Commonly Asked Questions of an Elder Law Attorney – Part III

What is Medicaid and how does it differ from Medicare? Medicare is a federal health insurance program for people age 65 or older, under age 65 with certain disabilities, and any age with End-Stage Renal Disease, meaning permanent kidney failure requiring dialysis or a kidney transplant. Most people get their Medicare health care coverage in one of two ways, the original Medicare Plan or the Managed Health Plan. Your costs vary depending on your plan, coverage, and the services you use.Medicare is divided into four parts. Part A covers hospital care, Part B covers physician and outpatient services. Part C is an HMO alternative that covers the same as Parts A and B. Part D is the prescription drug benefit. You can also purchase privately a Medigap or Medicare Supplement policy that fills in the gaps in Part A and B coverage.Medicare is a federal entitlement program, meaning both rich and poor alike are eligible for Medicare if they are over age 65 and are entitled to receive social security benefits or come under one of the previously mentioned exceptions. Even if you are not covered by social security, you may buy your way into the Medicare program. With reference to long-term care, Medicare covers only acute care in a hospital, medically necessary care in a nursing facility or at home. It should be noted that these benefits involve large co-pays and limited coverage.Medicaid is a federal and state program based on need with stringent financial eligibility requirements. Unlike Medicare, when dealing with long-term care, Medicaid covers custodial care in a nursing home. Custodial care includes assistance with eating, bathing, toileting, transferring from the bed to a chair, and dressing, which are what we refer to as activities of daily living.To qualify for Medicaid you must be a resident of the United States, who is either a citizen, a lawfully admitted alien, or otherwise permanently residing in the United States under color of law. You must be over age 65, blind or disabled to be eligible for Medicaid. In that Medicaid is administered by the individual states, each state handles Medicaid differently.The following discussion of Medicaid applies to residents of the State of New Jersey only. You must contact an Elder Law Attorney in your state in order to learn how Medicaid works in your state. The resource limits are $2,000 for an individual and $3,000 for a married couple when both apply for benefits. Under New Jersey’s medically needy program, the resource limit is increased to $4,000 for an individual and $6,000 for a married couple.Resources are cash and any other asset, including real or personal property that an individual can convert to cash. The key to eligibility is whether or not a resource is available. A resource is available when a person has a right to liquidate it. Unavailable resources are resources that the applicant cannot convert to cash. Only countable resources are considered in determining Medicaid eligibility. Noncountable assets include one automobile, the family home if it is occupied by the Medicaid applicant or the community spouse, property used in a trade or business, property used for self-support or employment, personal effects and household goods up to $2,000, wedding and engagement rings, medical devices, life insurance with a total face value of $1,500 or less, or term insurance, regardless of the value. Medicaid law provides for the pooling of the couple’s total resources and allows the community spouse to retain a community spouse resource allowance, which is a portion of the total assets, as a protection against impoverishment. Please keep in mind that even from the assets that are excluded, the Medicaid estate recovery unit may come back against the estate to recover payments made to a Medicaid recipient after the death of the recipient and their spouse, if they are married. Because of this pitfall is important to discuss these issues with a qualified elder law attorney who can properly advise you on the current Medicaid laws.For Medicaid eligibility, an individual must meet the income test as well. New Jersey has an income cap of 300 percent of the SSI benefit rate. The income of the Medicaid applicant is the only income that counts toward the cap. The income of the community spouse is not deemed to be available to the institutionalized spouse for the cost of care. The community spouse is also entitled to a monthly minimum maintenance needs allowance, which comes from the income of the institutionalized spouse’s income. As they say, please do not try this at home. You need to consult a qualified elder law attorney to advise you on Medicaid qualification as well as other long-term care issues.

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