Medicare & Medicaid Basics

Used when determining your eligibility for Medicaid benefits.

Filed in Medicaid & Medicare, on July 18, 2017

Medicare

Medicare is not meant to pay for long term care costs. It MAY provide limited coverage for rehabilitative care in a nursing facility (in certain circumstances), provided the care required is deemed as skilled nursing care. Medicare will not pay for treatment of all diseases such as Alzheimer’s or Parkinson’s because these conditions tend to require longer term care.

Medicaid

Medicaid is the only other government program available to seniors needing care in a nursing home. Qualifying for Medicaid is difficult, but not impossible. Eligibility is based on your age, medical need, income and resources. The asset and income tests are difficult to pass unless you are truly poor or you plan carefully. Many seniors wait until it is too late to plan for Medicaid benefits.

How can you avoid spending down your assets and still qualify for Medicaid benefits?

The best thing you can do to protect your assets and qualify for Medicaid benefits is to start planning at least 5 years before you think you may need to apply for the benefits.  But if you don’t start planning this early, all is not lost. There may be certain things you can do to decrease the penalty periods the State will impose, such as purchasing annuities and paying off your mortgage.

Your Estate

Thinking of transferring everything to your healthy spouse or other family members to qualify for benefits? You can’t. The healthy spouse, called the community spouse, has to pass asset and income tests as well, even though he or she does not need nursing home care.  Gifting all of your assets to your family members, in most cases, will not allow you to qualify for benefits sooner. In fact, gifting will likely cause you to incur penalties which will delay your eligibility for benefits.

Spending down assets

If you apply for Medicaid benefits, and the State determines you do not meet the asset or income tests, it will require you to spend down these assets:

  • All income
  • IRAs and other retirement plans
  • Bank accounts, CDs, Credit union accounts
  • Assets held in revocable trusts
  • Investment accounts
  • Stocks

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