Will I Lose My Medicare?

“When I qualify for Medicaid benefits will I lose my Medicare benefit?”  I get this question quite often from clients.

A substantial part of my practice is planning to qualify my clients for Medicaid eligibility. I have been helping clients with Medicaid planning for twenty-five years, and in that time, I have helped hundreds (if not thousands) of clients qualify for Medicaid benefits.

Medicaid is a health payment plan for needy individuals. Most of my clients never thought they would qualify for Medicaid benefits; most never wanted to qualify for Medicaid. But unlike a traditional health insurance plan, Medicaid will pay for the cost of long-term care.

Long-term care is care in a nursing home or an assisted living residence. Long-term care is also a health aide providing care in the home. Long-term care can last—as the name implies—a long time. In the past thirty years, the long-term care industry has come into its own, and it is now a five-trillion-dollar-a-year industry. (That is trillion with a “t.”) People often receive long-term care services for years.

In this area of New Jersey, care in a nursing home can cost anywhere from $12,000 to $15,000 a month. Care in an assisted living residence can cost anywhere from $6,000 to $13,000 a month, with the median cost being around $9,000 a month. A home health aide costs about $30 an hour unless you pay the aide under the table.

Health insurance does not pay for long-term care. Private health insurance may cover short-term rehabilitation services, but it will not pay for long-term custodial care.

Like health insurance, Medicare also will not pay for long-term care. Medicare is a health insurance program for disabled or elderly (aged sixty-five or older) individuals. Taxpayers pay into Medicare through deductions from their earnings.

Medicare will pay for short-term rehabilitation or skilled nursing care. Medicare will not pay for more than one hundred days of rehabilitative care.

Most seniors (and disabled individuals) depend on Medicare for their health insurance. Many also purchase a supplemental, private health insurance policy. Medicare has certain gaps—co-pays and deductibles. Clients purchase a supplemental insurance policy to fill in these gaps. Seniors cannot afford to lose their Medicare coverage.

Unlike private health insurance and Medicare, Medicaid will pay for long-term care. In order to qualify for Medicaid, an individual must have insufficient income to pay for her care and a limited amount of assets, less than $2,000. Having insufficient income is easy for most people because most people do not have $15,000 a month in income—the cost of a nursing home. I help clients shelter their assets from Medicaid, getting their assets below the $2,000 threshold. I often can save half to three-quarters of their assets. In limited situations, I can save almost all of a client’s assets.

But clients are concerned that once they qualify for Medicaid, they will lose their Medicare and health insurance coverage. They worry that they will only be able to see “Medicaid doctors,” and they want to keep their current doctors.

When a Medicare beneficiary qualifies for Medicaid benefits, too, the person is called a “dual-eligible” because the person is eligible for both Medicare and Medicaid. You pay into Medicare throughout your working life. You own the benefit. A person does not lose Medicare when he qualifies for Medicaid; Medicare is an additional benefit.

Once a person is dual-eligible, Medicaid will pay for the gaps in Medicare. A Medicaid beneficiary does not have to pay deductibles and co-pays; however, since all medical providers do not accept Medicaid, I recommend that my client keep their private, supplemental insurance. These clients have Medicare benefits, private health insurance, and Medicaid benefits. Medicaid is the payor of last resort, paying what Medicare and private health insurance do not pay.