Medicaid

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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.