Understanding Medicaid & Medicare

DUE TO THE COMPLEX AND EVER-CHANGING LAWS GOVERNING MEDICAID ELIGIBILITY, IT IS STRONGLY ADVISED THAT YOU CONSULT WITH AN ELDER LAW ATTORNEY PRIOR TO ANY PLANNING.

Medicaid:
Medicaid is a federal healthcare program administered by each state. Medicaid was intended to serve as the “payor of last resort.” Eligibility is based on financial need, and as such there are stringent asset and income requirements that must be met which are based on the size of the applicant’s household.

Annuities: 
A type of investment where an individual makes a lump sum contribution (the “annuitant”) and in turn receives fixed periodic payments either for life or for a term of years. To the extent the anticipated return corresponds to the money invested, and the annuity names the state as the remainder beneficiary after the surviving spouse or minor child, no transfer penalty will occur.

Commercial Annuity: 
An annuity purchased through an insurance company

Private Annuity: 
An agreement between individuals such as family members where one acts as the insurance company would in the commercial annuity. The benefit of a private annuity is that it can be arranged with the consideration being assets other than cash, such as a home or other real estate.

Caregiver Agreements: 
Agreement whereby one family member provides services to another in exchange for compensation. Such agreements are subject to income taxation and other issues that need to be addressed.

Community Spouse: 
The spouse of a Medicaid recipient (who usually resides in his/her home)

Community Spouse Resource Allowance (“CSRA”): 
The amount of assets the non-institutionalized spouse is allowed to retain. It is currently equal to the greater of one half of the couple’s assets or $104,400 (in 2008).

Deficit Reduction Act of 2005 (“DRA”): 
Made major changes to the commencement of transfer of assets and penalty periods. Also added additional requirements to annuities.

February 8, 2006: date on which the DRA became effective.
Excess Resources/income: assets/income above the permissible Medicaid level. We can discuss what assets/income are excluded from the calculation.

Lookback period: 
Period during which Medicaid will “look back” from the date of a Medicaid application to determine if there were any transfers by the applicant for less than fair market value.
prior to February 8, 2006: all nontrust transfers were subject to a thirty six month transfer and all transfers to trust were subject to a sixty (60) month lookback.
February 8, 2006 and later: all nontrust transfers remain subject to the 36 month transfer and all transfers to trust remain subject to a 60 month transfer. However, beginning with applications filed on or after February 8, 2009, the lookback period will be increased one month for all nontrust transfers.

Minimum Monthly Maintenance Needs Allowance (“MMNA”): 
Amount of income the well spouse may maintain absent extenuating circumstances increasing the amount.

Net Available Monthly Income (“NAMI”):
The amount of income the Medicaid recipient is deemed to have available to offset the cost of care.

Medicare:

Medicare is the primary insurance of most senior citizens in the United States. There are no financial requirements or limitations associated with Medicare. Medicare is broken down into Parts A, B, C and D.

Medicare Part A:
Primarily covers inpatient hospital services. However, in limited circumstances it also covers certain skilled home health services, some hospice care, and certain skilled care and rehabilitative care in a skilled nursing facility subject to a deductible.

Medicare Part B: 
Primarily covers physician services and related testing and medical equipment.

Medicare Part C: 
Medicare Advantage Programs, including, HMOs and other coordinated care plans, serves as an alternative to traditional Part A and Part B plans.

Medicare Part D: 
Prescription drug coverage comprised of multiple prescription drug plans. Each drug plan has a different “formulary” or list of preferred prescriptions……. Each plan is subject to monthly premiums, annual deductibles, co-payments and coverage gaps.

Medigap Insurance: 
Private insurance policies that cover the portion of medical bills including deductibles not covered by Medicare.