Medicare and Medicaid (which is called Medical Assistance in Maryland) are both programs that provide healthcare-related financial assistance for Maryland elders. The names of the programs sound remarkably similar, but the programs themselves are very different. It is important for Maryland elders to understand the differences between Medicare and Medicaid / Medical Assistance to ensure they get the financial assistance available to them.
Medicare is a program funded and operated by the federal government. In contrast, individual states and the federal government jointly fund Medicaid.
Each state administers its own Medicaid program. The State of Maryland uses the name Medical Assistance for Medicaid, which further complicates understanding the difference between the two programs. (Other states also use different names for Medicaid.)
Individual states follow federal guidelines and rules for Medicaid, but each state also sets its own rules regarding important aspects of the program, including eligibility requirements. For that reason, the Maryland Medical Assistance program has its own specific rules for eligibility.
Medicare provides coverage for specific healthcare related services for seniors in four different areas:
Medicare generally does not cover long-term costs of a nursing home or assisted living facility.
Medicaid / Medical Assistance provides healthcare benefits for individuals of all ages who meet income, asset, and resource eligibility requirements. If an elder meets the eligibility requirements, Medical Assistance covers long-term care costs of nursing home or assisted living care. This aspect of the program is the most significant benefit for many Maryland elders. (The program also includes some other special services for low-income seniors.)
Medicare is an entitlement program for anyone over age 65 who paid Medicare taxes through employment for at least 10 years. Income and assets are irrelevant to eligibility. Expressed another way, anyone who is eligible to receive Social Security benefits also is eligible for Medicare. (Medicare also covers permanently disabled people of all ages and individuals with end-stage renal disease.)
To be eligible for Medicaid / Medical Assistance coverage for long-term nursing home or assisted living needs, a senior must meet specific income and assets requirements. A married applicant’s spouse also must meet an asset limit and income requirements. Eligibility limits are different if married spouses both apply.
Since Medicare is an entitlement program, no advance planning is necessary, except to ensure that you meet the 10-year employment requirement. In contrast, for Medicaid / Medical Assistance eligibility, you can and should plan in advance. Planning ahead can make a significant difference in whether an individual qualifies or does not qualify for coverage at the point when long-term care is necessary.
Applying for Medicare is somewhat challenging, because there are choices that need to be made. Those choices determine cost, coverage, and out-of-pocket expenses. In some cases, low-income applicants may be eligible for assistance in paying Medicare costs.
Becoming eligible for Medical Assistance for long-term care needs is even more complicated. While the asset and income limits are clear, Medicaid rules about what qualifies as an asset and what counts as income are extremely complex. In many cases, you can spend down assets or set up special Medicaid-compliant legal funds that enable you to become eligible.
However, extreme caution is advisable if you are trying to establish eligibility for Medicaid. The program has a strict five-year “look back” period for reviewing property transfers. If property is transferred for less than fair market value within five years of an application, the applicant may be found in violation of the rules and become ineligible for Medicaid for a period.
If you are determining Medicaid / Medical Assistance eligibility because you anticipate needing long-term care, or if you are assisting an elder family member in a nursing home or in need of long-term care, you should consult with a professional knowledgeable in Medicaid planning. Eligibility requirements are complex. Specific rules apply to the applicant, as well as to a community spouse. Complicated income and asset exclusions must be taken into account.
Many individuals who appear to be over the income or asset requirements can take Medicaid-compliant steps to establish eligibility. Several different strategies may be available, depending on the individual’s specific circumstances. Especially because of the five-year look back period, planning ahead at the earliest possible time is the best approach.
Attorney Henry Nash has extensive experience helping seniors and their families work through the complex laws and concerns inherent in elder law matters, including planning for long-term care needs and Medicaid eligibility. At The Law Office of Henry Nash, we work with clients in Rockville, throughout Montgomery County, and elsewhere in Maryland. We also assist out-of-state clients who have loved ones residing in the state.
If you have any questions or concerns about any issues relating to Medicaid planning or elder law, we welcome you to call us at (301) 998-6111 or contact us through our online form.