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Why Medicare May Not Be Enough

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Most Americans qualify for Medicare coverage when they reach retirement age and many of them rely on Medicare to cover healthcare expenses. If you are one of them, it is crucial to understand what Medicare covers and, more importantly, what Medicare will not cover. To help get you started, the Essex Junction attorneys at Unsworth LaPlante, PLLC explain why Medicare may not be enough and how a Medicaid planning component in your estate plan can help.

What Is Medicare?

Medicare is a federally administered healthcare program for people who are aged 65 and older and people under aged 65 who qualify. During your working years, you pay into Medicare through payroll withholding. Medicare has three parts, including:

  • Medicare Part A (Hospital Insurance). Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
  • Medicare Part B (Medical Insurance). Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
  • Medicare Part D (prescription drug coverage). Part D helps cover the cost of prescription drugs (including many recommended shots or vaccines).

What Does Medicare Not Cover?

At first glance, Medicare coverage appears to be relatively extensive. Part A claims to cover inpatient hospital stays and care in a skilled nursing facility; however, the reality is that Medicare will not cover most expenses related to long-term care services. While Medicare does cover expenses related to a stay in a skilled nursing facility, that coverage does not apply if you only need “custodial care.” Custodial care refers to the need for assistance with activities of daily living such as bathing, dressing, and eating. If you require nursing home care only because you need custodial care, Medicare will pay nothing. In fact, Medicare only pays for time spent in a skilled nursing facility if you have Part A and have days left in your benefit period and you have a qualifying inpatient hospital stay that precedes the need for nursing home care. Medicare also excluded other types of long-term care services, such as home health or assisted living, from coverage. Medicare does pay for hospice care which is available if your physician indicates that you likely have six months or less to live.

How Can Medicaid Planning Help?

Experts tell us that from the time we enter our retirement years we already stand about a 70 percent chance of needing some type of long-term care (LTC) services before the end of our lives. With nursing home care averaging over $100,000 per year and assisted living averaging over $50,000 per year nationwide, it is prudent to think about how you will pay for LTC if you need it, knowing that Medicare will not help. One option is to purchase a long-term care insurance policy when you are younger; however, you need to weigh the potential benefits of LTC insurance against the cost of paying premiums for decades before you use the insurance. For many seniors in need of LTC, Medicaid is the solution. Medicaid, however, employs both an income and an asset limit when determining eligibility. Medicaid also reviews your finances for the five-year period prior to applying and may penalize you for any below market value assets transfers. To make sure that you qualify for Medicaid if you need it down the road, talk to your estate planning attorney about incorporating a Medicaid planning component into your overall estate plan.

When Medicare Is Not Enough

For more information, please attend one of our upcoming FREE webinars. If you are interested in incorporating Medicaid planning into your estate plan now that you know Medicare may not be enough, contact an experienced Essex Junction estate planning attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.

Stephen Unsworth
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