Medicare Coverage

Any person over the age of 65 who is eligible to receive Social Security is also entitled to Medicare. Currently, Medicare pays for up to 150 days of hospital care and, in certain circumstances for up to 100 days in a skilled nursing facility. But the Medicare deductibles--the total "out-of-pocket" expenses not covered by Medicare if a patient receives the full 250 days of coverage--is still nearly $30,000. Most seniors are shocked to learn this but often shrug it off in the belief that they are adequately protected by the supplemental insurance policies they own.

Private Insurance

Most available private insurance policies pay the Medicare deductible amounts but very few cover beyond that. In addition, existing supplemental insurance policies seldom cover two types of care very likely to be needed: custodial nursing home care and home health aides. These services are covered by Medicaid once a person's life savings have been almost totally depleted.

Medicaid

Generally, to receive Medicaid a person must be "categorically eligible," that is he or she must be poor enough to receive Supplemental Security Insurance (SSI)States have the option of extending coverage to the aged, blind and disabled as well. Some states, such as New York, also offer coverage to a class called "medically needy," those being people whose monthly income exceeds the SSI allowance (currently about $438 per month) but whose medical bills nevertheless exceed their income.

Recipients must "spend down" their assets and excess income on medical bills in order to qualify for Medicaid. In other words, you lose your lifetime of assets you have accumulated, in order to get the necessary means of footing your nursing home bill.

Example:

In order to be eligible for Medicaid in New York, a single individual may have no more than $3,000 of "exempt" resources (cash equivalents and other assets) plus an additional $1,500 as a burial fund. A single individual living at home is also entitled to a mere $500 per month of income. How much money a married couple may keep depends upon circumstances.

When a couple is separated by reason of the institutionalization of one, the spouse remaining in the community is entitled to keep $66,480 plus up to $1,662 of monthly income. But a husband and wife living together at home may have only $4,300 of liquid assets plus $1,500 each as a burial fund. In addition, as a couple, they may keep $717 of combined monthly income. It makes no logical sense that a couple may keep less than a single spouse continuing to reside in the community while the second is in a nursing home, but this is only one of the inconsistencies in the new law.

The resource and income allowances are indexed for inflation and will, presumably, increase in future years. Again, allowances vary from state to state. In New Jersey, for example, a single individual is only allowed to have $2,000 plus a $1,500 burial fund, and the monthly income permitted is $1,221 for a nursing home resident, $438.25 for a single person living at home, and $635.36 for a couple living together. Where a nursing home patient has a spouse living at home, the community spouse is entitled to keep between $12,500 and $62,500 of the combined marital assets.

In addition to the dollar amounts above, certain other assets are exempt from being counted for Medicaid eligibility purposes. Among them is a "homestead." This homestead can be the primary residence of either the Medicaid applicant, his or her spouse, or members of their family including certain children and other dependent relatives. A house unoccupied by one of the above (i.e., an investment property or vacation home) or even the primary residence, once vacated because the elderly occupant is institutionalized, may not be exempt. It may need to be sold to pay for medical bills.