What’s the Difference Between Medicare and Medicaid in the Context of Long Term Care?

Although their names are similar- Medicaid and Medicare are very different programs. Both programs provide health coverage- but Medicare is an “earned benefit” program available to individuals who reach age 65 and receive Social Security benefits- as well as individuals of any age who have been determined to be disabled by the Social Security Administration or have end stage renal disease (ESRD).

Medicaid is a public assistance program that covers medical costs for individuals with limited income and assets. Unlike Medicare- to be eligible for Medicaid coverage- individuals must meet strict income and asset guidelines. Moreover- Medicare is entirely federally funded and regulated- while Medicaid is a joint state-federal program. Each state operates its own Medicaid program which must meet federal guidelines- and the costs are shared by federal and state governments. Individuals who qualify for both Medicare and Medicaid are often referred to as “dual eligibles.”

Medicare and Medicaid Coverage of Long-Term Care

The most significant difference between Medicare and Medicaid in the realm of long-term care planning is that Medicaid will cover unskilled or custodial nursing home care- while Medicare will only cover skilled care in a skilled nursing facility and for a limited amount of time. As a result- Medicare pays for less than 25% of long-term care costs in the U.S.

While Medicare may cover up to 100 days of skilled care in a nursing home following a required three-day inpatient hospital stay- Medicare typically only covers around 20 days of skilled nursing home care per beneficiary. Thus- very few nursing home residents receive the full 100 days of coverage- and Medicare beneficiaries and their families should not expect Medicare to pay for 100 days of nursing home care. Moreover- after day 20 of a Medicare-covered skilled nursing home stay- individuals will have a $152 daily copay.

In the absence of any other public program covering long-term care- Medicaid has become the default nursing home payment source for the middle class. Most people do not have long-term care insurance and can only pay out-of-pocket for so long before needing Medicaid.

The fact that Medicaid is a joint state-federal program complicates matters because the Medicaid eligibility rules are somewhat different from state to state- and they keep changing. Both the federal government and most state governments seem to be continually tinkering with the eligibility requirements and restrictions. This is why consulting with your attorney is so important.

As for home care- Medicaid has traditionally offered very little. Recognizing that home care costs far less than nursing home care- more and more states are providing Medicaid-covered services to those who remain in their homes. In Virginia- Medicaid provides community-based care through Medicaid Waiver programs for individuals who meet the financial and medical criteria for Medicaid coverage of nursing home care- but are able to remain at home.