Medicare vs. Medicaid: What Do They Cover?

Being in the line of work I am I often get asked about the difference between Medicare and Medicaid. Although they sound similar, the two programs have plenty of differences. Here is an explanation of each program and the different coverage each one offers.

What is Medicare?

Medicare is a federally funded health insurance program available for people aged 65 and older as well as disabled individuals who are under age 65 regardless of income. Like traditional health insurance plans, the insured individual covers any applicable deductible, or copayment, as well as services not covered under Medicare.

Medicare has four parts, each of which covers a different portion of health insurance:

Part A– helps with hospital inpatient care costs and is often referred to as Hospital Insurance.

Part B– is available at an additional cost and includes services and products, like outpatient or observation care from doctors, medical tests, some medical equipment and procedures, etc.

Part C (Medicare Advantage)- is an alternative to traditional Medicare coverage, and often includes Parts A, B, and D, and may also include some procedures not covered by Medicare such as hearing, vision, and dental. Private insurance companies administer Medicare Advantage plans.

Part D– comprises prescription drug coverage and is also administered by private insurance companies. You are required to have it unless you have coverage from another source. Part D requires you to pay a monthly premium in most cases. 

Does Medicare Cover Nursing Home care?

Medicare only covers a nursing home stay immediately after or within 30 days of a medically necessary inpatient hospital stay lasting three or more consecutive days. In order to be eligible for this benefit, the patient must be admitted as an inpatient; nursing home care will not be covered if the hospital stay is classified as outpatient or observation care. The nursing home stay must also be for the ailment diagnosed and treated during the hospital visit; it will not be covered if the skilled nursing care is only for non-skilled activities of daily living (ADLs). In order to qualify for continued coverage, the patient should show signs of improvement based on a schedule laid out by the doctor. Medicare offers coverage for eligible nursing home stays up to 100 days. The first 20 days are fully covered, while days 21-100 require a copayment by the insured for $176 per day (as of 2020).

After 100 days, Medicare will no longer cover a nursing home stay. If the patient is unable to return to the community after 100 days (or less) of skilled nursing care, they will have to pay out of pocket to extend their stay. That is unless they qualify for Medicaid.

What is Medicaid?

Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by states, according to federal requirements. The program is funded jointly by states and the federal government.

In long-term care situations, Medicaid has both health and financial eligibility requirements. To meet the health prerequisite, applicants must need assistance with at least three activities of daily living (ADLs) and require round-the-clock care. Additionally, individuals must meet income and asset requirements. The rules for income eligibility vary by state, but most states compare the individual’s current income to their cost of care. If their cost of care exceeds their income, they may be eligible for Medicaid. For asset eligibility, non-exempt assets must be less than a specific amount, depending on the state as well as the applicant’s marital status.

What Does it Cover?

Although benefits vary by state, each state is required to cover certain types of care. These include inpatient and outpatient hospital services, nursing home and home health care, laboratory and x-ray diagnostic services, transport to a medical facility, and tobacco-cessation counseling for pregnant women.

In addition to paying Medicare-related expenses such as hospitalization, doctors, and medicines, Medicaid offers two additional types of care that Medicare does not:

Custodial Care– helps you with daily activities. These activities include eating, bathing, dressing, and using the bathroom. Custodial care can be provided in a skilled nursing facility or provided at home.

Nursing Home– Medicaid is the primary provider of long-term nursing home care. Nursing home care under Medicaid is a complex subject. Even if you qualify for it, you may have to pay part of the cost—depending on your income and tax deductions.

Can I Be Covered By Both Programs?

Yes, if you qualify for both programs you’re considered “dual-eligible”. Individuals who fall under this status will have most or all of their healthcare costs covered. Medicaid will pay for most of your Medicare Parts A and B premiums (if you have premiums), along with deductibles and co-payments you may have. It doesn’t matter if you get your Medicare coverage through traditional Medicare or a Medicare Advantage (MA) Part C plan.

If you are “dual eligible” and receive full Medicaid, your prescription drug coverage (Part D) will go through Medicare, but you will automatically qualify for extra help paying for your medicines. In addition, Medicaid may cover some drugs that Medicare does not.

How We Can Help

At The Nebraska Asset Protection Group, we are committed to helping your senior clients accelerate their Medicaid eligibility while also guarding their assets in the most economically beneficial way. Unfortunately, many individuals assume their only option to become eligible for Medicaid is to deplete their assets by paying for care or making unnecessary purchases. But they have other options, and they deserve to be informed! Our Benefits Planners are well-versed on the limitations of Medicare coverage and the benefits that Medicaid offers for skilled nursing care. To get in touch with us to learn how we can help click here!

Published by Michael A. Luna, CIC

Asset protection specialist helping families and business owners achieve their goals.

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