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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

Assets:   The applicant is allowed to keep the following:

               up to $2,000 in bank accounts, stocks or other assets

               a prepaid funeral in any amount

               a designated burial account (to subsidize the funeral) in the amount of $1,500

 

All other assets must be spent on care. Income is non countable as all but $72.80 will be paid to the nursing facility each month towards care cost.

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 applying for Medicaid can divert an amount to bring her up to that amount. The minimum monthly amount is $3,022.50. If, for example, the applicants' spouse has only $1,000 per month, the state may allow $2,022.50 from the Medicaid applicant’s monthly income to be diverted to his spouse to bring her up to the minimum amount.

 

  • 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 the spouse at home can keep is $120,900.00. Assets over the allowance can be referred to as a spend down and considered by Medicaid to be available and spent on care.

 

What is the difference between Medicare & Medicaid?

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

Medicare Medicaid
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 72 hours, Medicare can pay for up to 100 days in a skilled nursing facility (SNF). The first 20 days are paid 100% by Medicare. There is a co-insurance amount for days 21 through 100. This is paid by either a Medicare supplemental policy, other insurance or the patient.