Medicare

The Medicare program is part of the Social Security Act. It was created in 1965 and is currently a $300 billion program. It is administered by the Social Security Administration and the Health Care Financing Administration. Individuals who are 65 years of age and who are eligible for Social Security benefits are automatically eligible for Medicare.

Medicare is a national entitlement program that provides health insurance for approximately 31.5 million people age 65 and over. Medicare is divided into two parts; Part A and Part B.

• Part A is known as “hospital insurance” and provides for inpatient hospital care. Hospitals are regarded as acute facilities. 
• Part B is referred to as “medical insurance” and provides for outpatient health services and physicians. A skilled nursing facility would be regarded as a sub-acute facility. While a significant number of Americans depend upon Medicare, it does not cover all health care costs associated with the elderly and disabled.       

However, there are elderly individuals who are not covered by Medicare. If a person is a recent immigrant or if that person is not receiving Social Security benefits because he did not work as an adult, then he would not be eligible for Medicare.

What does Medicare cover?

Medicare does not pay for services that are “routine” or “preventative”, such as drugs, routine physical exams, eyeglasses, immunizations and custodial care.

Medicare will pay the entire cost of skilled nursing care for the first 20 days after a hospitalization, but after that, depending upon the patient’s medical condition and other factors weighed by Medicare, there is an expensive co-payment of $145 per day!  In any event, there is no Medicare coverage for skilled nursing care after a maximum of 100 days. Actually, Medicare looks for ways to end its payments to the patient and often stops coverage within 50 days or less from the date of the initial hospitalization.  

Further, there is no Medicare coverage for custodial care, such as at-home care for such things as feeding, cleaning, monitoring, medications, etc. Most significantly, Medicare does not provide for the cost of so-called “independent living”, such as assisted living facilities and/or “retirement” or board and care facilities.

What Medicare Doesn't Cover

So, in a situation where someone needs the level of care available only at a skilled nursing facility – with an average cost of $5,500 per month  – there are limited options available. Because most people do not realize that Medi-Cal is a choice and do not know that its benefits are available to them, they pay privately. Private paying could result in the loss of an entire lifetime of savings. The expense of nursing home care might be covered by long-term care insurance, although that may not provide 100% of what is needed and there may be other significant limitations.

But the problems outlined above regarding the astronomical cost of skilled nursing care are not insurmountable.  There is a remaining option, and that option is Medi-Cal. Unlike Medicare, Medi-Cal covers the cost of long-term care in a Medi-Cal approved skilled nursing facility for as long as the care is medically necessary! There is no “100 day limit.”  

For example, Medi-Cal allows a married individual entering a skilled nursing facility to keep his/her home of any value, $109,560.00 in other non-exempt assets, a car, IRAs, and an income flow of $2,739.00 per month.

The important point to keep in mind is that, contrary to what you may have read or heard from the media, friends, relatives, or even professionals, such as lawyers, accountants and financial planners, It is not necessary that an individual, in order to be eligible for Medi-Cal benefits “SPEND DOWN” all of their assets, or, in the alternative, be poor or impoverished.