It can be difficult to understand Medicare and Medicaid and which covers what. The fact that the two programs sound alike makes it even more confusing. However, understanding the differences between the two, at least in a nutshell, is crucial for the proper and timely planning of your future and for the future of a child with a developmental disability.
Medicare is a federal healthcare program that is based on the age of the person, without regard to need.

The following groups are eligible for Medicare:

  1. people who are at least 65 and eligible for Social Security;
  2. those receiving Social Security benefits because of a disability;
  3. people collecting Social Security Disability benefits; and
  4. permanently disabled adult children of people collecting Social Security benefits.

With some co-pays, Medicare covers hospital stays, limited stays in a skilled nursing facility, a hospice, or post-hospital home health services. If a person decides to pay premiums, Medicare may also cover physician’s services.

Medicaid is a joint federal and state program (federally and state funded and state administered) that is based solely on need, regardless of age. If a person qualifies, this program will cover, among other things, long-term nursing home care and in some cases a residential placement for a permanently disabled individual. Medicare does not cover long-term care.

To qualify, the person must be essentially poor. Resources owned or available to the Medicaid applicant or his/her spouse will be considered to determine eligibility. The person can transfer assets to others to make him/herself eligible for Medicaid, but such transfers must be done properly and, more importantly, timely.

If a transfer of assets occurs within a specified period of time prior to the person’s Medicaid application (called a ‘look-back period’), the transferred resources will be considered as available for Medicaid purposes and could make that person ineligible for the program. In 2005, Congress passed a law that gradually changed the federal look-back period from 36 to 60 months and imposed penalty (or ineligibility) periods for transfers that occurred within five years of the application for the program.

This is the case in Pennsylvania, but New Jersey has not caught up yet. Under current New Jersey regulations, the look-back period is still 36 months, except for a 60-month look-back in case of transfers to a trust. In April 2011, however, the New Jersey Division of Medical Assistance and Health Services proposed to change the look-back period in New Jersey from 36 to 60 months for all transfers. That means that the assets transferred within five years of the Medicaid application, while not at the moment, will probably soon be considered as available to determine the person’s eligibility for the program.

Published on Jan 22nd, 2012. © Copyright 2012 Hinkle, Fingles & Prior, P.C., Attorneys at Law. All rights reserved.
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