What is Medicaid?
Medicaid is a health insurance program for people with low income. It was
created in 1965 as a joint federal-state program to provide medical assistance
to aged, disabled, or blind individuals (or to needy, dependent children) who
could not otherwise afford the necessary medical care.
Who administers Medicaid?
Each state administers its own Medicaid programs based on broad federal
guidelines and regulations. Within these guidelines, each state (1) determines
its own eligibility requirements, (2) prescribes the amount, duration, and types
of services, (3) chooses the rate of reimbursement for services, and (4)
oversees its own program.
How do you qualify for Medicaid?
Approximately 39 million people receive Medicaid benefits. To qualify for
Medicaid, you must meet two basic eligibility requirements. First, you must be
considered categorically needy because you are blind, disabled, or elderly.
Second, you must be financially needy. This means that your income and your
assets must fall under a certain limit set by the state in which you live.
How do you apply for Medicaid?
You can apply for Medicaid at your state welfare
office, public health department or state social service agency.
What types of benefits are available?
Medicaid pays for a number of medical costs, including hospital bills, physician
services, home health care, and long-term nursing home care. States may elect to
provide other services for which federal matching funds are available. Some of
the most frequently covered optional services are clinic services, medical
transportation, services for the mentally retarded in intermediate care
facilities, prescribed drugs, optometrist services and eyeglasses, occupational
therapy, prosthetic devices, and speech therapy. Check with your state's
Medicaid representative to see what coverage your state offers.
Medicaid and long-term nursing home care
Over 60 percent of all nursing home residents receive Medicaid benefits that
help pay for their care. An aging population and the increased cost of long-term
care have made Medicaid planning an important topic. If you're interested in
Medicaid planning, here are some things you should know.
In years past, attorneys and financial planners devised
strategies for the middle class and people of means to qualify for Medicaid by
transferring funds to family members and by establishing trusts. Consequently,
Congress tightened the Medicaid rules regarding the transfer of assets.
The Omnibus Reconciliation Act of 1993 makes qualifying for
Medicaid more difficult for those people who transfer their assets away without
receiving fair value in return. If you transfer assets away for less than fair
consideration within 36 months of your application for Medicaid, the law creates
a waiting period before you can collect Medicaid benefits. Transfers into
certain trusts within 60 months of your Medicaid application also will also
cause a period of ineligibility.
However, it's still possible to plan for long-term care and
comply with the various Medicaid rules. Trusts, transfers of the family home,
purchase of exempt assets, outright transfers under the "half-a-loaf
strategy," and the purchase of long-term care insurance, among others, can
be effective planning tools and strategies for this purpose. For details, see
your financial adviser or an attorney experienced with Medicaid planning.