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WHAT IS THE DIFFERENCE BETWEEN MEDICARE and MEDICAID IN NORTH CAROLINA? A Look at Two Government-run Health Insurance Programs, the Similarities and Differences Between Them

MARK O. COSTLEY NORTH CAROLINA ESTATE PLANNING ATTORNEY What Is the Difference Between Medicare and Medicaid?

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Elder law attorneys provide counsel to senior citizens who are concerned about the eventualities of aging. Health care expenses, including long-term care costs, are certainly going to concern elder Americans. Medicare and Medicaid are two government-run health insurance programs are relevant to senior citizens. In this paper will look at the two respective programs and the differences between them.

MEDICARE Medicare is a health insurance program that is administered by the federal government. You are paying into the Medicare program when you pay taxes throughout your life. Along the way you earn retirement credits. You can accumulate as many as four credits per year. Once you have 40 credits, you will qualify for Medicare when you reach the age of 65. It is important to understand the fact that Medicare will not pay for everything in its entirety once you become eligible for coverage. There are deductibles, copayments, and premiums that must be paid out of pocket. The majority of senior citizens are going to need assistance with their day-today needs eventually. Medicare does not pay for long-term care at all.

MEDICAID Medicaid is a health insurance program that is jointly administered by state governments along with the federal government. Unlike Medicare, you don't have to accumulate credits to qualify for Medicaid. Medicaid is a need-based program. If your assets do not exceed the limits that

What Is the Difference Between Medicare and Medicaid?

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are imposed by the program, you may be able to qualify. Another difference between Medicare and Medicaid is the fact that Medicaid is available to people of all ages, not just senior citizens. However, senior citizens can qualify for Medicaid. From an elder law perspective, the most profound difference between Medicare and Medicaid is the fact that Medicaid will pay for long-term care, while Medicare will not.

LONG-TERM COSTS If you eventually need to reside in an assisted living community or nursing home, you are looking at some extraordinary expenses. When you combine the average length of stay with the average cost for a private room in a nursing home, you could be looking at a figure approaching $200,000. This is not something that most people can easily pay out-of-pocket. Assisted-living communities are expensive as well, with the average annual charge in the United States exceeding $40,000. Because of the fact that Medicare will not pay for long-term care, many senior citizens who were qualified for Medicare coverage ultimately rely on Medicaid to pay for long-term care. In fact, most of the long-term care expenses that are accumulated in the United States are paid by the Medicaid program.

What Is the Difference Between Medicare and Medicaid?

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Those who do not plan ahead often spend everything that they saved paying for long-term care. Once they have virtually nothing left, they can qualify for Medicaid.

MEDICAID PLANNING It is possible to plan ahead with Medicaid eligibility in mind in an effort to preserve resources for the well-being of your family. If you take the right steps, you can position your assets wisely. Ultimately, you can become eligible after making sure that your resources have been distributed optimally. How can this be accomplished? There is an upper asset limit of $2000. However, everything that you own does not count toward this figure. Your home, certain personal effects, and your primary vehicle don't count. In addition, your spouse can keep his or her half of assets up to a certain limit. If your spouse is relying on your income to maintain a particular standard of living, he or she may be able to draw what is called a monthly maintenance needs allowance. Under Medicaid regulations, all or part of your income could still be available to your spouse. Many people engage in something called a Medicaid spend down. This involves divesting yourself of assets before applying for Medicaid. The objective is to be

What Is the Difference Between Medicare and Medicaid?

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in possession of less than $2000 in countable assets when you actually submit your application. The spend down can include giving assets to loved ones who would have otherwise been inheriting them someday. However, to do this you have to plan ahead in advance. There is a five year look back period. You are penalized and your eligibility is delayed if you give away assets within five years of applying.

CONCLUSION Medicare is a health insurance program that is available to senior citizens who have paid into the program sufficiently throughout their lives. Medicaid is a need-based program that is available to people of all ages who have financial need. Medicaid can be relevant to senior citizens who were qualified for Medicare because Medicaid will pay for long-term care. Medicare will not. If you plan ahead effectively with the assistance of a licensed elder law attorney, you could potentially qualify for Medicaid to pay for your long-term care expenses without losing everything in the process.

REFERENCES Medicare http://www.medicare.gov/ Medicaid http://www.medicaid.gov/

What Is the Difference Between Medicare and Medicaid?

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About the Author Mark O.Costley With more than nineteen years experience in private practice, Mark Costley has helped hundreds of North Carolinians with estate planning, living trusts, financial law and probate, estate and trust administration. A partner with one of the largest and most vibrant estate planning practices in the Research Triangle area of North Carolina, Mark’s areas of practice are estate planning, trust and estate administration, planning for children and adults with special needs, business succession planning and business transactions, representation of nonprofit organizations, family charitable and philanthropic counseling, civil dispute mediation, and business, estate and trust litigation. Mark’s work involves elements of teaching, strategic analysis and planning, negotiation, documentation, and assisting clients in executing their plans. Mark is devoted to providing clients with the best in estate planning, estate administration and financial services law. Mark is also a certified court mediator. Mark was drawn to and estate planning and financial planning law because of a passion for helping clients and their families avoid problems and helping them to have the necessary tools to preserve their wealth, prepare for the future and deal with problems when they do arise. Consistent with the philosophy of Walker, Lambe, Rhudy & Costley, P.L.L.C. to be “Your Counsel”, Mark and his colleagues in the Estate Planning Group strive to have strong relationships with clients and their families in order to be of the greatest assistance possible when legal counsel is needed. Walker LambeRhudyCostley& Gill, PLLC www.organizeyourassets.com Palladian Corporate Center 240 Leigh Farm Road, Suite 100 Durham, NC 27707

What Is the Difference Between Medicare and Medicaid?

www.organizeyourassets.com

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What Is the Difference Between Medicaid and Medicare in North Carolina?