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What is the difference between Medicare and Medicaid?
Medicare is federal health insurance for people over 65 and certain
disabled people under 65. Medicare is divided into two parts:
Part A, hospital insurance, and Part B, medical insurance. Part
A covers inpatient care in hospitals and limited coverage in a
skilled nursing facility. Part B covers physician and outpatient
services.
Medicaid is a federally mandated program providing health insurance
benefits for low income individuals and families. The program
is financed largely through federal funds but is administered
by each state through their Medicaid agency. In Massachusetts,
the Medicaid program is called "MassHealth". Medicaid
is the program that pays for long term stays in nursing homes
provided the applicant has met rigid eligibility requirements.
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I thought Medicare pays for everything? Does it?
No. Medicare provides excellent coverage and benefits but unfortunately
there are many deductibles and co-payments. According to a recent
study by the AARP, Medicare paid only 49.1 percent of enrollee’s
health care costs in 2000.
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We heard about the 3-year "look-back" period for Medicaid,
what does that mean?
Simply stated, the "look-back" period of 36 months is
the maximum waiting period for asset transfers made by an applicant
or spouse. Asset transfers and gifts to trusts are subject to a
longer 60-month "look-back" period. When an individual
applies for Medicaid to pay for nursing home care, the application
will require full disclosure of all financial transactions for the
thirty-six month period immediately preceding the date of the application.
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One of my parents will be admitted to a nursing home shortly.
Do we need to spend all of their assets to pay for their care?
No. There are many different planning strategies available to individuals
and couples to help preserve family assets even though nursing home
placement is imminent. Each situation must be assessed very carefully
to determine which strategies will work best for them. Failing to
do so can lead to catastrophic financial consequences.
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Can assets be transferred while my mother is in a nursing home?
Yes. Asset transfers within the three-year "look-back"
period will trigger a period of ineligibility based on the total
value of the asset transfer or gift. Individuals and families who
are considering asset transfers and gifts need to understand Medicaid
rules and regulations before any transfers are completed.
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My friend tells me that there is a $10,000 limit each year on
gifts. Is that true?
No. The Economic Growth and Tax Relief Reconciliation Act of 2001,
the tax cut package that you probably have heard about over the
past year allows every taxpayer to give away up to $1,000,000 of
assets during his or her lifetime or upon death to someone other
than a spouse (usually children or other named beneficiaries) free
from federal gift and estate taxes. By law, the $1,000,000 gifting
limit will increase gradually over the next few years to a maximum
of $3,500,000 in 2009. The exemption limit is scheduled to be repealed
in 2010. In 2011, the exemption limit is returned to the 2002 threshold
of $1,000,000 unless other legislation is passed. Gifting is an
important asset preservation strategy that is often recommended
for many of our clients in connection with Medicaid planning.
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When do I need to apply for Medicaid?
The rules around Medicaid eligibility will vary slightly from state
to state and are usually quite complicated. In Massachusetts, an
individual is eligible for Medicaid when his/her total countable
assets are $2,000 or less.
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My parents live in an assisted living facility. Are there any
state programs to help pay for their care?
Yes, but unfortunately the few existing programs have very strict
rules about income limits and as a result, provide benefits to a
relatively small number of people. For the most part, assisted living
care is paid entirely from private funds or long term care insurance.
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My father is in the hospital. The Case Manager is telling us
that he needs permanent placement in a nursing home. How can we
be sure that this is the right decision and what are the alternatives?
Each situation should be evaluated very carefully on a case by case
basis. We understand that hospital staffs are under pressure from
administration to arrange expedient discharges. Unfortunately, many
patients are admitted to a long term care facility before all other
options have been fully explored. We work with families to ensure
that each of those options is considered. We know from experience
that a placement decision is not always about care needs. Other
issues like safety, finances and family dynamics are important factors.
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We have researched nursing homes by visiting the State and Medicare
web sites. Should we make our final decision based solely on the
scores and numbers from those web sites?
No. Choosing the right nursing home for a loved one is a very difficult
and time consuming process. The information in the State and Medicare
web sites provide excellent data about nursing homes but unfortunately
are limited to information based on the most recent annual Medicare/Medicaid
"surveys" or inspections. The Long Term Care Survey process
is very complicated. Deficiencies are categorized or scored based
on their Scope and Severity. In some instances, facilities with
multiple minor deficiencies are often as good as those facilities
with few or no deficiencies. Understanding the differences and translating
this information requires special expertise. In today’s changing
environment, we suggest that families seek professional assistance
before any placement decision is made. Because nursing home costs
are averaging close to $100,000 per year in Massachusetts, we believe
that selecting the right nursing home should be handled with careful
consideration and due diligence.
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What’s the difference
between a Power of Attorney, Durable Power of Attorney and Health
Care Proxy?
A Power of Attorney is a legal document that allows named individuals
to act in your place and on your behalf, under certain circumstances.
Generally speaking, Powers of Attorney refer to matters involving
finances and asset management. Unfortunately traditional powers
of attorney expire upon the disability
of the person granting the authority. In recent years, Powers of
Attorney have evolved to a newer form called Durable Power of Attorney
(DPOA). A DPOA is recognized in all 50 states and provides a paragraph
that specifically indicates that the powers within the document
are not affected by the subsequent disability and incapacity of
the principal. Simply stated, a DPOA is viewed as one of the most
important advanced directives that a person should consider in connection
with eldercare planning issues. A Health Care Proxy is sometimes
called a Durable Power of Attorney for Health Care. It is a legal
document that specifically authorizes the designated agent to make
health care decisions on behalf of the principal.
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What is a Guardianship and when is one
needed?
The laws around Guardianship are very complex and will vary from
state to state. Generally speaking, individuals with certain physical
or mental incapacity or illness who are incapable of taking care
of themselves, or are incapable of making or communicating informed
or responsible decisions may require a formal Guardian to act on
their behalf. We are often involved with families where a parent
or loved one has a dementia and a DPOA or Health Care Proxy was
not executed prior to their incapacity. In many of those instances,
a spouse or child have enlisted our assistance to arrange for a
Guardianship petition so that they are legally empowered to manage
the person’s estate and/or make appropriate health care decisions
on their behalf.
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