As our population continues to age, paying for health care and long-term skilled nursing care have become major issues for all of us, but particularly for elderly and disabled people.  Medicare and Medicaid are both programs that help pay for these costs, but they are very different from one another and understanding these differences is vital when discussing paying for health care and long-term skilled nursing care.  One of the major differences between the two is that Medicare does not pay for long-term skilled nursing care.  Another is that, while Medicare is not means-tested, Medicaid is.

Medicaid

Medicaid is the payor of last resort for those who are aged, blind or disabled, and meet both the income and resource requirements for Medicaid eligibility.  Generally, once a person has qualified, both medically and financially, Medicaid will pay for medical care after all other sources, including Medicare, have been exhausted.  To financially qualify for Medicaid, a person can have only nominal assets. 

Medicaid pays the facility-based long-term skilled nursing costs of those who are both medically eligible and meet the strict income and resource limits.  Unlike the Medicare skilled nursing benefit, there is no time limitation on the Medicaid benefit.  It is also possible to get a “waiver” from Medicaid that will assist with nursing care in the person’s home when such care will keep a person out of a skilled nursing facility.  The articles Asset Protection for Married Persons and Asset Protection for Unmarried Persons address the financial requirements for long term skilled nursing care.

 

Medicare

Medicare is a health insurance program for all people aged 65 and older, people under 65 who have certain disabilities and people of all ages with End-Stage Renal Disease.  All citizens and most permanent residents, regardless of their means, are eligible for Medicare if they are in one of the three groups listed above.  Medicare pays for skilled nursing care only under certain circumstances for limited time periods and does NOT cover long-term skilled nursing care or care in an assisted living setting. 

Medicare has an excellent website, www.medicare.gov, that has an overview of the entire Medicare program, including nursing home ratings, and lists all co-pays and deductibles. There are four primary areas of Medicare coverage:

Medicare Part A Coverage

Medicare Part A helps pay inpatient care in hospitals, including critical access hospitals, a limited benefit for skilled nursing care, hospice and some home health care.  Most beneficiaries, or their spouses, have paid Medicare withholding taxes during their working life and now pay no monthly premium for Part A.   Those who did not participate in the payroll withholding taxes for Medicare, or who received Part A because of a disability but have now returned to work, can purchase Part A for a monthly premium.  Part A covers:

  • Hospital Stays. Semiprivate room, meals, general nursing, and other hospital services and supplies.  This includes inpatient care provided in critical care access hospitals and mental health care.  This does not include private duty nursing or a television or a telephone in the room.  It also does not include a private room, unless the private room is medically necessary.  Inpatient mental health care in a psychiatric facility is limited to 190 days in a lifetime.
  • Skilled Nursing Care Facility. Semiprivate room, meals, skilled nursing and rehabilitative services, and other services and supplies.  This benefit is only for rehabilitation and short-term skilled nursing care.  Medicare pays 100% for the first 20 days and for part of the stay as long as the care is needed, up to 100 days.   This benefit is only available after three-day inpatient hospitalization; being kept at the hospital for “observation” may feel like being admitted, but it is not and does not count toward the three-day inpatient hospitalization.  There is more information about observation status here: http://www.medicareadvocacy.org/medicare-info/observation-status/
  • Home Health Care. Limited to reasonable and necessary part-time or intermittent skilled nursing care and home health aide services as well as physical therapy, occupational therapy, and speech-language pathology that are ordered by a doctor and provided by a Medicare-certified home health agency.  This benefit also includes medical social services, durable medical equipment, such as wheelchairs, hospital beds, oxygen, walkers, medical supplies, and other services.
  • Hospice Care. For individuals with a terminal illness, including drugs for symptom control and pain relief, medical and support services from a Medicare-approved hospice, and other services not otherwise covered by Medicare, such as grief counseling.  Hospice care is usually provided in the home, which may include a nursing facility if the nursing facility is the home.

Medicare Part B Coverage

Medicare Part B covers doctors' services and outpatient care, as well as other medical services that Part A does not cover, such as some of the services of physical and occupational therapists, and some health care.  Part B pays for part of these covered services and supplies when they are medically necessary.  Part B must be timely elected and does require the payment of a premium. 

  • Medically Necessary Medical and Other Services. These include: doctors' services, but excluding routine exams other than a one-time "Welcome to Medicare" physical available within six months of enrollment; outpatient medical and surgical services and supplies; diagnostic tests; ambulatory surgery center facility fees for approved procedures; outpatient mental health care; outpatient occupational and physical therapy, including speech-language pathology; and durable medical equipment such as wheelchairs, hospital beds, oxygen, and walkers.  It also covers a second, and sometimes a third, surgical opinion for surgery that isn't an emergency.
  • Clinical Laboratory Services. This includes blood tests, urinalysis, some screening tests and other similar lab services.
  • Home Health Care. Limited to reasonable and necessary part-time or intermittent skilled nursing care and home health aide services as well as physical therapy, occupational therapy, and speech-language pathology that are ordered by your doctor and provided by a Medicare-certified home health agency.  This also includes medical social services, durable medical equipment.
  • Outpatient Hospital Services. Hospital services and supplies received as an outpatient as part of a doctor's care.
  • Blood. Pints of blood provided as an outpatient or as part of a Part B-covered service.
  • Preventative Services. These include:  bone mass measurements; cardiovascular screenings; colorectal cancer screening; diabetes screening; flu shots; glaucoma tests; hepatitis B shots; pap tests and pelvic exam; clinical breast exam; pneumococcal shot; prostate cancer screening; and screening mammograms.

Medicare Part D Coverage

Medicare Part D is a pharmaceutical plan administered by private companies. Each state has numerous private providers at various premium levels, drug formularies and co-pays. This optional coverage provides a limited drug benefit for many seniors, but with significant out-of-pocket expenses.

Medigap Policies

Many private companies offer health insurance policies that provide for gap coverage under Medicare parts A and B. Such policies pay, for example, a combination of the hospital co-pays and deductibles and other provider co-pays and deductibles.