Like many Americans, you may have had health insurance through your employer or purchased it privately for the entirety of your adult life. Yet, this coverage might conclude once you enter your retirement years, making Medicare the primary source for covering most of your healthcare costs. Nevertheless, there may arise a circumstance where qualifying for Medicaid becomes necessary. If you’re unfamiliar with Medicare and Medicaid, you might mistakenly perceive these healthcare programs as interchangeable or connected, when, in fact, they are entirely distinct programs. To help you better understand, a Murfreesboro estate planning attorney at Bennett | Michael | Hornsby explains Medicare and Medicaid.
Medicare and Medicaid Basics
You may have encountered discussions where Medicare and Medicaid are mentioned together, creating the impression that they are interconnected components of a single program. However, the reality is a bit different. While both are primarily funded by the federal government, Medicaid may additionally receive supplementary funding from individual states. Although both programs are overseen by the federal government in a general sense, there’s a key distinction in administration: Medicare is centrally administered by the federal government, while each state individually administers Medicaid. Consequently, Medicare coverage remains consistent across states, whereas Medicaid coverage can vary (with certain mandated basic services) as each state has some flexibility in its administration.
As you approach retirement, it’s important to familiarize yourself with Medicare and explore the available options. Medicare is classified as an “entitlement program,” ensuring that participants are entitled to program benefits without the requirement to demonstrate a specific need. Throughout your working years, you contribute to Medicare through payroll withholding, automatically qualifying you for participation in the Medicare program upon retirement. Additionally, certain individuals may qualify for Medicare benefits even before reaching the standard retirement age. Medicare comes in “parts” as follows:
- Part A (Hospital insurance). Covers the cost of being in a medical facility.
- Part B. (Medical insurance) Covers doctors, medical tests, and procedures, meaning basically, anything done to you. There is a monthly premium for Part B coverage.
- Part C (Medicare Advantage). Part C is an alternative to traditional Medicare coverage. Coverage often includes Parts A, B, and D. Medicare Advantage plans are administered by private insurance companies.
- Part D (Prescription drug coverage). Part D is administered by private insurance companies, and you are required to have it unless you have coverage from another source. Part D requires you to pay a monthly premium in most cases.
Unless you did not pay into Medicare during your working years, Medicare Part A will be free. If you did not pay into Medicare, you may need to pay a premium for Part A. You may also have to pay a premium each month for Parts B and D. Medicare Part C is a Medicare-approved plan from a private company that offers an alternative to Original Medicare for your health and drug coverage, and you will pay a premium for Medicare Part C. Medicare coverage also requires beneficiaries to meet a deductible and to pay co-payments.
Medicaid is intended to provide healthcare coverage to beneficiaries in financial need. As such, Medicaid requires applicants to demonstrate a low-income. Among other eligibility requirements, eligibility hinges on not surpassing the monthly income limit and not owning assets valued above the asset limit. If you are eligible for Medicaid, you will not be required to pay premiums, deductibles, or co-payments. Although Medicaid is a cost-free healthcare program, Medicaid often offers more restricted provider options compared to Medicare.
For many seniors, the need to qualify for Medicaid arises from the substantial expenses associated with long-term care, as Medicare does not cover such costs. Recognizing the potential need for future Medicaid qualification, it is advisable to engage in discussions about Medicaid planning with your estate planning attorney now to ensure that you qualify for benefits down the road if you need them.
Contact a Murfreesboro Estate Planning Attorney
If you have additional questions or concerns about how Medicare or Medicaid fit into your estate plan, consult with an experienced Murfreesboro estate planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.