Don’t Fall for the Medicare Trap

Jackie Bedard
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Attorney, Author, and Founder of Carolina Family Estate Planning

Medicare and Medicaid are both Federal government health program. Because of the similarity in names, many people confuse the programs.

  • Medicare is a federal government health insurance program. It is payed for by payroll taxes and is only funded with Federal funds. Many refer to Medicare as an entitlement program because regardless of your assets or income, if you paid into the program during your working years, then you are entitled to benefits.
  • Medicaid is also a government health insurance program. However, it is for the financially needy. It is funded with a combination of Federal and State funds.

Medicare Basics

The Medicare program has four parts:

  • Medicare Part A & Part B (Original Medicare): The Medicare basic plan requires participants to contribute to cost of care by paying deductibles and co-insurance. Many people purchase Medicare supplement policies that will cover the deductibles and co-insurance.
  • Medicare Part C (Medicare Advantage): Medicare Advantage plans are offered by private health insurance companies as an alternative to Medicare Parts A & B. Often, Medicare Advantage plans offer additional benefits, but you may have to pay more for the additional coverage.
  • Medicare Part D: Medicare Part D is the Medicare Prescription Drug Plan.

Medicare does NOT cover custodial care. In Medicare’s own words:

Medicare also doesn’t pay for help with activities of daily living or other care that most people can do themselves. Some examples of activities of daily living include eating, bathing, dressing, and using the bathroom. Medicare will help pay for skilled nursing or home health care if you meet certain conditions.”

What Does Medicare Cover?

Medicare Part A

Medicare Part A covers:

  • Inpatient hospital care—hospital charges only, it does not cover physician, surgeon, or anesthesiology services.
  • Skilled nursing-home care (up to 100 days) and only if certain conditions are met
  • Skilled home health care
  • Hospice care
  • Blood transfusions

Inpatient Hospital Care

Medicare Part A covers charges for semiprivate rooms in an accredited hospital. Part A only covers the hospital charges. It does not cover doctor, surgeon, or anesthesiology services.

Hospital charges are covered for up to 60 days per benefit period after the patient meets a deductible. Benefits are based on a ‘benefit period.’ A new benefit period begins after a patient has been discharged from the hospital for at least 60 days.

After a 60-day hospital stay, Part A coverage reduces but will continue up to 90 days. After 90 days, Medicare coverage stops for that benefit period. However, Medicare participants also have an additional 60-day “lifetime reserve” that they may use. If this 60-day lifetime reserve is used, it is a one-time use so it will not reset after the patient has been discharge for more than 60 days.

Skilled Nursing-Home Care

This benefit is what creates a lot of confusion. Medicare Part A will cover up to 100 days of skilled nursing care after a hospitalization. To qualify for this benefit, the patient must have been admitted to the hospital for more than 72 hours and then moved to the skilled nursing facility within 30 days. Although up to 100 days may be covered, most patients spend less than 30 days on Medicare’s skilled-nursing home coverage.

A classic example of when this coverage may apply is when a senior falls and breaks a hip. The senior will likely spend 3-5 days in the hospital and then be discharged to a skilled nursing home for rehabilitation which will be covered by Medicare.

A common area of frustration is that many hospitals will keep patients on observation status. This means that the patient has not been formally admitted to the hospital. Later, when the patient is moved to a skilled nursing home, the family is dismayed to find out that the hospital stay will not be covered by Medicare because there was not a hospital admission of 72 hours or longer.

Home Care Services

In limited instances, Part A will cover some home care services:

  • Your doctor must determine that you need medical care at home and create a care plan.
  • You must need either intermittent skilled nursing care, physical therapy, speech-language therapy, or occupational therapy.
  • The agency providing the home health services must be Medicare-approved.
  • You must be homebound.

In the past, this program was more flexible, and more people qualified for home care services, but in 1998 these rules were tightened up.

Medicare Part B

Medicare Part B typically covers:

  • Physician services
  • Outpatient hospital care
  • Surgical services and supplies
  • Physical therapy
  • Speech therapy
  • Ambulance trips
  • Diagnostic tests
  • Durable medical equipment (e.g., wheelchairs, walkers, hospital beds)
  • Prosthetic devices
  • Blood transfusions

Medicare Part C (Medicare Advantage)

Medicare Advantage is an alternative to Medicare Parts A & B. Benefits will vary depending upon the policy, but for the purpose of this article series on long-term care planning, it’s important to understand that Medicare Advantage still does not pay for long-term care services other than the limited skilled nursing home coverage after a qualified hospital stay (see above under Medicare Part A).

Medicare Part D

Medicare Part D is for prescription drug coverage. There are different plans to select from based upon the participant’s prescription needs. The participant is still responsible for deductibles and out-of-pocket costs.  Some participants with limited income an assets may qualify for assistance that subsidizes about 95% of the drug costs.

Medicare & Long-Term Care

The key takeaway with regards to long-term care planning is that Medicare does NOT pay for long-term care. 

We Can Help You Develop a Long-Term Care Plan

Having assisted many Wake County clients with long-term care planning, our team at Carolina Family Estate Planning understands that developing a long-term care plan is about not just protecting your own independence and dignity, but also protecting those you love from the physical, emotional, and financial toll that caring for a loved one can take.

We’ve helped many clients take an interdisciplinary approach to their long-term care planning by exploring both legal and financial options. Usually, a well-rounded long-term care plan will involve a combination of legal, health care, and financial tools to meet your goals and maximize your protection. To get started, register an upcoming seminar to learn more or call our office at 919-443-3035.