Medicare vs Medicaid: What’s the Difference and How Do I Become Eligible?

As estate planning attorneys, we often encounter clients who are confused about the differences between Medicare and Medicaid. While both are government programs designed to help with healthcare costs, they serve different purposes and have distinct eligibility requirements. Understanding these differences is crucial for effective estate planning, especially when it comes to long-term care considerations.

Medicare: Health Insurance for Seniors (“Care for the elderly”)

Medicare is primarily a federal health insurance program for people aged 65 and older, as well as some younger individuals with specific disabilities (SSDI).

Here are some key points about Medicare:

Eligibility: Generally available to those 65 and older, regardless of income.
Coverage: Includes hospital insurance (Part A), medical insurance (Part B), and optional prescription drug coverage (Part D).
Costs: May involve premiums, deductibles, and copayments.

Medicaid: Healthcare Assistance for

Low-Income Individuals (“Aid for the poor”)

Medicaid, on the other hand, is a joint federal and state program that provides health coverage to eligible low-income individuals.

Important aspects of Medicaid include:

Eligibility: Based primarily on income and assets, varies by state.
Coverage: Often more comprehensive than Medicare, including long-term care services.
Costs: Usually free or very low-cost for eligible individuals.

Why the Distinction Matters in Estate Planning

Understanding the difference between Medicare and Medicaid is crucial for several reasons:

Long-Term Care Planning: While Medicare provides limited coverage for long-term care, Medicaid is the primary payer for services such as nursing home fees or in home nursing care aides for eligible individuals.
Asset Protection: Qualifying for Medicaid often requires careful estate planning to meet asset limits without impoverishing yourself or your spouse.
Estate Recovery: Medicaid may seek reimbursement from your estate after death, which can impact inheritance plans.

How an Estate Planning Attorney Can Help

Navigating the complexities of Medicare and Medicaid can be challenging. An experienced estate planning attorney can provide invaluable assistance:

Medicaid Planning: Developing strategies to qualify for Medicaid without depleting all your assets.
Asset Protection Trusts: Creating trusts that protect assets while maintaining Medicaid eligibility.
Spend-Down Strategies: Advising on appropriate ways to reduce assets to meet Medicaid eligibility requirements.
Spousal Protection: Ensuring that a healthy spouse is not impoverished when the other spouse needs long-term care.
Medicare Supplement Planning: Advising on additional coverage options to complement Medicare benefits.

The Importance of Early Planning

It's crucial to start planning early. Medicaid has a five-year look-back period for asset transfers for New York nursing homes, meaning that any gifts or transfers made within five years of applying for Medicaid may result in penalties. Working with an estate planning attorney well in advance can help you navigate these rules effectively.

Protect Your Future with Expert Guidance

While Medicare and Medicaid are indeed two different things, both play crucial roles in healthcare planning for seniors and individuals with limited resources. An experienced estate planning attorney can help you understand how these programs fit into your overall estate plan and develop strategies to qualify for the coverage you need while protecting your assets.

At Sammartino & Sultan, we specialize in helping clients navigate the complex interplay between estate planning, Medicare, and Medicaid. Don't leave your future healthcare needs to chance.

About the Author

Christina has been practicing law in New York State, for over 7 years. She is a Pace University School of Law graduate. After passing the New York and New Jersey Bar Exams, she went on to work for several law firms with primary practice areas in Real Estate, Estate Planning, Estate Administrations, Guardianship proceedings under Article 81 of the Mental Hygiene Law, and Article 17A, Medicaid planning and applications. Christina is also certified as a Guardian, Court Evaluator, and Attorney for the AIP under Part 36 of the Rules of the Chief Judge.