The federal government provides a program of basic health care insurance for
older and disabled individuals called Medicare. Practically everyone who has a work
history and is sixty-five and older is eligible for Medicare, even those who continue
working after age sixty-five.
The federal and state governments together also provide a comprehensive medical
benefits program, called Medicaid, for qualified low-income people. Medicare and
Medicaid are not the same, though some older people qualify for both. Medicaid coverage
rules vary from state to state, but Medicare is the same all over the United States.
The questions that follow examine Medicare and Medicaid, as well as private
“Medigap” insurance commonly used to supplement Medicare coverage. The section then
turns to long-term care benefits under public programs and under private long-term care
Since Medicare and Medicaid came into being in 1965, they have been revised
many times. More revisions are certain. Current information is available from your local
Social Security Administration office. Other groups such as the American Association of
Retired Persons, local legal services programs, senior centers, and area agencies on aging
also provide useful information.
Q. What is the basic structure of the Medicare program?
A. The Health Care Financing Administration, a branch of the U.S. Department of
Health and Human Services, is the federal agency responsible for administering the
Medicare program. Regular Medicare has two main parts. The hospital insurance part, or
“Part A,” covers medically necessary care in a hospital, skilled nursing facility, or
psychiatric hospital, home health care, and hospice care.
“Part B,” or the medical insurance benefits part, covers medically necessary
physician’s services, no matter where you receive them, outpatient hospital care, many
diagnostic tests, and a variety of other medical services and supplies not covered by Part
A.The exact coverage rules and limitations are complex. The actual coverage
determinations and payments to providers of care are handled by insurance companies
under contract with Medicare. These insurance companies are referred to as “fiscal
intermediaries” under Part A and “carriers” under Part B. They determine the appropriate
fee for each service. That is why regular Medicare is referred to as a “fee for service”
Medicare beneficiaries also have the option of joining a Managed Care
Organization (MCO) or care option permitted under “Medicare + Choice.” Managed care
organizations provide or arrange for all Medicare covered services and generally charge a
fixed monthly premium and small or no co-payments. They may also offer benefits not
covered by Medicare, such as preventive care, for little or no additional cost.
Denials of Benefits
Never accept a denial of benefits without further questioning. Unfair denials of
Medicare benefits occur with surprising frequency. Medicare beneficiaries who appeal
unfair denials have a substantial likelihood of success on appeal. Your appeal rights are
Q. What does Medicare cost me?
A. Part A coverage is provided free to all individuals sixty-five and older who are
eligible for social security (even if they are still working). If you are not eligible for social
security benefits, you can enroll in Part A after age sixty-five, but you will have to pay a
sizable monthly premium.
Part B is available to all Part A enrollees for a monthly premium that changes
yearly. The Social Security Administration office can tell you the cost of the current
premium. Under both Parts A and B, beneficiaries must pay certain deductibles and coinsurance
payments, depending on the type of service, unless you are enrolled in a
managed care organization. “Deductibles” are payments you must make before Medicare
coverage begins. “Co-insurance payments” are percentages of covered expenses that you
are responsible for paying. These amounts can change from year to year.
If you meet certain income and resource tests, your state’s Medicaid program will
assist you in paying your share of Medicare costs. The income and resource tests are more
generous than the limits for regular Medicaid eligibility, so even if you are not eligible for
Medicaid, you may still be eligible for help as a “Qualified Medicare Beneficiary” (QMB)
or a “Specified Low-Income Medicare Beneficiary” (SLMB).
Q. I will turn sixty-five soon, but I do not plan to retire then. Am I still going
to be able to receive Medicare benefits?
A. Yes, but you must file a written application. This can be done in two different
ways. Your “initial” enrollment period begins three calendar months before your sixtyfifth
birthday month, and extends three months beyond your birthday month. You can
enroll at any time during this seven-month period. Your benefits will begin on the first day
of the month in which you turn sixty-five.
If you do not enroll during this time, you can enroll during the “general”
enrollment period, which runs from January 1 to March 31 of each year. However, you
will pay a higher monthly premium if you delay enrollment beyond your initial enrollment
If you are working and are covered by your employer’s health insurance program,
or if you are covered under your spouse’s plan, Medicare is the secondary payer after the
other insurance pays. If you haven’t enrolled in Medicare and you lose the other insurance,
you may sign up for the Medicare program during a “special” seven-month enrollment
period that begins the month the other program no longer covers you.
To make sure you receive maximum coverage without penalty, talk to your
employer’s benefits office or your local Social Security Administration office.
Q. Is Medicare only for older adults?
A. No. In addition to older social security recipients, younger persons who have
received social security disability benefits for more than twenty-four months are eligible,
as well as certain persons with kidney disease.
Protecting Your Rights When You Contact Public Agencies
Remember to note the name of the person with whom you speak, the date of your
conversation, and the content of the conversation. This is useful if you later need to
challenge the information provided.
Signing Up for Medicare
Enrolling in Medicare is no problem for most people. Everyone who is turning
sixty-five and applying for social security or railroad retirement benefits is automatically
enrolled in Medicare Part A. If you are receiving these benefits before turning sixty-five,
you should receive a Medicare card prior to the month you turn sixty-five. The Medicare
benefits normally begin on the first of the month in which you turn sixty-five.
If you are under sixty-five and receiving disability benefits, your enrollment in
Medicare will begin automatically as soon as you have been receiving benefits for twentyfour
months.If you are planning to work beyond age sixty-five and are covered by your employer’s
health insurance program, you must still file a written application through your local
Social Security Administration office.
Q. What does Medicare Part A (hospital insurance) cover?
A. Medicare Part A helps pay for medically necessary hospital care, skilled
nursing care, home health care, and hospice care as described below:
1. Hospitalization. This includes:
· a semiprivate room and board,
· general nursing,
· the cost of special care units, such as intensive care or coronary care units,
· drugs furnished by the hospital during your stay,
· blood transfusions,
· lab tests, X-rays and other radiology services,
· medical supplies and equipment,
· operating and recovery room costs, and
· rehabilitation services.
The coverage period for hospitalization is based upon a “benefit period.” A benefit
period begins the first time you receive inpatient hospital care. It ends when you have
been out of a hospital and have not received skilled nursing care for sixty days in a row. A
subsequent hospitalization begins a new benefit period.
On the first day of hospitalization during a benefit period, the patient is responsible for
a sizable inpatient hospital deductible ($776 during 2000). If you are hospitalized more
than once during a benefit period, the deductible does not have to be paid for the other
hospitalizations during the same benefit period. After the deductible, Part A pays for all
covered services through the sixtieth day of hospitalization. From the sixty-first through
ninetieth day, coverage continues but the patient is responsible for a daily co-insurance
payment. After the ninetieth day, Medicare covers up to sixty extra days (called “reserve
days”) during the lifetime of the patient. The patient pays a sizable co-insurance payment
during reserve days.
If psychiatric hospitalization is needed, Part A helps pay for a lifetime maximum of
190 days of inpatient care in a participating psychiatric hospital.
2. Skilled Nursing Facility inpatient care following a hospitalization of at least three
days. Your condition must require on a daily basis skilled nursing or skilled
rehabilitation services, which, as a practical matter, can only be provided in a skilled
nursing facility. You must be admitted within a short time (usually thirty days) after
you leave the hospital, and the skilled care you receive must be based on a doctor’s
Most nursing home residents do not require the level of nursing services considered
skilled by Medicare. Consequently, Medicare pays for relatively little nursing home care.
In addition, not every nursing home participates in Medicare or is a skilled nursing
facility. Ask the hospital discharge staff or nursing home staff if you are unsure of the
facility’s status.The coverage period for skilled nursing facility services is limited to 100 days. In a
benefit period, Medicare pays for all covered services for the first twenty days. For days
twenty-one through 100, the patient is responsible for a sizable coinsurance payment.
Medicare helps pay only for “skilled” nursing home care. Medicare does not pay
for “custodial” care. However, the distinction is often fuzzy, and many Medicare denials
based on a finding of custodial care can be successfully appealed. Generally, care is
considered custodial when it is primarily for the purpose of helping the resident with daily
living needs, such as eating, bathing, walking, getting in and out of bed, and taking
medicine. Skilled nursing and rehabilitation services are those that require the skills of
technical or professional personnel such as registered nurses, licensed practical nurses, or
therapists. Care that is generally non-skilled may nevertheless be considered skilled when,
for example, medical complications require the skilled management and evaluation of a
care plan, observation of a patient’s changing condition, or patient education services.
3. Home Health Care. Medicare covers part-time or intermittent skilled nursing care;
physical, occupational, and speech therapy services; medical social services; part-time
care provided by a home health aide; and medical equipment for use in the home. Both
Part A and Part B of Medicare cover some home health care. Medicare does not cover
medications for patients living at home, nor does it cover general household services
or services that are primarily custodial.
To be eligible for home health care services you must meet four conditions,
presented in simplified terms here. First, you must be under the care of a physician who
determines you need home health care and sets up a plan. Second, you must be
home bound, although you need not be bedridden. Third, the care you need must include
intermittent skilled nursing, physical therapy, or speech therapy. Finally, your care must
be provided by a Medicare-participating home health care agency.
The coverage period for home health care is unlimited with no deductible or coinsurance
payment (except for durable medical equipment) as long as you continue to
meet all four conditions.
4. Hospice Care A hospice is an agency or organization that provides primarily pain
relief, symptom management and supportive services to people with terminal illness.
Hospice services may include physician or visiting nurse services, individual and
family psychological support, inpatient care when needed, care from a home health
aide, medications, medical/social services, counseling, and respite care for family
To be eligible for hospice care, a patient must have a doctor certify that he or she is
terminally ill (defined as a life expectancy of six months or less); the patient must choose
to receive hospice care instead of standard Medicare benefits; and the hospice must be a
The coverage period for hospice care consists of two ninety-day periods, followed
by a thirty-day period, and when necessary, an indefinite extension. There are certain coinsurance
payments required under the hospice benefit, but no deductibles.
Q. What does Medicare Part B (medical insurance) cover?
A. Medicare Part B covers a wide range of outpatient and physician expenses
regardless of where they are provided–at home, in a hospital or nursing home, or in a
private office. Covered services include:
· doctors’ services, including some services by chiropractors, dentists, podiatrists, and
· outpatient hospital services, such as emergency room services or outpatient clinic care,
radiology services, and ambulatory surgical services;
· diagnostic tests, including X-rays and other laboratory services, as well as some
mammography and pap smear screenings;
· durable medical equipment, such as oxygen equipment, wheelchairs, and other
medically necessary equipment that your doctor prescribes for use in your home;
· kidney dialysis;
· ambulance services to or from a hospital or skilled nursing facility;
· certain services of other practitioners who are not physicians, such as clinical
psychologists or social workers;
· many other health services, supplies and prosthetic devices that are not covered by
Medicare Part A (Part B also covers some home health services.)
Medicare does not cover:
· routine physical examinations;
· most routine foot care and dental care;
· examinations for prescribing or fitting eyeglasses or hearing aids;
· prescription drugs that do not require administration by a physician;
· most cosmetic surgery;
· immunizations except for certain persons at risk;
· personal comfort items and services;
· any service not considered “reasonable and necessary.”
Recently, Medicare Part B began covering certain preventive services under
certain circumstances. These services include:
· certain vaccinations such as those for flu, pneumonia, and hepatitis B;
· prostate cancer screenings;
· pap smear and pelvic examination;
· diabetes monitoring;
· colorectal cancer screening; and
· bone mass measurements.
A. For Part B benefits, you must pay a $100 annual deductible. Then Medicare
generally pays 80 percent of Medicare-approved amounts for covered services for the rest
of the year. You pay the other 20 percent of the approved amount. There is no cap on the
patient’s share of the cost. If you are a Medicaid recipient or a qualified Medicare
beneficiary (QMB), then your physician must accept “assignment.”
If a physician or other provider charges you more than the Medicare-approved
amount, then your liability depends on whether the provider accepts assignment.
“Accepting assignment” means that the provider agrees to accept the Medicare-approved
amount as payment in full. This means that your liability is limited to the annual
deductible and 20 percent co-payment. If the provider does not accept assignment,
generally you must pay for any excess charge over the Medicare-approved amount, but
only up to certain limits. The government presently sets the limit on physician’s charges at
115 percent of the Medicare-approved fee schedule. Doctors who charge more than these
limits may be fined, and you should get a refund from the doctor.
Here is an example of the difference accepting assignment can make: Mrs. Jones
sees Dr. Brown on June 1 for medical care. She has already paid her $100 annual
deductible for covered Part B medical care this year. Dr. Brown charges $230 for the visit.
The Medicare-approved amount for such services are $200. If Dr. Brown accepts
assignment, Mrs. Jones must pay a
· $40 co-payment (that is, 20 percent of the $200 approved).
If Dr. Brown does not accept assignment, Mrs. Jones must pay:
· $40 plus the $30 excess charge. Her Payment = $70.
Note that Dr. Brown’s actual charge ($230) is within 115 percent of the Medicare
approved amount ($200) and is therefore permissible
Doctors and suppliers who agree to accept assignment under Medicare on all
claims are called Medicare participating doctors and suppliers. You can get a directory of
Medicare participating doctors and suppliers from your Medicare carrier. The directory is
also available for your use in Social Security Administration offices, state and area
agencies on aging, and in most hospitals.
Q. How are Medicare claims filed and paid?
A. For Part A benefits, the provider submits the claim directly to Medicare’s fiscal
intermediary (the insurance company). The provider will charge you for any deductible or
co-insurance payment you owe. For Part B claims, doctors, suppliers and other providers
are required to submit your Medicare claims to the Medicare carrier (the insurance
company) in most cases, even if they do not take assignment. The provider will charge
you directly for any deductible, co-insurance, or excess charge you owe. If you belong to a
Medicare participating Managed Care Organization (MCO), there are usually no claim
forms to be filed, nor any deductible or co-payment for any covered services, or the
amount is small.
Signing Up for Medicare
Part B If you are receiving Part A coverage, you will automatically be enrolled for
Part B coverage as well. If you don’t want Part B coverage, you must notify the Social
Security Administration. Also, anyone sixty-five and older can buy Part B coverage.
Enrollment periods are similar to those for Part A. Your Part B premium will be deducted
from your monthly social security check.
Q. What if I disagree with a Medicare decision? How can I appeal?
A. You have the right to appeal all decisions regarding coverage of services or the
amount Medicare will pay on a claim. If your claim has been denied in whole or in part, it
is usually a good idea to appeal, especially if the basis of denial is unclear. A surprisingly
high percentage of denials are reversed on appeal. In any case, the appeal will make clear
the reason for the denial.
Medicare Parts A and B have different procedures for appealing and several steps
in the appeal process. After the initial levels of review, Parts A and B both include the
option of a hearing before an administrative law judge and even review by a federal court
if sufficient amounts of money are at stake.
Key tips in appealing Medicare decisions:
· Denials by any Part A provider (hospital, nursing home, home health care agency, or
hospice): Do not accept oral denials. You should be given a written notice of
non coverage from the provider explaining why the provider believes Medicare will not
pay for the services. This is not an official Medicare determination. You should ask
the provider to get an official Medicare determination. The provider must file a claim
on your behalf to the Medicare fiscal intermediary if you ask for an official
determination. If you still disagree, you may make use of several additional appeal
steps if minimum threshold amounts of money are in dispute.
· Hospital coverage denials: Hospital coverage decisions are normally made by Peer
Review Organizations (PROs). PROs are groups of doctors and other health care
professionals under contract with the federal government to review care given to
Medicare patients. When you are admitted to the hospital, you will receive a notice
called An Important Message From Medicare that explains the role of PROs and
describes your appeal rights. If you disagree with a PRO decision, the initial review
will occur very quickly, usually within three days. You cannot be required to pay for
hospital care until third day after you receive a written denial of Medicare coverage.
· Part B coverage denials: These decisions will be made by the Medicare carrier. After
your doctor, supplier, or other provider sends in a Part B claim, Medicare will send
you a notice called Evaluation of Your Medicare Part B Benefits. The notice tells you
what charges were made and the amount Medicare approved and paid. It also shows
the amount of any copayments, deductibles, or excess charges that you are responsible
for paying. The notice gives the address and telephone number for contacting the
carrier and an explanation of your appeal rights. You have six months from the date of
the decision to ask the carrier to review it. If you still disagree, you may make use of
several additional appeal steps if minimum threshold amounts of money are in dispute.
Always be conscious of time limits for filing appeals (normally sixty days from the
date of the notice). You may lose your rights if you wait too long. You may want to get
assistance with your appeal from a legal services office or a private attorney, particularly
if large medical bills are involved. Nonlawyer volunteers and non lawyer staff members of
legal service programs help a number of people with benefit appeals without charging
Q. Do I need any other insurance coverage besides Medicare?
A. Yes. Most older persons need to purchase a supplemental (or “Medigap”) insurance
policy to cover some of the costs not covered by Medicare. However, there are exceptions,
In addition, if you can afford it, you may also want to consider purchasing a longterm
care insurance policies, because Medicare and Medigap policies do not cover longterm
care. Long-term-care insurance is discussed in the next section.
Q. Who doesn’t need a Medigap policy?
A. While most people need Medigap coverage, you may already have enough coverage
without it if you belong to one of the four groups below:
1. If you are already covered by Medicaid, you do not need a Medigap policy.
Medicaid covers the gaps in Medicare and more.
2. If you are not eligible for Medicaid, but your income is low, you may be eligible
for help in paying Medicare costs under the Qualified Medicare Beneficiary (QMB)
program. Under QMB the government will pay your Medicare Part B premiums and
provide supplemental coverage equivalent to a Medigap policy if your income and assets
fall below a qualification amount (one that is more generous than Medicaid’s).
To apply contact the local office of your state Medicaid program.
3. If you get retiree health coverage through a former employer or union, you
may not need Medigap insurance. But this coverage may not provide the same benefits as
Medigap insurance and may not have to meet the federal and state rules that apply to
Medigap. Examine the coverage, costs, and stability of your coverage to determine
whether it is a better option than Medigap.
4. If you belong to an HMO, you probably do not need a Medigap policy, since
HMO coverage is normally comprehensive. But do not be too quick to give up your
Medigap coverage if you are just joining a Medicare HMO. If you can afford it, keep it
long enough to be sure you are satisfied with the HMO. If you become dissatisfied with
the HMO, you have the right to disenroll from it at any time. But if you have already
given up you Medigap coverage, you may not be able to get it again or get the same price.
Q. How do I find a good Medigap policy?
A. Since 1992, all Medigap insurance has had to conform to standardized benefit plans.
There are ten possible standardized plans, identified as Plan A through Plan J. Plan A is a
core package and is available in all states. The other nine plans have different
combinations of benefits. Check with your state department of insurance for additional
information. Many states provide buyers guides.
Purchase only one Medigap policy. Multiple policies will almost always provide
overlapping coverage for which you will pay twice but receive the benefit of only once. In
evaluating policies, decide which features would best meet your health needs and financial
situation. Prescription drug coverage, for example, may be right for you if you are on
continuing maintenance medications, even though such coverage may be expensive. When
you compare policies of the same type (A through J), remember that benefits are identical
for plans of the same type. For example, all type G plans have essentially the same
benefits. However, the premiums and potential for premium increases may differ greatly.
Q. When should I get a Medigap policy?
A. Buy a Medigap policy at or near the time your Medicare coverage begins, because
during the first six months that you are sixty-five or older and enrolled in Medicare Part B,
companies must accept you regardless of any health conditions you have, and they cannot
charge you more than they charge others of the same age. After this one-time period, you
may be forced to pay much higher premiums for the same policy due to your health status.
During this open enrollment period, companies may still exclude pre-existing conditions
during the first six months of the policy.
Different enrollment rules apply to persons under sixty-five who are eligible for
Medicare because of disability.
Q. What if I have an “old” Medigap policy and am considering a replacement? Is
that a good idea?
A. If you have a Medigap policy that pre-dates the standardized plans (before 1992), you
may not need to switch policies, especially if you are satisfied. Some states have special
regulations allowing beneficiaries to convert older policies to a standard Medigap plan.
Check with your state insurance department or health insurance counseling service for
Beware of illegal sales practices. Both federal and state laws govern the sale of
Medigap insurance. These laws prohibit high pressure sales tactics, fraudulent or
misleading statements about coverage or cost, selling a policy that is not one of the
approved standard policies, or imposing new waiting periods for replacement policies. If a
sales agent offers you a policy that duplicates coverage of your existing policy, the
duplication must be disclosed to you in writing. If you feel you have been mislead or high
pressured, contact your state insurance department, your state’s health insurance
counseling program, or the federal Medicare Hotline at 1-800-MEDICARE (1-800-633-
EVALUATING AMEDIGAP POLICY
Obtain a free copy of the booklet Guide to Health Insurance for People with Medicare
from your local Social Service Security Administration or from the Consumer Information
Center, Department 70, Pueblo, CO 81009 (719) 948-3334 or at the website at
www.pueblo.gsa.gov. This guide:
· explains how Medigap insurance works;
· explains the ten standardized plans;
· tells how to shop for Medigap insurance;
· lists addresses and phone numbers of state insurance departments of state insurance
departments and state agencies on aging. Most states offer free insurance counseling
Q. What is Medicaid?
A. Medicaid is a medical assistance program for poor older or disabled persons
whose income and assets fall below certain levels set by federal and state law. Unlike
Medicare, which offers the same benefits to all enrollees regardless of income, Medicaid
is managed by individual states, and the benefits and eligibility vary from state to state.
Q. Is it possible to receive both Medicare and Medicaid?
A. Yes, if you qualify for both programs. Even if you do not qualify for Medicaid,
the Medicaid program may still assist you in paying for all or part of the Medicare
premium, deductibles and co-insurance payments if you meet the special income and
resource tests under the “Qualified Medicare Beneficiary” (QMB) program or the
“Specified Low-Income Medicare Beneficiary” (SLMB) program.
Q. If I qualify for Medicaid, what sorts of services do I get?
A. Medicaid covers a broad spectrum of services. Certain benefits are mandated by
federal law. They include:
· inpatient and outpatient hospital services doctors’
· nurse practitioners’ services inpatient nursing home care
· home health care services
· laboratory X-ray charges.
Other services may include private duty nursing; services from podiatrists,
optometrists and chiropractors; mental health services; personal care in your home; dental
care; physical therapy and other rehabilitation; prescription medications; dentures;
eyeglasses; and more. In all cases, you may receive these service only from a Medicaidparticipating
provider. As with Medicare, providers may choose whether or not to
participate in Medicaid, and they must meet certain standards.
Some states have contracted with managed care organizations to provide
comprehensive care to Medicaid-eligible individuals.
Qualifying for Medicaid
Medicaid programs in each state have different standards to determine whether
needy individuals are eligible for assistance. All states require that older adults be at
least age sixty-five, blind or disabled, and that they meet income and asset tests. In
most states, persons eligible for Supplemental Security Income (SSI) or Temporary
Assistance to Needy Families (TANF) are automatically covered. Most states also
cover some people whose income falls below a certain level after they “spend down”
their income on medical bills. Medicaid eligibility rules are so complicated that it is
advisable for older persons with low incomes or with high medical expenses to talk
with someone with expertise in Medicaid–such as a legal services lawyer, paralegal,
or social worker, or a private attorney experienced in handling Medicaid issues.
Q. Does owning a home disqualify me from Medicaid?
A. No. All states exempt your home as an asset as long as you or your spouse
lives in it. If you must leave your home in order to receive nursing home care or other
long-term care, the state may still exempt it, but state asset exemption rules differ from
state to state and can be complex. Besides your home, all states allow you to keep a
very limited amount of cash and personal property.
Q. What does Medicaid cost me?
A. Medicaid does not require you to pay premiums or deductibles like Medicare.
Providers may not charge Medicaid patients additional fees beyond the Medicaid
reimbursement amount. However, states are permitted to impose a nominal deductible
charge or other form of cost-sharing for certain categories of services and prescription
drugs. No Medicaid recipient may be denied services by a participating provider because
of the patient’s inability to pay the charge.
Individuals whose income or assets exceed the state’s permissible Medicaid
amount may be eligible for Medicaid only after “spending down” their income or assets to
a poverty level by incurring medical expenses. These “spend down” amounts can be very
high, especially for nursing home residents whose income far exceeds the Medicaid
eligibility level but who face enormous monthly expenses for care.
Q. How do I apply for Medicaid?
A. Contact the state or local agency that handles the Medicaid program. Its name
will vary from place to place. It may be called Social Services, Public Aid, Public
Welfare, Human Services, or something similar. You can also call your local agency on
aging or senior center for information.
When you apply, you will have to document your financial need in detail, as well
as your residency. The application form can be lengthy and complex, but the Medicaid
agency can help you complete it. If you are homebound, a Medicaid worker can be sent to
your home to help you apply. If you are in a hospital or other institution, a staff social
worker should be made available to help you apply. Don’t let inability to get to the public
agency keep you from seeking assistance. Since the start of benefits is linked to your date
of application, it is important to establish an application date as soon as you need
Medicaid assistance. Almost any written request with your signature may be enough to
establish your application date, even if you have not yet completed the full application
form. The effective date can be retroactive, up to three months.
Q. How are Medicaid claims filed and paid?
A. Medicaid providers always bill Medicaid directly. The state Medicaid program
reimburses providers according to the state’s particular reimbursement formula. Providers
cannot charge you additional amounts for covered services, but states may opt to charge
you small deductibles or fees for certain items such as prescriptions.
Q. If I disagree with a decision made by my Medicaid program, what can I
A. You have the right to appeal all decisions that affect your Medicaid eligibility
or services. When a decision about your Medicaid coverage is made, you should receive
prompt written notice of the decision. This will include an explanation of how you can
appeal the decision. The appeal process includes a right to a fair hearing before a hearing
officer. You may need a lawyer or public benefits specialist experienced in Medicaid law.
Q. What federal programs will pay for long-term care in a nursing home?
A. Medicare does not pay for a significant amount of nursing home care. Coverage
of skilled nursing care, as described above under “Medicare,” is narrowly
defined and limited to twenty days of full coverage and a maximum of eighty additional
days with a large co-insurance payment.
Medicaid, on the other hand, pays a substantial portion of the nation’s nursing
home bill (over 40 percent). Medicaid, however, pays only when most other funds have
been depleted. Medicaid will cover nursing home expenses if your condition requires
nursing home care, the home is certified by the state Medicaid agency, and you meet
income and other eligibility requirements to receive this benefit.
Many persons who normally are not eligible for Medicaid become eligible after a
period of time in a nursing home. This happens because the high cost of nursing home
care forces many individuals to spend down their assets and income to a level that
qualifies them for Medicaid in many states. The rules and availability of this option vary
from state to state.
The Department of Veterans Affairs (VA) pays for some nursing home care for
veterans in VA facilities and private facilities, but the benefit is limited to the extent that
resources and facilities are available. Priority is given to veterans with medical problems
related to their military service, and to very old veterans of wartime service, and very poor
veterans. Contact your local VA office for more information.
Q. What if I don’t want to live in a nursing home? Are home care services
available under Medicare or Medicaid?
A. Yes, but to a limited extent.
The home health care benefit under Medicare focuses mainly on skilled nursing and
therapeutic services needed on a part-time or intermittent basis. The benefit is described
above under “Medicare.”
Medicaid home health care is usually quite limited, too. But in addition to home
health, several state Medicaid programs also provide “personal care” services to Medicaideligible
individuals who need help with normal activities of daily living, such as dressing,
bathing, toileting, eating, and walking. Many states also have instituted Medicaid “waiver”
programs that allow the state to use Medicaid dollars for home and community based
services that would not normally be covered under Medicaid. These waiver programs
usually target persons who would otherwise have to live in a nursing home. Some of the
services covered under Medicaid waiver programs include personal care, adult day care,
housekeeping services, care coordination and management, and respite care. Respite care
enables primary care-givers to take a break from their responsibilities. Check with your
local office on aging or department of human services about the options available in your
Q. What happens if my husband needs nursing home care but I am still able
to live independently? Will all our income and assets have to be used for his support
before Medicaid will help pay expenses?
A. If your spouse resides in or may be entering a nursing home, Medicaid has
special rules that allow the spouse remaining in the community (community spouse) to
keep more income and assets than permitted under the regular eligibility rules. The
specifics vary from state to state, but the general structure is as follows:
The community spouse can keep all income, no matter how much, that belongs
exclusively to the community spouse. Joint income is another story. The state may require
all or part of joint income to help pay nursing home expenses, depending upon the
particular state’s rules.
Most of the income of the nursing home spouse is considered available to pay for
nursing home care. However, a portion of the nursing home spouse’s income may be kept
by the community spouse as a “minimum monthly maintenance needs allowance” if the
community spouse’s income is below a spousal allowance figure set by the state. States
must establish a spousal allowance of at least 150 percent of the poverty level for a twoperson
household. Thus, for 2000, this calculation results in a minimum spousal allowance
of $1406 per month that could be kept by the community spouse (Alaska and Hawaii have
higher figures). States also permit the community spouse to keep a shelter allowance, if
shelter costs (rent, mortgage, taxes, insurance and utilities) exceed a specified amount.
Assets or resources are treated quite differently. The state applies a two-step rule.
First, Medicaid counts all resources owned by either spouse. This inventory will exclude a
few resources. The excluded resources are: your home, household goods, personal effects,
an automobile, and a burial fund of up to $1,500.
Second, from the total countable resources, Medicaid permits the community
spouse to keep one-half, as long as the one-half falls between a specified floor and ceiling
amount, adjusted yearly. If the one-half falls below the floor (about $16,824 in 2000), the
community spouse may keep more of the couple’s resources up to the floor amount. If the
one-half exceeds the ceiling (about $84,120 in 2000), the excess will be considered
available to pay for the cost of nursing home care. Thus, the community spouse is
permitted to keep no more than the ceiling amount even if it equals far less than half of the
Another special rule applies to your home. Even though your home is an excluded
resource, the state, in limited circumstances, can place a lien against your home equal to
the amount of nursing home expenses paid. The rules are complicated and vary by state;
the advice of a lawyer experienced in Medicaid law is advisable. Moreover, almost all
these rules have hardship exceptions in special circumstances.
Q. If I have assets that exceed my state’s Medicaid eligibility requirements,
can I transfer these to my children or to a trust in order to qualify? After all, these
are assets I intend to leave to my children when I die.
A. The law on transferring assets before making a Medicaid application is
complex. Such transfers can result in a period of ineligibility for Medicaid benefits.
Several strategies are available to shelter or preserve some of your assets, but there are a
number of legal, financial, ethical, and practical consequences to any such transfer of
property. Anyone considering such transfer should seek advice from a lawyer experienced
in Medicaid law.
Q. Must children pay for parents in nursing homes?
A. There is no legal obligation for children to pay for their parents’ care. Only a
spouse may be held legally responsible to help pay for the cost of nursing home care, and
as a practical matter, the responsibility is often difficult to enforce against an unwilling
spouse. If Medicaid enters the picture, the special rules for spousal responsibility
described above will apply.
Children sometimes feel pressured to help pay for a parent’s nursing home cost
because of the shortage of nursing home beds, especially Medicaid covered beds. Some
nursing homes give preference to admitting “private pay” patients over Medicaid patients
because private-pay rates are often higher than the amount Medicaid pays. While
admission priority for private pay patients is permissible in some states, it is illegal in
others. In all states, federal law prohibits nursing homes from requiring a private payment
from families, or a period of private payment, prior to applying for Medicaid coverage.
Federal law also prohibits nursing homes from requiring patients to waive their rights to
Medicare and/or Medicaid.
Q. What is long-term care insurance?
A. Long-term care insurance helps pay for nursing home care and usually home
care services for a period of two or more years. Long-term care insurance is still a
relatively new type of private insurance, so the features of this type of insurance continue
to change frequently. For example, newer policies may cover assisted living facilities,
adult day care, respite care, or other long – term care services.
Most individual policies are available for purchase only to persons between ages
fifty and eighty-four, and a medical screening of applicants is typically required. Not
every older person needs or can afford a long-term care insurance policy. Policies are
appropriate for those with substantial income and assets to protect, and who desire to buy
this form of protection against the potential costs of long-term care.
Most long-term care policies are structured as indemnity policies. That is, they pay
up to a pre-set cap for each day of a covered service. The specific provisions of these
policies should be closely examined before purchasing one, since the possible conditions
and limitations on coverage can be complex.
How much health insurance do I need?
Some people covered by Medicare think they need several additional policies to
cover Medicare gaps, specific diseases, and long-term care. That is probably not a good
strategy. Chances are the policies would duplicate too many benefits to justify the cost.
That is why insurance companies are no longer permitted to sell duplicate Medicare
supplement policies. The consumer may purchase only one of the A-J policies.
The best recommendation for someone on Medicare, who is not also on Medicaid,
is to purchase one good “Medigap” policy, and possibly one long-term care insurance
policy if you can comfortably afford the cost of a good long-term care policy. Lower
income persons are likely to qualify for Medicaid if they need long-term care, so
purchasing private long-term care insurance may be a waste of money.
Q. How are the costs of a long-term care policy determined?
A. The cost of the premium is determined in part by your age, the extent of
coverage you purchase, and your health history. Age is clearly the single greatest factor
because the risk of needing long-term care increases significantly with age. The premium
for a seventy-five year old can be double or triple that for a sixty-five year old.
Q. How do I evaluate a long-term care policy?
A. Compare more than one policy side by side. Your state’s insurance department
should have names of companies offering long-term care insurance. Many states are
beginning to set minimum standards and consumer protection guidelines for these
policies. In addition, federal law provides favorable tax treatment of federally qualifies
long-term are policies — that is, policies that meet minimum federal standards.
Guides for evaluating long-term care insurance may be available from your state
insurance department or state office on aging.
Keep in mind the following tips in evaluating policies:
· Make sure your policy will pay benefits for all levels of care in a nursing home,
including custodial care.
· A good policy will pay benefits for assisted living and home care, including in-home
personal care. Personal care refers generally to help with activities of daily living, such
as dressing, bathing, toileting, eating, and walking.
· Consider whether the amount of daily benefits will be adequate now and in the future.
Many policies give you a range of daily benefit amounts to choose from. Make sure
the policy has an “inflation adjustor” under which benefits increase by a certain
percentage each year to keep pace with coverage. The “right” amount depends in part
on the amount of assets you have to protect inflation.
· Do not assume that more years of coverage is always better. Some policies offer
benefit options of six, seven, or more years. It is possible to buy too much coverage.
· Avoid policies that exclude coverage of pre-existing conditions for a lengthy period.
Six months is considered a reasonable exclusion period for pre-existing conditions.
· Policies should allow payment of nursing home or home health benefits without
requiring a prior period of hospitalization as a condition of coverage.
· Most policies impose waiting periods that restrict the starting time of benefits after you
begin receiving nursing home care or home care–twenty to ninety days is a common
waiting period. A longer waiting period will lower the premium cost. First day
coverage will increase your premium.
· Be sure your policy covers victims of Alzheimer’s disease and other forms of
dementia. About half the residents of nursing homes suffer some form of dementia.
· Be sure that the premium remains constant over the life of the policy and that the
policy is guaranteed renewable for life.
· Buy a policy only from a company that is licensed in your state and has agents
physically present in your state. Out-of-state mail order policies often leave you
powerless to remedy problems if anything goes wrong.