For seniors, distinguishing between Medicare and Medicaid is crucial, particularly regarding asset protection. Each program offers significant benefits, yet they cater to different needs and have unique eligibility criteria. Understanding these differences can help you make informed healthcare and financial planning decisions.

Medicare Overview

Medicare is a federal health insurance program primarily for people aged 65 and older, regardless of income. It also covers some younger people with disabilities and those with End-Stage Renal Disease. Medicare is divided into different parts, each offering specific types of coverage:

• Part A: Covers hospital stays, skilled nursing facility care, hospice, and some home health care. This part is often referred to as hospital insurance. Most people do not pay a premium for Part A if they or their spouse paid Medicare taxes while working.
• Part B: Covers outpatient care, doctor visits, preventive services, and some home health care. This is known as medical insurance. Part B requires a monthly premium determined based on your income. Preventive services include screenings, vaccines, and yearly wellness visits.
• Part C (Medicare Advantage): This is an alternative to Parts A and B, provided by private insurance companies approved by Medicare. These plans often include additional benefits such as vision, dental, and hearing coverage and may also include prescription drug coverage (Part D). Medicare Advantage plans can vary in cost and coverage, so it’s important to compare plans in your area.
• Part D: Covers prescription drugs. This part helps cover the cost of prescription medications and is available through private insurance companies. Part D plans have formularies, which are lists of covered drugs and may include different tiers of coverage affecting the cost of your medications. There are also premiums and other out-of-pocket expenses associated with Part D.

Medicaid Overview

Conversely, Medicaid is a joint federal and state program that helps with medical costs for low-income individuals, including seniors. Medicaid programs can vary from state to state, but in North Carolina, it covers a range of services such as long-term care, hospital services, and in-home care. Importantly, Medicaid also helps cover services not typically covered by Medicare, like long-term nursing home care.

Eligibility Differences

Medicare Eligibility:

• Primarily based on age (65+).
• Younger individuals may qualify if they have a disability or specific medical conditions.
• No income or asset limits for eligibility.

Medicaid Eligibility:

• Based on income and asset limits.
• Seniors must meet specific financial criteria to qualify.
• For long-term care benefits, there are strict asset and income limits.

Asset Protection for Medicaid in North Carolina

One of the critical concerns for seniors is protecting their assets when qualifying for Medicaid. Here are some strategies to consider:

1. Spend Down: Reducing your countable assets to meet Medicaid’s eligibility criteria is known as a spend down. This can include paying off debts, making home improvements, or purchasing exempt assets like a new car or burial plan.
2. Asset Transfers: Transferring assets to a spouse or setting up an irrevocable trust can protect your resources. However, Medicaid has a five-year look-back period during which asset transfers are scrutinized. Transfers made within this period can result in a penalty period of ineligibility.
3. Medicaid-Compliant Annuities: Converting assets into an income stream through Medicaid-compliant annuities can help reduce countable assets. These annuities must meet specific requirements to be considered compliant.

Medicaid’s Look-Back Period

Medicaid’s five-year look-back period examines any asset transfers for less than fair market value. If such transfers are identified, they can result in a penalty period, delaying Medicaid eligibility. Proper planning well in advance of needing Medicaid is crucial to avoid penalties.

Protecting Your Home

Your primary residence is often your most valuable asset. While it is typically exempt when determining Medicaid eligibility, it can be subject to estate recovery after your death. Strategies to protect your home include transferring ownership to a spouse, creating a life estate, or setting up a Medicaid Asset Protection Trust.

Key Takeaways

• Medicare: Medicare is a federal program primarily for seniors 65+, with no income or asset limits.
• Medicaid: Joint federal and state program for low-income individuals, with stringent income and asset limits.
• Asset Protection: Strategies like spend down, asset transfers and Medicaid-compliant annuities can help protect your assets when applying for Medicaid.
• Look-Back Period: Medicaid’s five-year look-back period can penalize improper asset transfers, making early planning essential.
• Home Protection: Special strategies can protect your home from being subject to Medicaid estate recovery.

Contact Us, We’re Here to Simplify the Process

Understanding these differences and strategies is vital for seniors aiming to protect their assets while qualifying for Medicaid. If you need assistance with Medicaid planning in North Carolina, contact the Salines-Mondello Law Firm. Our experienced attorneys can guide you and help safeguard your assets. Contact us Online or call (910) 777-5734 to schedule a confidential consultation.