The United States of America has a social and financial safety net designed to protect individuals who need medical care, as well as those dealing with disabling illnesses and injuries. Among the programs intended to help those dealing with medical or economic hardship, government health care policies are some of the most commonly utilized.
Both Medicaid and Medicare extend government-backed medical insurance protections to large segments of the population. However, despite their ubiquity, many people have a hard time understanding the difference between Medicaid and Medicare.
Confusion about the programs or assumptions about coverage can leave you and older adults you love vulnerable to serious gaps when the need for long-term care arises. Both of these insurance programs could play important roles in your long-term care planning, provided that you understand them and the benefits they can offer.
Medicare is an age-based program that protects retirees
Once you reach retirement age or 65, you likely have the right to apply for Medicare insurance. In some cases, your pension plan may require that you convert from private insurance to a Medicare program even if you continue to work.
Medicare covers basic medical needs among older adults, in some cases, without charging a premium. However, there are many limitations to the coverage that it offers. Medicare will not cover incredibly costly services, such as in-home skilled nursing care or assisted living facility rental prices. That can leave older adults who need more expensive medical services vulnerable and unable to cover the costs of their care.
Medicaid offers protections for lower-income individuals
Unlike Medicare, where age or medical diagnosis is a primary factor in qualification, Medicaid covers people ranging in age from unborn babies to older adults living in nursing home facilities, regardless of their primary diagnosis.
Unlike Medicare, Medicaid will cover skilled nursing costs and nursing home costs. However, Medicaid has a strict cap on how much money you can have and how much money you can make. In fact, in order to prevent people who don't qualify from abusing the program, the Medicaid approval process includes a look at the financial records of an applicant going back five years prior to the date when they need benefits.
That extended period of accountability is one reason why it is so important to begin planning for your long-term care needs before you actually retire. If your parents have already retired, you should talk to them about whether they have a plan in place for long-term care. The sooner you do things like put assets in a trust or make large gifts to your heirs, the less likely you are to encounter setbacks and complications when applying for Medicaid if you need it.