Your Complete Guide to Medicaid

Have you wondered if you or a loved one is eligible to receive Medicaid benefits? And what does Medicaid cover anyway?

This guide will break down what Medicaid is, the differences between Medicare and Medicaid, who qualifies for coverage, and what Medicaid covers.

Let’s dive in.

What Is Medicaid?

Medicaid is a government-operated program. It is designed to deliver health insurance benefits to those with low income based on the federal poverty level or minimal assets. Some people confuse Medicaid and Medicare because of the similar names; however, the eligibility benefits are unique, and they serve different demographics.

74 million people were enrolled in the Medicaid program in June 2020.

Over 74 million people were enrolled in the Medicaid program in June 2020, and in 2017, this program made up 17% of total health care expenditures in the nation, which has continued to increase year over year.

Medicare vs. Medicaid

There are several distinct differences between Medicare and Medicaid. Some of the specific differences are highlighted here.

Funding Sources

Medicare is a program that is funded using taxpayer dollars. It is available to everyone who is age 65 or older. It is also provided to younger individuals who meet the specific disability requirements that have been outlined. All seniors are qualified to receive Medicare coverage; however, if you pay for particular elements of the coverage, the health coverage is dependent on how long you paid into the Social Security system through your payroll taxes.

Medicaid, on the other hand, is a federally-aided program. This means some federal tax dollars go to funding the individual state program. However, this program is operated on the state level, which means specific elements of this program are unique.

Medicaid qualification is not based on a person’s age or Social Security benefits. Your eligibility for this health coverage is dependent on your resources and income.

An Overview of Medicaid’s Basic Parts

Medical coverage provided by Medicaid includes several types of health care. Benefits this this program provides cover, at a minimum, the same health care services Medicare does. It also covers some services Medicare does not. For some people, Medicaid will cover Medicare premiums, co-payments, and deductibles for individuals who qualify for both programs.

A separate portion of Medicaid coverage provides long-term nursing home care, and there are special Medicaid-funded programs that cover long-term, in-home personal care, and human services. Asset and income eligibility rules for this at-home, long-term care programs are not as stringent as traditional Medicaid programs. In some states, related Medicaid programs cover the costs of assisted living care. Keep in mind that this is just a basic overview of the question, what does Medicaid cover.

Specific Qualification Requirements for Medicaid Coverage

All Medicaid plans extend coverage to individuals with limited resources or income and over the age of 65. Also, people who are disabled, blind, and have minimal assets or income are qualified.

With these factors in mind, it is still important to note that Medicaid eligibility varies from one state to the next. There are some portions of a person’s income that are not counted when determining Medicaid eligibility, including your home and car. You can find out the specific requirements for Medicaid in your state by visiting the Benefits.gov website.

Take note that even if you are a senior and make more than the income limits set by Medicaid, you may still qualify if you have a significant amount of medical bills and expenses. This is due to most Medicaid programs subtracting your medical costs from your total residual income while determining eligibility. The details of the calculations called the “Medicaid spend-down” rules are different from state to state.

Income Considerations for Medicaid Coverage

As mentioned above, Medicaid coverage is only available to those who meet certain income limitations. The amount of income allowed is dependent on the state where you live. In every state, if you have income that is under the eligibility standard for the Supplemental Security Income program from the federal government, which is called SSI, you will also be eligible to receive Medicaid medical coverage. It is a good idea to learn about the state-specific income limits to know if you qualify.

The amount is around $770 a month, which is called “counted income.” However, a lot of your annual income may be considered in this figure, so you need to consider applying for Medicaid coverage even if your monthly income is higher than the limits.

If you or your spouse apply for Medicaid, both incomes are considered (if you live together) to determine eligibility. If you are receiving Medicaid benefits, and receive free meals from friends and family or free housing, or if your bills are paid on your behalf, Medicaid could consider this as income when determining eligibility.

In some states, Medicaid medical care will be available to you if you have an income level that exceeds the eligibility level established by your state if you have ongoing medical expenses that are not being paid by another insurance or program. This category of individuals is referred to as those who are “medically needy.”

If you have ongoing or regular medical bills that your other insurance plan or Medicare does not cover, you may still acquire Medicaid coverage. This is true even if your income is over the set limit.

Assets Allowed for Medicaid Medical Care Coverage

If you are applying for Medicaid coverage as an individual, you can have around $2,000 in assets. For married couples who live together, the amount is $3,000. This includes savings, cash, and other assets. There are some assets excluded when calculating your asset worth. The assets that are exempt from this calculation include:

  • Life insurance that has a total face value of $1,500 or less and term insurance with no cash surrender value
  • The house you live in
  • Engagement or wedding rings
  • Personal property or household items for day-to-day use
  • Vehicle (often limited to the fair-market resale value)
  • Earmarked funds for funerals and burials up to $1,500 and burial space

If you want to ensure you qualify for Medicaid medical coverage, you can give away or transfer any assets necessary to ensure you are eligible. Coverage by Medicaid does not have the same penalties or rules related to transferring assets that Medicaid nursing home coverage does.

Understanding Medicaid Spend Down

Spending down is a term used to describe reducing your assets to ensure you qualify for Medicaid coverage. Remember, the eligibility requirements are established on a state by state basis, which means you must contact the department of health for your state to figure out the current asset limit. There are two asset limits:

  1.  Medicaid Only
  2.  Medically Needy

Medicaid will let you reduce your assets by paying off your debt, making modifications to your home, prepaying for your funeral costs, and purchasing a vehicle. There are other methods of spending down, too, like giving away your assets or transferring property. However, these methods can trigger a penalty based on the Medicaid coverage you apply for. If your home equity interest is over a specific amount, you may not be eligible for Medicaid.

Exempt Assets from Spending Down

Some assets are considered exempt from the spending down process. If you are single, your home is exempt if you plan to go back. In certain states, Medicaid assumes that you will not return if you do not do this within six months of moving into a nursing home. If this happens, the house is not exempt.

However, if you are married when you go back into the nursing home, and your noninstitutionalized spouse remains in the house, it is exempt from spending down. Also, for married couples with a spouse at home, the family vehicle is exempt.

What Does Medicaid Cover – Specifically?

If you qualify to receive Medicaid benefits, you can receive coverage for an array of medical expenses. Some of the specific things covered include:

  • Outpatient care
  • Lab testing
  • Home health services
  • Some medical supplies
  • Hospitalization
  • Ambulatory services
  • Part-time and in-home nursing care
  • X-ray services
  • Dental services
  • Hearing services and hearing aids
  • Home health services
  • Nursing facility services

The prescription drug benefit offered by Medicare covers medication costs. At the same time, Medicaid may cover Part D health plan co-payments and premiums and cover some drugs that are not covered under the Part D plan.

A significant benefit that Medicaid offers for some people is that it covers long-term custodial care in a nursing facility and long-term in-home care. Neither of these things is covered with Medicare.

What Does Medicaid Not Cover?

Like eligibility requirements for Medicaid vary from one state to another, so does the list of what is and is not covered. Generally, Medicaid will not cover any cosmetic surgeries or elective procedures. This includes medical treatments for obesity (i.e., gastric bypass surgery), or prescription drug coverage for those enrolled in Medicare. 

Additionally, depending on the rules in your state, you may be required to cover a small portion of the cost (referred to as a co-payment) for a portion of the medical services Medicaid covers.

What Doctors Can You See Under Medicaid?

Medicaid will not pay the money for your medical care and treatment to you. It sends payments to your doctor and healthcare provider. However, since the reimbursement rates are low, some doctors do not accept Medicaid patients. You need to ask the doctor you want to see if they take Medicaid patients before making an appointment.

Can Medicaid and Medicare be Used Together?

If you qualify for both Medicaid and Medicare benefits, you will find that Medicare covers most people’s medical services. However, there are some services that Medicare does not cover, too, and in these cases, the state Medicaid program may cover these costs.

Additionally, Medicare does not always pay all your medical bills, even if the service is covered. The out-of-pocket expenses you pay as a Medicare beneficiary include the premiums, co-payments, and deductibles for Medicare, along with the cost of some prescriptions that are not covered by your Part D Medicare prescription drugs. This helps ensure a low cost for you.

Suppose you have Medicare Part A or Part B coverage that pays partially for a medical service but leaves a portion of the costs unpaid. In that case, Medicaid will cover the additional amount if you are enrolled in both programs. If you have both Medicaid and Medicare, you must register in the Medicare Part D plan to receive prescription drug coverage. However, sometimes Medicaid will provide coverage for drugs that are not included in the Part D health plan.

Are There Certain Types of Senior Communities You Can Enter Through Medicaid Coverage?

Only certain assisted living communities and skilled nursing facilities will accept residents on Medicaid. This is also true for home health care service providers. However, most communities limit the number of beds they allow to be taken by Medicaid residents. You must call the facility to find out if you can get in.

How to Apply for Medicaid Benefits

Even if you applied for Medicaid services in the past and told you do not qualify, you may be eligible thanks to the new rules that have been established. There are two ways to see if you qualify for Medicaid benefits. These include:

When you reach the status of Medicaid enrollees, you can begin receiving the benefits mentioned above.

Options if Your Income is Too High for Medicaid Benefits

If you have a low countable income and few assets, but your income is too high to qualify for Medicaid, you may still be able to acquire coverage from another program or community-based service. Some of the top programs to look into include QMB, SLMB, cash assistance programs, and QI.

As you can see from the information here, there are strict and stringent requirements to receive Medicaid coverage. The answer to “what does Medicaid cover” can vary based on your income and needs. Taking time to learn what the requirements are for your state and the care plan you need will help ensure you know what you are eligible (or ineligible) to receive. 

Being informed, knowing the requirements and standards, and understanding your position will help you figure out if you qualify to receive Medicaid services and benefits.

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