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  • Writer's pictureDouglas S. Holden

What Is Medicaid?

Federal and state governments have created a safety net for seniors and those who are disabled. So Medicaid is a federal program that is managed by the state. There is much overlap between federal and state laws regarding Medicaid and many exceptions.

On the whole, the Medicaid system is “needs-based.” Social security benefits, for example is not needs-based. One is entitled to social security if she has worked for a prescribed period of time, has paid into the system for a prescribed period of time, and is a certain age.

There is a difference between Medicare and Medicaid. Medicaid provides much more comprehensive coverage of medical costs than Medicare. Medicaid law does not require beneficiaries to pay deductible or coinsurance amounts, whereas Medicare has such a requirement.. Medicaid covers a broader range of medical services and allows certain unskilled attendant and custodial care.

Generally speaking, Medicaid provides long-term care for its recipients, but there are qualification factors. For instance, to be eligible for Medicaid, generally one must qualify under three separate tests. The first is the medical test which means the beneficiary must be over age 65, blind or “disabled,” and to be eligible for Medicaid long-term care or Home and Community-Based services (and certain other benefits), usually, the beneficiary must need a nursing home level of care. This means the beneficiary must lack the ability to perform at least two of the following “activities of daily living” (ADLs): Mobility, Bathing, Dressing, Eating, Toileting, Transferring, and Need for Supervision.

The second qualification is called the resource test. Here a Medicaid recipient cannot have “countable” resources (assets) of more than $2,000, though there are assets that are not countable. For instance, the following resources are not countable: (1) the primary residence, up to a certain net value, (2) one vehicle, so long as the vehicle is used for transportation by the individual or a member of the individual's family, (3) household goods and personal effects, (4) certain life insurance values, (5) certain irrevocable burial insurance and certain revocable burial insurance, (6) a commercial, irrevocable, and non-assignable, actuarially sound annuity that pays substantially equal payments of the annuitant's lifetime that is annuitized, and a few other things. One major exemption is the Community Spouse Resource Allowance (CRSA). In 2018, the CSRA is $123,600.00.

The third qualification is the so-called “income test.” Here, the individual's monthly income cannot exceed $2,250 per month (2018), but can be saved by the use of a special trust and by participating in a few other income-saving funds.

As you can easily see, it is often difficult to take advantage of this “safety net.” Thankfully there are some planning techniques to save the assets but still qualify for Medicaid Long-Term Care.

© DOUGLAS S. HOLDEN, P.C. All Rights Reserved.

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