of your income. It is typically taken right out of your Social Security check once you become eligible for Social Security.
One thing that everyone should know about Medicare is that it doesn’t pay for an extended stay in an assisted-living community or nursing home. These facilities are extremely expensive, with the average nursing home stay generating total bills of perhaps $200,000 using today’s costs. In the future the number may be significantly higher because nursing home and assisted-living community costs have been rising each year.
Some Facts About Medicaid
Medicaid is a program that is entirely separate from Medicare. Unlike Medicare people of all ages can qualify for Medicaid.
Medicaid is intended to provide access to health care to people who have very little money. The upper asset limit is typically $2000. If you have assets that exceed this amount you would not qualify for Medicaid.
In spite of this most senior citizens who are residing in nursing homes are using Medicaid to pay for the care, at least in part. Most of these people were not very poor throughout their lives, and most of them qualified for Medicare.
The reason why people who were never poor oftentimes qualify for Medicaid when they need long-term-care is because some assets don’t count, like the value of your home up to a certain amount of equity.
And, it is possible to “spend down” in anticipation of applying for Medicaid. This entails giving away your assets, presumably to people who would be inheriting them anyway.
However, you have to plan ahead carefully because you can be penalized if you divest yourself of assets within five years of applying for Medicaid.
To learn about Medicaid planning in detail contact a licensed elder law attorney.
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Ryan M. DenmanandDennis D. Duffy
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