By Cameron Lindahl, M.S., Director of Advocacy
CPT Institute, A 501(c)(3) Tax-Exempt Charity

Despite the similar terminology, Medicare and Medicaid are NOT the same regarding coverage or eligibility rules. The individuals affected the worst by this misconception have an anticipated need for long-term care services. Only Medicaid covers these services, including skilled nursing facilities (i.e., nursing home) and caregiving support (often available in the client’s residence). Additionally, being eligible to receive Medicaid and Medicare is an excellent benefit because it often helps recipients with costly prescriptions and prevents out-of-pocket expenses for their medical care (CMS, 2020; Medicare.gov, 2020). These “dual-eligible” clients, receiving both Medicaid and Medicare, are not typically aware that Medicaid covers the monthly Medicare deductible of approximately $135, which is automatically deducted from their monthly Social Security income if the individual only receives Medicare. This article will focus on improving your understanding of Medicaid and Medicare health insurance to help you make an informed decision before jeopardizing benefit eligibility. 

Coverage

The largest potential benefit Medicaid has over Medicare is the ability to cover expensive long-term care services. Medicare does not cover long-term care services. On average, the cost for a semi-private room in a nursing home is $6,844 a month or $82,128 a year in the United States (LongTermCare.gov, 2016). In most states, Medicaid pays for In-Home Support Services (IHSS), which provides in-home caregiving services that can pay a family member or a friend. For example, in California, IHSS will provide up to 283 hours of free in-home caregiving a month for Medi-Cal recipients (California’s Medicaid program). This max number of hours multiplied by the average cost of health aid at $20.50 an hour equals a total value of approximately $5,801.50 a month, or $70,000 a year. If you have an anticipated need for long-term care services, forfeiting Medicaid eligibility should not be taken lightly. 

How You Qualify 

Individuals who are aged, disabled, or blind are eligible to receive Traditional Medicaid. Traditional Medicaid is a “means-tested benefit,” which indicates a resource and income test (determined by the state) to qualify. In other words, an increase in income or accepting any funds over the state threshold usually threatens eligibility. In contrast, Medicare is an entitlement benefit because the recipient paid into the system and is “entitled” to it. Your attorney is required to address the requirements of Medicare Secondary Payer (MSP) compliance through the use of a Medicare Set-Aside account during the settlement process. Assuming there is compliance, Medicare eligibility is not affected by accepting a settlement. The tricky part about dual-eligibles is that the Medicare Set-Aside designed to protect your entitlement to Medicare is an asset you can count for Medicaid eligibility (CMS, 2005). One of the only solutions is to title the funds through a Special Needs Trust, which excludes these funds from Medicaid’s eligibility calculations, preserving your eligibility for Medicaid and Supplemental Security Income.

The Takeaways

Medicaid eligibility is notoriously undervalued during the settlement process. If one of the situations below applies to you, you should investigate preserving eligibility for Medicaid:

  • An anticipated need for caregiving services or nursing home (or other skilled facility)
  • Extensive medical expenses or prescription costs
  • A tight monthly budget

How We Help

As a part of our tax-exempt activity as a 501(c)(3) charity, CPT Institute offers no-cost consultations focused on helping attorneys and individuals evaluate their options to protect eligibility. If a Medicare Set-Aside (MSA) is needed within a Special Needs Trust to protect Medicaid eligibility, CPT Institute does not charge an annual administrative fee for the MSA portion.  Please feel free to directly book a consultation with us on our website or call our office number below. 

Additional Reading

  1. Get Help Paying Costs: Medicaid, 2020: https://www.medicare.gov/your-medicare-costs/get-help-paying-costs/.medicaid
  2. Effect of WCMSA on Medicaid Eligibility, 2005: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Memorandums/Downloads/July-11-2005-Memorandum.pdf
  3. DUALLY ELIGIBLE BENEFICIARIES UNDER MEDICARE AND MEDICAID, 2020: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/medicare_beneficiaries_dual_eligibles_at_a_glance.pdf
  4. Costs of Care, 2016: https://longtermcare.acl.gov/costs-how-to-pay/costs-of-care.html#:~:text=Average%20costs%20for%20specific%20states,room%20in%20a%20nursing%20home