Health Insurance

Health Insurance

One of the biggest areas of concern for many individuals is health care. This concern is greatly increased among seniors. As people age they have an ever increasing chance of getting sick or hurt. While medical science is constantly improving health care, the improvements come at a cost. A big cost! In fact, for many people, the fear of not being able to pay medical expenses is one of their biggest financial concerns. Fortunately, health insurance provides some relief from the high cost of medical care.


Medicare is a federal health care program for persons ages 65 and older, certain disabled persons, and anyone who has end-stage renal (kidney) disease. Medicare Part A covers hospital charges, such as bed and board, operating room costs, and lab tests. Premiums for Part A are paid by the government. Part B pays for doctor’s charges and for other outpatient treatment, and requires a premium payment by the individual. Both Part A and Part B require the individual to pay a deductible, which can be quite large. Some prescription drug coverage is offered.


Medicaid is a combined state and federal program. Although Medicaid operates under general federal guidelines, each state runs its Medicaid program somewhat differently. For example, income and asset levels for eligibility vary from state to state. If you are working in multiple jurisdictions, you need to be aware that different rules may apply.

Medicaid is a form of welfare and has rules (different than Medicare’s) that must be followed to qualify for benefits. In addition to medical qualifications required to receive benefits, in general terms, an individual must spend down his or her assets to a low level to be eligible for Medicaid-covered long-term care (LTC). Spending down assets means using up whatever resources are available until there is a very small amount left. Certain assets, such as home and an automobile, are exempt from the spend-down provisions as long as the patient intends to return home or a spouse remains in the home.

Additionally, there is a limit to the income a person can have and still be eligible for Medicaid. A lien will sometimes be placed on the home of a person who is confined to a long-term care facility. On the sale of the home, the proceeds will be used to repay Medicaid for its expenses in providing the long-term care. When there is a living community spouse, this person can keep the home, some invested assets and a significant amount of the household income while the confined partner (institutionalized spouse) qualifies for Medicaid.

Medicaid pays for care for nearly 70 percent of nursing home residents of all ages and accounts for 42 percent of overall long-term care spending. When a senior is deciding whether to purchase LTC insurance or to qualify for Medicaid, consider these factors:

  • Quality of care
  • Physical qualifications that must be met to receive benefits
  • Elimination of an inheritance to pass on to children (refer to Estate Planning)
  • Possible financial penalties for an improper transfer of assets
  • Potential loss of a family home and other assets
  • Availability of Medicaid patient beds

The information above is reprinted from Working with Seniors: Health, Financial and Social Issues with permission from Society of Certified Senior Advisors® . Copyright © 2009. All rights reserved.