EmailShare with:TweetEach time that you get a paycheck there is a small amount taken out for your Social security benefits. These payroll deductions pay for your federal Medicare health insurance benefits. When you retire from the workforce at age 65, or earlier due to a disability, your Medicare coverage begins. It also covers your children under the age of eighteen if you die before retirement. You will receive Medicare even if you are a millionaire provided you paid in enough quarters. It does not depend on your assets or income. Bill Gates will get his coverage.
Medicare coverage is not complete and there can be co-pays. Most retirees buy supplemental insurance for some of the services that the basic Medicare benefits do not provide. Medicare covers hospital stays and limited skilled nursing facilities under "Part A." Doctors, outpatient care, and medical supplies are covered under "Part B." The two biggest gaps in Medicare coverage are long term care and prescription drugs. You can not double dip and if you collect coverage from another source, Medicare does have some reimbursement rights.
Some days I think that Congress named our two very different national health care programs "Medicare" and "Medicaid" just to confuse us. Medicaid on the other hand is a welfare program that is not funded through Social Security. It comes from our general taxation with about half paid by each state and the balance paid for by Congress. Each state designs its own program. Medicaid covers many more services than Medicare and there are no co-pays. Medicaid covers hospitals, doctors, drugs, x-rays and long term nursing home care.
The key to be eligible for Medicaid is that you must be very poor. Your income and resources must be below a threshold set by the federal government and adjusted every year. You must also be able to prove that you are a U.S. citizen. Aliens cannot receive Medicaid benefits.
While Medicaid will cover long term nursing home care if your family member meets the Federal medical need guidelines, there are certain hooks. Medicaid can assert a payback lien against some future earnings, inheritances, gifts, lawsuit winnings and your estate. You will also be ineligible if you gave anything away during the five years before you apply. The period of time that you are ineligible is based on how much you gave away. Some transfers to spouses or disabled children are exempt from the penalty rules.
Surprisingly, Congress took some care not to impoverish a healthy spouse or disabled children who remain at home in the community. A home, a car and approximately $100,000 can be kept back for them when a disabled spouse goes to a nursing home. Congress also allows some limited asset protection planning and has sanctioned the use of "Special Needs Trusts" in a law called "OBRA 95."
The rules are all laid out in 95,000 pages of books cutely called the "POMS." You can read them all at www.ssa.gov. It does help to have a little working knowledge of your family's federal health benefits and the difference between Medicare and Medicaid. The rules cited in this article are very general and it is important to have exact guidance for each particular case.
Joseph M. Hoffmann, Esq. is an attorney in Newton, New Jersey who counsels clients on trusts, asset planning, Wills and transactions.