Posted on Sep 24, 2020 in Senior Health
In the US, healthcare expenses are covered by the public insurance systems Medicare and Medicaid, both administered by the US Centers for Medicare and Medicaid.
It’s vital to be clear on the types of healthcare insurance available so you can ensure you’re fully covered. You don’t want to be hit with a bill for any unforeseen additional healthcare costs if you need treatment. It would help if you were also confident that adequate healthcare coverage is in place ready for your senior years.
The US healthcare insurance-based system is complex and there’s no one-size-fits-all approach.
Lets review a quick overview of Medicare vs Medicaid before we double down on each in more detail…
Medicaid is a means-tested insurance program available to all US citizens with a low income regardless of age.
Medicare is for people over 65 and some younger people with disabilities. Medicaid is used to pay for nursing home costs and personal care.
It’s easy to get confused between Medicaid and Medicare. Here’s a handy mnemonic:
Although Medicare is for over-65s, it does not cover custodial care. Custodial care refers to assistance with personal care such as bathing, dressing, eating, and using the bathroom. Medicare doesn’t cover nursing home care either. An additional Medicaid policy is required for both these types of care.
Medicare is paid for by earnings. Medicaid, by contrast, is funded by the federal and state government.
Medicare is healthcare insurance for over-65s and disabled individuals under 65.
Everyone who pays income tax automatically qualifies for Medicare. It is not based on financial need.
Medicare is divided into four main components from Part A through Part D.
Part A covers care while you are in hospital. It pays for nursing skills and hospice care.
Part B covers medical care such as doctor’s appointments, outpatient services, and preventative services.
Parts A and B are paid for from contributions made throughout your working life. Also referred to as Original Medicare, this is the most basic coverage and is not comprehensive. You’ll need to make additional payments to plug gaps in coverage.
Part C is also called the Medicare Advantage Program. This a private healthcare plan. It provides the same cover as Original Medicare but can cover additional costs like prescriptions, dental care, eyesight care, and wellness programs. The state you live in will determine coverage as it differs from state to state.
Part D covers outpatient prescription drugs through private Medicare plans.
When planning your healthcare into old age, it’s vital to be aware of which healthcare plans will cover your medical expenses and nursing home care. While Medicare covers you for healthcare, it fails to cover some nursing home expenses. You’ll need to make provision for this separately.
You have two basic options when deciding how to pay for Medicare. You can either opt for a fee-for-service plan or you can choose the Part C plan.
With the fee-for-service plan, you can get healthcare from any provider that accepts Medicare. You can personalize requirements with this plan but might not be covered for all eventualities. You will have the option of purchasing an additional policy to cover any shortfall in coverage.
With the Part C Medicare Advantage Program, you’re covered for most things and payment comes in the form of a standard monthly payment. The average monthly payment for Medicare is $144. While this option might save you money, it may not cover you for dental care or x-rays so consider this when you’re choosing which route to take.
To make sure you’re fully covered, you might want to supplement your Original Medicare plan with Medigap Insurance. This caps any out of pocket expenses you might incur. Medigap is not available if you are enrolled on the Part C Medicare Advantage Program.
Of the 331 million people in the US, 4.25% or 74 million qualify for Medicaid healthcare insurance.
This is for the least affluent Americans regardless of age. Medicaid is based on financial need and covers one in five Americans. It’s funded both federally and by each individual state from money collected through income tax. Medicaid was fully funded by the state in 2014 but the government announced plans to “phase down” to 90% by 2020.
Any additional healthcare expenses not covered by your estate will be recouped from existing family members when you pass away if you are not covered.
You are eligible for Medicaid funding if you can demonstrate financial need. You are deemed in financial need when household income is below 133% of the federal poverty level.
The 2020 Federal poverty level is calculated by adding up the most basic resources that a household uses in a year.
Here are some of the federal poverty level guidelines for 2020:
The federal poverty level is a little higher for citizens in Hawaii and Alaska because it’s more expensive to live there. Unfortunately, the poverty level does not account for varying living costs within states.
You might qualify for Medicaid if you are in one of the following categories:
Eligibility criteria vary from state to state. Not all states offer Medicaid to individuals without disabilities or dependents so you’ll need to check the criteria for your specific state.
Financial need is based on your household income as well as assets. To qualify you must hold no more than $2000 in stocks, bonds, savings, additional homes, and additional vehicles.
If you have more than the qualifying amount, it’s possible to reduce your assets by using them to pay off loans, renovate your home, or pay for funeral expenses. But, if you suddenly start off-loading assets, you could be liable for a transfer fine. You’ll need to check the requirements of your state at the Medicaid website.
Medicaid covers expenses incurred from hospitalization, doctor appointments, and medication. This includes inpatient and outpatient hospital care, transport to hospital, x-ray, and laboratory services. It also covers nursing home care and healthcare at home.
Beyond this, Medicaid covers personal care and nursing home care services. Personal care refers to help with daily living such as washing, dressing, eating, and using the bathroom.
Long-term nursing home care is covered by Medicaid but not Medicare. The amount of Medicaid you can claim for long-term nursing home care depends on your income and assets. You might have to top-up Medicaid contributions out of pocket.
Healthcare insurance is certainly a complicated affair. To ensure you get the most cost-effective coverage you can find more information at the US Centers for Medicare and Medicaid website.
Seniors living in nursing homes qualify for both Medicare and Medicaid if they are on a low income. They automatically qualify for Medicare because they are over 65 and qualify for Medicaid since their income is low enough to qualify.
Maybe all this thought of healthcare coverage has you thinking it might be time to relocate to a senior living community. Get in touch with us here at Landmark Senior Living and we can arrange a free tour of your nearest community.