When you are planning ahead for your senior years, you should understand government health insurance programs that may be relevant to you. Medicare is one of them, and perhaps surprisingly, Medicaid is another.
Medicare
The FICA tax that you pay throughout your working career may seem like a nuisance, but you do get something in return if you are fortunate enough to attain senior citizen status. Part of what you pay goes toward Social Security, and part of it goes toward Medicare.
You obtain Medicare eligibility through the accumulation of retirement credits. In 2014, you get one credit for every $1200 that you earn. It is possible to earn up to four credits in a year. After you have accumulated 40 retirement credits, you will qualify for Medicare when you reach the age of 65.
Medicare coverage has nothing to do with financial need. Someone who is very wealthy could qualify for Medicare coverage.
Medicaid
Medicaid is jointly administered by the federal government along with each state government. This is also a health insurance program, but it is a need-based program. Eligibility is based on financial need; it has nothing to do with the accumulation of retirement credits.
There is a $2000 asset limit for an individual in most states, but some assets are not considered to be countable.
Long-Term Care
If you are enrolled in the Medicare program when you are a senior citizen, you will not need Medicaid coverage at first, and you wouldn’t qualify if you have a reasonable store of assets. However, in spite of this, many people who were never financially needy do seek Medicaid eligibility late in their lives.
Most seniors will eventually need help with their activities of daily living. This type of care is called custodial care. Medicare does not pay for custodial care.
Long-term care is extremely expensive. We practice law in the state of North Dakota. According to a survey that was conducted by Genworth Financial, the median annual cost for a private room in a nursing home in North Dakota is $93,623.
Medicaid does pay for long-term care, and this is why it is relevant to many elders who were enrolled in the Medicare program.
How could you qualify for Medicaid if you retired with some resources? People often give gifts to their loved ones before they apply for Medicaid. This process is called a spend down.
This is a bit more complicated than it may seem to be on the surface, because there is a five-year look-back. You have to complete your gift giving at least five years before you apply for Medicaid. Your eligibility is delayed if you give away assets within this five-year time frame.
Medicaid Planning Report
If you would like to educate yourself about the Medicaid program, download our special report. This in-depth report will give you a solid foundation of information, and it is being offered free of charge at the present time.
Click this link to access your copy of the report: Grand Forks ND Medicaid Planning.
To learn more, please download our free Guardianship in Minnesota here.
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