Medicare vs. Medicaid: What Are the Differences?

By Jennifer Cona, Esq. Originally published in the February issue of Long Island Press, Power of Your Attorney.

By now, you should have enrolled or re-enrolled in a Medicare Plan during the open enrollment period. So it’s a good time to re-visit the confusing issue of Medicare vs. Medicaid. Let’s break down the basics.

First, everyone age 65 and over, as well as certain qualified disabled individuals, is entitled to Medicare. Not so with Medicaid; Medicaid is a means-tested government benefits program, meaning that you must qualify financially for benefits. 

Medicare Part B covers doctors’ services, medical supplies, outpatient care and preventive services. Many people who choose traditional Medicare will also purchase a Medigap policy to cover some of what Medicare does not cover, including co-insurance. Medicare Part A covers in-patient hospital stays, short-term skilled nursing facility care/rehabilitation, hospice care and some limited home health care. If you are admitted to a skilled nursing facility for rehabilitation directly from the hospital, Medicare will cover the first 20 days in full. From days 21-100, there will be a co-insurance due.  However, Medicare can cut off benefits anytime between days 21-100 if they believe you are not making progress in rehabilitation.  

An easy way to think of it is that Medicare pays for acute care needs (doctors, hospitals, rehab). In contrast, Medicaid covers long-term health care needs, including care in a nursing home or care at home with home health aides. In order to be eligible for both nursing home care and home care, the applicant must have no more than $31,174 (in 2024) in his/her name (total assets).  A home care applicant is permitted to keep $1,732 of their income (in 2024).  Income in excess of $1,732 must be spent down or deposited to a Pooled Income Trust to maintain eligibility. There are asset and income limits for spouses in the community as well (see conaelderlaw.com/resources/government-benefit-rates/).

In addition, an applicant for Medicaid nursing home benefits must prove they did not make any gifts or asset transfers during the five year look-back period. If they did, they will be subject to a penalty period. There is currently no look-back period for home care benefits, but it is expected to be phased in soon. As such, asset protection planning is key and the earlier the better. However, families can rest assured that even if a loved one is being placed in a nursing home today, they can still protect up to one-half of their assets by working with an experienced Elder Law attorney like the attorneys at Cona Elder Law.  

The laws are complex and change often. The accomplished Elder Law attorneys at Cona Elder Law will navigate the Medicaid and Medicare systems with you to ensure you have access to the best care while protecting your hard-earned assets.

Jennifer B. Cona, Esq. is the Founder and Managing Partner of Cona Elder Law, an award-winning law firm concentrating in the areas of elder law, estate planning, special needs planning, estate administration and litigation, and health care law. The firm has been ranked the #1 Elder Law Firm by Long Island Business News for eight consecutive years.  For additional information, visit www.conaelderlaw.com.