MEDICAID & MEDICARE:
WHAT ARE THE DIFFERENCES? Medicaid and Medicare – They May Have Similar Sounding Names But There Are Significant Differences Between These Two Government Insurance Programs
MICHAEL DAVIDOV NEW YORK ESTATE PLANNING ATTORNEY
Medicaid and Medicare are both government administered health insurance programs. They have similar sounding names, but there are significant differences between them. In this paper we will look at those differences.
THE MEDICARE PROGRAM Traditionally, people in the United States get health insurance through their employers. This is great while you are working, but what happens after retirement when you are especially likely to need health care? Medicare answers this question. While you are working you pay into the program as you pay your taxes. You must accumulate at least 40 retirement credits to qualify for Medicare coverage. The maximum annual accrual is four credits. The required earnings are quite modest. In 2013 you are rewarded with a retirement credit when you earn $1160. When you earn another $1160 you earn a second credit, and so on up until the maximum of four annual credits. It takes $4640 of earnings in 2013 to get the maximum four credits. Once you have accumulated 40 retirement credits, you qualify for Medicare coverage. There is no added level of coverage that you can obtain if you
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accumulate more than 40 credits. Medicare comes in four different parts: Part A, Part B, Part C, and Part D.
Medicare Part A covers inpatient hospital stays. Medicare Part B covers visits to doctors and outpatient care. Medicare Part C allows recipients to use their benefits to obtain streamlined private coverage. Medicare Part D is an optional prescription drug plan.
When you are looking ahead toward the future with regard to your budget you should understand that there are out-of-pocket costs that Medicare recipients must pay. There is a deductible for Part A coverage, and there can be copayments for prolonged hospital stays. You have to pay a monthly premium for Part B coverage. The exact amount of the premium will vary depending on your income. In 2013 most people who are covered by Medicare Part B are paying $104.90 per month. There are out of pocket costs for the other two portions of the program as well.
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THE MEDICAID PROGRAM In this section we will look at Medicaid and the differences between Medicare and Medicaid. Medicare is a health insurance program that is administered by the federal government. Medicaid is a jointly run federal-state government health insurance program. Because of this, each state has some latitude with regard to the precise way that the
Medicaid and Medicare are both government administered health insurance programs. They have similar sounding names, but there are significant differences between them.
program is administered. Unlike Medicare, Medicaid is a need-based program. Eligibility has nothing to do with paying into the program by paying taxes. You become eligible for Medicaid because you can demonstrate significant financial need. In New York there is a maximum countable asset limit of $2000. If your countable assets exceed $14,400, you cannot qualify for the program. The qualifier “countable� is important here. Everything that you own does not count when Medicaid evaluators are determining your eligibility. As a New York resident, you could retain ownership of your home up to $802,000 of equity in 2013. Your household effects do not count toward this figure, and your wedding and engagement rings and heirloom jewelry would not count. Another difference between Medicare and Medicaid is the fact that you don't have
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to be a senior citizen to qualify for Medicaid. You become eligible for Medicare at the age of 65, but people of all ages are enrolled in the Medicaid program. The final difference between Medicare and Medicaid that we would like to highlight is the fact that Medicare won't pay for continued long-term care. Medicaid will pay for an extended stay in a nursing home or assisted living community. This is a huge difference, and it is very relevant when you are planning ahead for the future. Long-term care is very expensive, with a year in a nursing home in the New York metropolitan area averaging over $130,000 at the present time. These expenses are rising year-by-year. If you need long-term care a couple of decades from now, the average costs are likely to be significantly higher.
CONCLUSION The major differences between Medicaid and Medicare that we have highlighted in this paper are threefold. For one, you gain eligibility for Medicare coverage by accumulating retirement credits while you are working. There is no limit to the financial resources that you can have in your possession if you have accrued the required 40 credits.
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Medicaid is need-based. You can't qualify if your countable assets exceed $14,400. Secondly, you have to be 65 to qualify for Medicare. There is no age requirement for Medicaid coverage. Lastly, Medicare will not pay for extended long-term care. Medicaid will pay for it. Many people who were eligible for Medicare coverage ultimately rely on Medicaid to pay for long-term care. It is possible to preserve property that is earmarked for your loved ones while still gaining Medicaid eligibility if you take the right steps. To explore Medicaid planning strategies, contact a licensed New York elder law attorney.
REFERENCES Medicare http://www.medicare.gov/ Medicaid http://www.medicaid.gov/
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About the Author Michael Davidov, Esq., CFP, is a partner in the law firm of Davidov Law Group, P.C. Mr. Davidov’s areas of expertise include estate planning, elder law, Medicaid planning, Veterans pension benefits, tax law, trust and estate administration, as well as estate litigation. Mr. Davidov has represented hundreds of families, creating their estate plans and helping them navigate long-term care and tax issues. An advocate for seniors and their families, executors, trustees, and beneficiaries, Mr. Davidov practices before the Surrogate Court, Supreme Court and before Administrative agencies in matters relating to guardianship proceedings, will contests, fiduciary misconduct actions, accounting proceedings, kinship trials, proving the rights of non-marital children, Medicaid fair hearings and Veteran’s benefits eligibility. Mr. Davidov is an accredited attorney with the Veteran’s Administration since 2008, and also a Fellow of the American Academy of Estate Planning Attorneys. Adding further to his list of accomplishments, Mr. Davidov holds a designation as a Certified Financial Planning™ Professional. Recently selected as a “Super Lawyer” to the 2013 New York Metro Rising Stars List, Mr. Davidov has also been designated as a “King of Queens.” A regular lecturer at public and private workshops on topics relating to elder care law and estate planning, Mr. Davidov continually contributes articles and interviews to publications on issues relating to elder law. He speaks Hebrew and Russian.
Davidov Law Group www.davidovlaw.com 80-02 Kew Gardens Road, Suite 605 Kew Gardens, NY 11415 Phone: 718-793-7000 Fax: 718-793-7222
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