Many of us think, if we are eligible for Medicare then we also are eligible for Medicaid — although very few of us understand the difference. I am going to attempt to explain that difference without putting you to sleep.
MEDICARE: Medicare is a federally funded insurance program for “seniors.” It is available to all U.S. citizens and green card holders age 65 and older. There are two parts: Part A (Hospital Coverage) and Part B (Medical Insurance). If you choose a simple “Medicare” then you also have to choose doctors and hospitals that accept Medicare. In 2017, the Part B premium average was $134 but, if you have a higher income, it can go as high as $600 a month. If you live on or close to your social security income it is $109 on average.
For hospital insurance you usually pay a deductible — this can go into the thousands, which is why many people choose to have a “supplemental” plan. These plans are run by insurance companies and often are free — which is an HMO. As you know, we at Parenting Your Parents, recommend PPO plans which is an out of pocket cost.
MEDICAID: Medicaid is a state-administered program with some funds coming from state taxes and other funds coming from federal Medicaid grants given to needy states. (In other words, the poorer the state the more federal funds.)
The benefits are intended for low-income patients who cannot otherwise afford medical assistance. To be eligible for Medicaid, you must meet a mandatory list of standards that are partially enforced by the federal government.
Again you must be a U.S. citizen or green card holder to be eligible. For the purposes of seniors, they must be in a nursing home facility or receive “home or community-based care.” Bottom line, a senior cannot have assets or income over the poverty level if they want to qualify for Medicaid.
Here is the kicker: qualifying for Medicaid triggers a five-year look back to ascertain that you (the senior or the child) have not recently transferred a home, bank account, and/or other assets to avoid paying for nursing home care. And this is the tricky part — when do you begin the asset transfer to children, a trust, and/or a power of attorney. And that is where Parenting Your Parents is a resource.
This is a very tough subject. In our experience, parents don’t want to give up control and the kids are the prime suspects, i.e. “they want to take our money away and use it for vacations!” For the kids the hardest part is that one parent is going to go into a nursing home and you have to be prepared (unless you have more that $10 million in assets).
Bottom line: Ask yourself do you want these homes to get your money or do you want the money used for the greater good — whatever that might be. Once that question is answered, you can move forward in either direction — protecting your assets now or letting fate take her course.
H. Frances Reaves, Esq., a graduate of the University of Miami Law School, spent 10 years as a litigator/lobbyist. Today, she Is an accomplished business woman who, when her parents could no longer take care of themselves, learned the ins and outs of senior care (or the lack thereof). She founded Parent Your Parents to assist seniors and their children through the myriad pitfalls and options of “senior care” in the 21st Century. If you have any questions or comments contact Frances at hfrancesr@parentyourparents.com.
