RALPH S. ROBBINS, CFP©
A CERTIFIED FINANCIAL PLANNING PRACTITIONER
elder care financial planning
MEDICARE, MEDICAID & LONG-TERM CARE
Medicare vs. Medicaid
Medicare is an entitlement-based federal insurance program that pays for the medically necessary care of the aged or disabled. Medicaid, on the other hand, is a needs-based medical program funded jointly by the federal government and the respective state governments. Both federal and state laws, rules, and regulations apply when qualifying for and receiving Medicaid benefits.
While Medicare pays for expenses incurred by physician care and hospital stays, it can also assist with payments for up to 100 days in a nursing home if the individual meets certain requirements.
What Does Medicare Cover for Skilled Nursing Facilities?
Important note: Medicare only pays for Skilled Nursing Care. Intermediate or Custodial care is not covered under any circumstances. Once the patient no longer qualifies for skilled care, Medicare stops paying even if the patient is still in a facility.
Sometimes definitions are helpful. In this case, it is important to understand the definitions of the three basic levels of care:
To qualify for Medicare skilled care benefits in a facility the patient must:
If eligible, Medicare will pay the entire cost for the first 20 days of skilled care. After 20 days, Medicare will pay most of the cost for the next 80 days (total benefit = 100 days per benefit period). After the first 20 days a co-payment is required for the remaining 80 days. Many people have supplemental health insurance policies that cover this co-payment.
If the patient is a member of an "HMO" or other Medicare Advantage plan their skilled nursing benefit must by law be equal to or better than basic Medicare.
As noted above, Medicare (or Medicare Advantage Plans aka "HMO's) may stop paying at any time depending on the individual’s medical condition and how they respond to therapy (as determined by the facility using CMS guidelines). A Skilled Nursing patient in a nursing home does not "automatically" receive 100 days of care. When Medicare stops paying the nursing home expenses, most supplemental health insurance policies stop paying as well. Since Medicare pays for a relatively short period of time, only about two percent of all nursing home expenses in the United States are covered by Medicare.
What Does Medicare Cover for Skilled Home Care?
Medicare also provides skilled care benefits in the home. Remember that skilled care is that rendered by a skilled professional such as an RN, LPN, Speech, Occupational, or Physical Therapist, etc. In the case of home care, the patient's physician writes a prescription to order the needed services. The patient may contract with any independent agency that bills Medicare.
The patient will receive home visits from professionals to perform the required treatments. Medicare may provide some home health aide services while skilled services are being received. For instance, if the patient is recovering from a broken hip and receiving physical therapy a home health aide may be sent to bathe the patient once or twice per week. Continual custodial assistance with activities of daily living are not provided under any circumstances.
If eligible for benefits, skilled home health care is covered 100% by Medicare. If durable medical equipment is required it is generally covered at 80% with the balance paid for by supplemental insurance if any.
Florida's Medicaid Institutionalized Care Program (ICP)
Medicaid is designed to provide low-income persons with financial assistance to meet the costs of medical care including long-term care.
A variety of medically related assistance programs are available but here we will only concern ourselves with Florida's Medicaid Institutionalized Care Program (ICP) which provides nursing home and other long-term care assistance.
In 2011, Florida essentially "privatized" its Medicaid long-term care programs including those for Home and Community Based Services (HCBS). All Medicaid programs that provide benefits for nursing home care, assistance with the cost of care in assisted living facilities, or services and supplies for home based care, now fall under the Statewide Medicaid Managed Care program commonly referred to as "SMMC". You will find a full description of the program here: SMMC. Note: To qualify for Assisted Living benefits or benefits in the home the applicant must still meet the rules for ICP benefits as described on the Income Test and Asset Test pages on this site.
In Florida, the Medicaid Institutionalized Care Program (ICP) is administered by the Florida Agency for Health Care Administration. Eligibility for the program, however, is ultimately determined by the Florida Department of Children and Families. The Social Security Administration may also play a role (if an individual is receiving Supplemental Social Security Income or has low income/assets they may automatically be eligible for some Medicaid programs).
Qualified beneficiaries will receive financial assistance to help pay for the cost of nursing home care or a related program (see "SMMC" above) as well as other medically related needs. Note that Medicaid does not pay the entire cost of care. The person receiving benefits must contribute an amount based on his/her monthly income. This amount is referred to as “Patient Responsibility”. Medicaid then pays the nursing home, a managed care company, or other provider for the remaining expense.
Unlike Medicare, most of us have never encountered the Medicaid program. As a "needs based" program, Medicaid eligibility is based on the need for assistance as determined by the individual's medical and financial situation. The applicant must meet medical, financial, and residential requirements before benefits will be received.
Even though the Medicaid program has strict financial limits, there are strategies that can be used to restructure the family's financial situation to qualify for Medicaid benefits. Through this restructuring process, assets can be preserved to enhance and/or prolong the patient's care or preserve income and assets for the spouse and/or family members.
For an overview of eligibility requirements, click here: