Slideshow Image 2

What is Medicaid & How Does It Work?

Medicaid is a federal and state program that pays for a number of medical care services. It will also pay for care in a skilled nursing home. Medicaid is based on financial need; applicants have to have limited assets and income.

Eligibility for an individual

There are two eligibility criteria: income and assets.

  • Income:  Once approved for benefits the majority of the applicants monthly income must be spent towards the cost of care.
  • Assets: The applicant is allowed to keep the following:
    • Up to $2,000 in assets
    • A car
    • A prepaid funeral in any amount
    • A burial account (to subsidize the funeral) in the amount of $1,500

All other assets must be spent on care.

Eligibility for a married couple

Income and assets are treated a follows:

  • Income: The spouse at home is allowed to keep all of her or his monthly income. However if it is less than a federal and state minimum (referred to as a “floor”) the spouse living in the community may be allowed to keep some of the applicants income to bring her or him up to that amount. The minimum monthly amount in 2016 $1,967.00. If, for example, the applicants' spouse has only $1,000 per month, the state allows $967.00 from the Medicaid applicant’s monthly income to be diverted to his or her spouse to bring them up to the minimum amount. The state will also allow an additional “housing” allowance of approximately $598.00 if appropriate.
  • Assets: Medicaid considers all assets (excluding the primary residence) to be jointly held regardless of whose name they are in. The state does not honor premarital agreements, which means even if assets are held separately they would be considered the property of the other spouse in the event of a divorce or death, Medicaid states that they are all available. The maximum amount the spouse at home can keep is $119.220.00. Assets over the allowance can be referred to as a spend down and considered by Medicaid to be available and spent on care.

For example, a couple in a second marriage have a premarital agreement that states the assets of each remain separate and go to their respective children at death. The wife has $500,000, the husband $150,000. If the husband applies for Medicaid, the state considers the couple to have $650,000. The wife is allowed to keep no more than $119,200.00 regardless of the premarital agreement and the excess assets can be a spend down.

 

What is the difference between Medicare & Medicaid?

Many people confuse Medicare with Medicaid. The following may be helpful:

MedicareMedicaid
Pays for medical and rehabilitative care only Pays for medical, rehabilitative and custodial care
Is funded by participants not the state Medicaid is a joint partnership with the states
Is not based on financial need Is based on financial need

If you have been in a hospital for at least 3 midnights, Medicare can pay for up to 100 days in a skilled nursing facility (SNF). Usually the first 20 days are paid 100% by Medicare. Upon the 21st day there is a co-insurance amount that is the patient's responsibility.  This is either paid from a Medicare supplemental policy/other insurance or the patient.