My dad Jim died of Alzheimer’s disease in 2016.

In order to help pay for my dad’s nursing home care, my mom had to reduce her already modest assets as part of what is commonly referred to as a Medicaid spend-down.

But what is Medicaid? How do you qualify for it? Who is it designed to assist? And why do so many people have to expend their life savings in order to get it?

Let’s take a look at Medicaid.

In this introductory article, I’ll lay some basic groundwork – and provide a few essential definitions and concepts.

In two follow-up articles, we’ll discuss the all-important financial qualifications: first assets, then income. So… stay tuned!

(Also, be aware that this additional content is already available in the form of YouTube presentations and can be accessed HERE and HERE.)

Disclaimers

First of all, I need to give the usual disclaimers and in fact I want to amplify what I normally stay. I am not an attorney. I am not a financial advisor of any kind. You can consider the topics that I discuss to be research leads just to help you as you are thinking through these issues and hopefully help to shorten your learning curve in some of these important topics. But nothing that I say in this video should be construed as advice of any kind. If you need actual recommendations and evaluations, you need to consult with licensed professionals in your area. In this case, I am talking about attorneys who are knowledgeable about Medicaid, or other Medicaid experts.

The usual disclaimers are especially important in this case. That’s because Medicaid is just so complex; Medicaid’s rules and regulations are subject to amendment and modification; eligibility and other limits can be expected to change almost annually; Medicaid has as many different variations as there are US states.

So, you should meet with someone, not just is knowledgeable about the rough contours of the entire program, but somebody who knows the nitty-gritty of your local situation or state situation and how best to advise you.

What is Medicaid?

Medicaid is a United States government program that is designed to help impoverished people pay their medical expenses.

Sometimes, Medicaid is referred to as a joint federal and state program. Other times, Medicaid is referred to as a federal program that is administered by the U.S. states. And, sometimes, it is thought of mainly as a state program that has infusions of federal cash.

The federal government generally provides funding for benefits that are mandated at the federal level, which makes sense. The states, in turn, provide administrative services. They also pay for state-specific benefits.

However you think of it, or by whatever name you call it, Medicaid has a foot on the federal level government as well as on the state level.

This is one key reason for its (aforementioned) complexity. Namely, the particulars of how the plan is implemented and managed are going to vary according to the state that you are in.

Medicaid Isn’t Only for Long-Term Care

It is important to understand at the outset that Medicaid is a broad program and can cover many different medical services.

For example, it can cover routine doctor visits. It can cover hospital visits, long-term-care facilities, nursing homes and the like of that.

The long-term-care applications will be my focus in this series (since it’s the obvious concentration of the website). But Medicaid can cover a lot more than that.

And if you have need for additional services, for yourself or for your family, I am sure there are other resources that will expand my treatment.

Potential Pitfalls

Because of the complexity of the topic, there are certainly going to be a number of pitfalls.

Firstly, it’s easy to confuse Medicaid with Medicare. Not only are the two words similar, but both programs are overseen by the same government agency, the Centers for Medicare and Medicaid services, or CMS. CMS is a major division of the United States Executive Branch Department of Health and Human Services, with the cabinet-level Secretary of Health and Human Services at the helm of both programs.

However, these programs differ in terms of who is eligible and what services are covered.

Medicare is basically health insurance for seniors. Some of the premiums might vary in terms of the amount that is paid. But, otherwise, Medicare covers seniors of any income level.

Here, “senior” simply means a person who is 65 years of age or older.

There is an important caveat.

Medicare is called upon to deliver health coverage to people of any age, provided that they also are recipients of Social Security Disability Income (or SSDI), or if they suffer from end-stage renal failure (or kidney disease). Medicare itself is complex.

Medicare is a complex program itself. For my own YouTube-video treatment, see HERE.

In broad strokes, though, Medicare Parts A and B cover hospital and doctor visits, respectively. Part D was added to help provide prescription-drug coverage.

You can talk about something referred to as Medicare “Part C,” also known as “Medicare Advantage” plans. (These function something like Medicare HMOs)

And, to complicate matters further, Medicare Parts A, B and D can be further augmented with what are called “Medicare Supplement” (or “Medigap”) plans. (These, in turn, are also designated with letters like “Medicare-Supplement A,” “Medicare-Supplement F,” and so on.)

Medicare & Social Security

Historically, Medicare has a fairly tight relationship with Social Security.

For example, although it does have a deductible, Medicare Part A is usually delivered premium-free to people who are fully qualified to receive Social Security benefits. It is in this sense that Medicare Part A is often referred to as “automatic.”

It is important to note that if you are not eligible to receive Part A cost free, you may be able to purchase it.

Medicare has long had this close association with the Social-Security program

In fact, Medicare’s eligibility age, 65, once corresponded to the Full Retirement Age (or “FRA”)[1] for Social Security recipients. Even though the full-retirement age has been increased for most retirees, Medicare’s eligibility age has remained the same.

Medicare part B is never free. Though it’s actual premium cost will depend on many factors, including your income level.

Medicaid Will Be Our Focus

As stated from the outset, going forward, this series will be concerned with Medicaid (and its financial requirements), the government’s financial-assistance program for impoverished people – regardless of their age.

So, we come to one quick way of distinguishing Medicare and Medicaid.

Medicare has an age requirement,[2] but no income requirement. As long as you are 65 years of age, or older, you are eligible for Medicare.

On the other hand, Medicaid has no age requirement, but it does have an income requirement.

To rephrase: Medicare covers people 65+ years of age, of any income level; Medicaid covers any aged person, but only if they are of a low-income level.

Which Program Covers Long-Term-Care Costs?

“Medicaid also covers long-term care costs, both in a nursing home and at-home care. Medicare does not provide this coverage.”[3]

As noted by CNN, long-term care and nursing home costs are not generally covered by Medicare.

Medicare really only covers “curative,” skilled-nursing care – in a Medicare-approved facility. And, even then, it only covers skilled-nursing-home costs, provided that your entry into a qualifying facility followed a hospital stay of at least three days.

Additionally, Medicare coverage is calibrated to what are termed “episodes of care.” And each skilled-nursing-home visit is only covered up to 100 days per episode.

So, since Alzheimer’s and related dementias are not “episodic” in the relevant sense, we can basically say that Medicare is going to be irrelevant for the purposes of long-term care and nursing home care.

Another reason for this irrelevance is that long-term care is often bound up with what is called custodial care, and this is to be distinguished from skilled nursing care.

Basically, custodial care is help with the activities of daily living, whereas skilled nursing care is what you would normally think of in terms of medical care, medical testing, the administration of drugs, and the like.

(For my YouTube presentation explaining the difference between custodial and skilled nursing care, see HERE. For my written article on the same topic, see HERE.)

As if things weren’t confusing enough as it is, Medicaid is able to pay some of the expenses associated with Medicare. Examples of this would include the Parts B and D premiums, the Part-A premium (when it is applicable), and the various Medicare “co-pays” and deductibles.

Intro to Medicaid Eligibility

Each state sets its own guidelines for eligibility, within various limits.

For many states, Medicaid assistance is available to people who are below, at, or near the federal poverty level, or FPL.

Recipients cannot have incomes that exceed about 130-140% of the FPL, adjusted for household size. And these low-income requirements are very strict.

In addition, Medicaid recipients are not allowed to have much by way of assets or, in the Medicaid terminology, “resources.”

But, these two financial tests – one pertaining to assets, and one pertaining to income – are quite intricate. So much so, in fact, that I will be devoting a separate article to each of these.

So, I invite you to stay tuned for those posts.

And, in the meantime, feel free to view the companion YouTube videos. My discussion of Medicaid’s asset requirements can be found HERE, and my coverage of the relevant income requirements is HERE.

Notes:

[1] Note that, in some literature, this is instead termed the “Normal Retirement Age,” or NRA. Presumably, FRA is more common due to the fact that the letters “NRA” more commonly designate the National Rifle Association.

[2] For the exceptions to this, see the previous section.

[3] “What Does Medicaid Cover?” CNN, <https://money.cnn.com/retirement/guide/insurance_health.moneymag/index21.htm>.