Medicare is a federal program primarily for those over 65 who have contributed to the Medicare tax through their employment for at least 10 years.
Medicaid is a joint federal-state program designed to assist with medical costs for individuals with limited income and resources, which covers a broad range of medical services, including long-term care. For this reason, it can be important to incorporate Medicaid planning into an estate plan.
In Kentucky, many residents rely on Medicaid to afford nursing home care. Approximately 70% of nursing home residents in the state have their care at least, partially funded by Medicaid. This program is essential for long-term care needs, but qualifying for Medicaid can be challenging due to stringent eligibility requirements.
Kentucky residents can own a life estate without it impacting Medicaid eligibility. However, it is important to note that Medicaid will seek to recover costs from the individual’s estate after their passing, up to the amount determined by Medicaid guidelines. Certain assets, like a vehicle, may also be exempt if used for medical purposes.
Medicare Part A covers hospital care, a limited period of nursing home care, home health services and hospice care. It only covers nursing home care under specific conditions: there must be a qualifying hospital stay of at least 3 days, the nursing home care must be related to the hospital stay and the patient must enter the nursing home within a short period after the hospital discharge, usually within 30 days.
Estate recovery
For Medicaid participants, the Kentucky Department for Medicaid Services is legally obligated to recover the costs of healthcare provided by Medicaid from the individual’s estate. This recovery occurs after the participant’s death and can significantly affect the distribution of assets.
Both Medicaid and Medicare can play crucial roles in a Kentucky estate plan, but they have distinct implications. Understanding the differences between these programs and their impact on estate planning is vital. Incorporating these programs effectively requires careful planning to ensure that you or your loved ones can access necessary care without jeopardizing your estate.