Medicaid

For all practical purposes, in the United States the only “insurance” plan for long-term institutional care is Medicaid. Lacking access to alternatives such as paying privately or being covered by a long-term care insurance policy, most people pay out of their own pockets for long-term care until they become eligible for Medicaid.

Although their names are confusingly alike, Medicaid and Medicare are quite different programs. For one thing, all retirees who receive Social Security benefits also receive Medicare as their health insurance. To be eligible for Medicaid, however, you must become “impoverished” under the program’s guidelines.

Also, unlike Medicare, which is totally federal, Medicaid is a joint federal-state program. Each state operates its own Medicaid system, but this system must conform to federal guidelines in order for the state to receive federal money, which pays for about half the state’s Medicaid costs. The state picks up the rest of the tab.

This complicates matters, since the Medicaid eligibility rules are somewhat different from state to state, and they keep changing. The states also sometimes have their own names for the program, such as “MediCal” in California and “MassHealth” in Massachusetts. Both the federal government and most state governments seem to be continually tinkering with the eligibility requirements and restrictions.

This has most recently occurred with the passage of the Deficit Reduction Act of 2005 (the DRA) which significantly changed rules governing the treatment of asset transfers and homes of nursing home residents. But to be certain of your rights, consult an elder care attorney. He or she can guide you through the complicated rules of the different programs and help you plan ahead.