With so much talk over the past couple of years about the new healthcare laws, welfare reform and overall political bickering, many have found themselves hearing Medicare and Medicaid being used, sometimes interchangeably. Of course, the two are different and serve different purposes in the American society. Still, they both are important and both play a crucial role in ensuring Americans are cared for. This week, we take a look at the differences between Medicare and Medicaid and what it can means for your estate planning purposes.
Medicare
The Department of Human Services defines Medicare as an insurance program. This is part of the taxes you’ve seen withdrawn from your salary for most of your life. Medical bills are typically covered from this program and it serves those who are 65 or older. Their income plays no role in whether or not they qualify; however, there are still those instances when co-payments are required and generally, there are deductibles. It’s a seamless program from one state to another since it’s overseen by the federal government, specifically, the Centers for Medicare & Medicaid Services.
There are exceptions when Medicare covers those under the age of 65. Disabilities play a role in those types of determinations.
Medicaid
If Medicare is an insurance program, then Medicaid is the other half of the equation and is an assistance program. Medical costs associated with doctors’ visits, hospital stays and prescriptions are paid from taxes from the federal and state levels. Medicaid is designed to provide patients of every age medical assistance via partial payments for covered illnesses and injuries. Often there are no co-pays, though there are times when the patient can afford small payments. It too is a federal program, but is administered on the state and local levels.
While both programs are designed to help those who are struggling, neither program is perfect.
For instance, many clients are concerned about the possibility of having to go into a nursing home and what that means for their assets. By planning ahead of time, clients are able to ensure their medical care without worries about what it means for their assets and heirs after their death.
Legal Planning
Our team of estate planning lawyers have helped many people pay for their long term care while ensuring they’re not draining their retirement funds. Frankly, all of us plan for our retirement, with few concerns over whether or not we’ll be able to remain in our homes and care for ourselves. It’s part of the American Dream; until life gets in the way, illnesses strike and sometimes, despite our best efforts, we’re caught off guard and unprepared.
We can help you determine the best plan based on New York’s asset and income level requirements. There are assets and some income that is not included in how the state determines eligibility. There are ways to protect your assets so that you can leave your loved ones what you’d planned to all along. In order to ensure you’re in compliance with state laws, however, you need strong legal representation to cover those bases. There are new laws in place, new tax tables and a host of other considerations.
We have found that irrevocable trusts are a great tool for protecting what you’ve worked for. Those items, including your home, can be placed into the trust and protected from the Medicaid/Medicare requirements. Here’s where many become confused: as a general rule, your irrevocable trust must be put into place ahead of time before it actually benefits you. There are timing requirements and falling short can eliminate it altogether as a planning tool. Planning earlier is key.
Our experienced team of attorneys can help you preserve those assets. We know New York law and we’ve provided a solid plan for the future that allows our clients to get back to the business of enjoying their retirement.
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