Should I Keep Medicare Supplement Insurance If I Qualify for Medicaid Long Term Care?

Summary
Medicare Supplement Insurance helps seniors who have Medicare A and B (also known as Original Medicare) pay for healthcare expenses not fully covered by Medicare A and B, such as co-payments and deductibles. However, those Medicare Supplement Insurance plans may become unnecessary for many seniors who also qualify for Medicaid Long Term Care.

Definitions

Before going too deep into the pros and cons of keeping Medicare Supplement Insurance while on Medicaid, let’s clearly define the key terms and concepts.

Medicare
Medicare is federal health insurance for people age 65 and over. Medicare is divided into four parts – A, B, C and D. Medicare A covers in-patient hospital care. Medicare B covers outpatient services and some in-home care and durable medical equipment. Medicare D covers prescription medications.

Medicare C, also known as Medicare Advantage, allows private companies to offer insurance plans similar to Medicare A and B. Most of these Medicare Advantage plans also cover prescription medications and offer additional benefits beyond a typical Medicare A and B plan.

Medicare Supplement Insurance
While Medicare A and B plans will cover most costs associated with health care services and supplies, they don’t cover all the costs. Medicare Supplement Insurance, also known as Medigap, helps people with Medicare A and B fill in the “gaps” and pay for the additional costs not covered by their Medicare A and B plans. Most often these are things like copayments, coinsurance and deductibles.

Medicaid
Medicaid is a joint federal and state program that helps cover medical costs for people with limited financial resources. Medicaid covers long-term care costs in nursing homes and in the community through three programs – Nursing Home Medicaid, Home and Community Based Services (HCBS) Waivers and Aged, Blind, and Disabled (ABD) Medicaid. This is different from Medicare, which does not cover long-term care.

To qualify for Medicaid Long Term Care, individuals must show proof of limited income and assets. In addition to these financial criteria, people must meet functional criteria to be eligible for Nursing Home or HCBS Waivers Medicaid. In general, the functional criteria for both programs is needing a Nursing Facility Level of Care, an assessment that varies by state. There is no functional criteria to receive healthcare coverage through ABD Medicaid, but seniors must show a medical need for long-term care services and supports in order to receive them through ABD Medicaid.

Nursing Home Medicaid is an entitlement, which means all eligible applicants are guaranteed benefits without wait. However, not all nursing homes accept Medicaid, and those that do may not have available spaces when you or your loved one are looking. HCBS Waivers are not an entitlement. Instead, each Waiver program has a limited number of enrollment spots and once those spots are full additional applicants are placed on a waitlist. Receiving healthcare coverage through ABD Medicaid is an entitlement, but there may be waitlists for long-term care services via ABD Medicaid, or a lack of services, depending on the funds, programs and caregivers available in any given region.

Medicare Supplemental Insurance Details

Although Medicare is a federal government program, Medicare Supplement Insurance, or Medigap, is sold by private companies. The Medigap plans will vary by state, but they are standardized to fit into the “gaps” of Medicare A and B plans, and these plans are all named by letters (Plans A-N). To see what plans are available in your state and to compare the benefits, you can go to this medicare.gov page.

Some other important facts to know about Medicare Supplement Insurance are:

• You must have Medicare A and B to have a Medicare Supplement Insurance plan.
• You can buy a Medicare Supplement Insurance plan from any insurance company in your state that is licensed to sell them.
• You pay a monthly premium to the insurance company for the Medicaid Supplement Insurance that is in addition to the monthly premium you pay for Medicare B.
• It is illegal for anyone to sell you a Medicare Supplement Insurance plan if you have Medicare Advantage (Medicare C).
• Any Medicare Supplement Insurance plan sold after Jan. 1, 2006, will not cover prescription medication. Prescription medication is covered under Medicare D.
• Medicare Supplement Insurance plans cover only one person. If you are married, both you and your spouse will have to buy plans.
• Any standardized Medicare Supplement Insurance plan is guaranteed renewable, regardless of your health conditions as long as you pay the premium.
• In general, Medicare Supplement Insurance plans do not cover vision, dental, hearing aids, private nurses or doctors and long-term care services.

Keeping Supplement Insurance When:

Whether or not you should keep your Medicare Supplement Insurance plan while you’re on Medicaid depends in part on which of the three Medicaid Long Term Care programs you have – Nursing Home Medicaid, Home and Community Based Services (HCBS) Waivers and Aged, Blind, and Disabled (ABD) Medicaid. Having Medicaid and Medicare at the same time is known as being “dual eligible.”

In a Nursing Home

For Medicare A and B plan holders who also have Medicare Supplement Insurance and qualify for Nursing Home Medicaid, it does not make sense to keep paying for your Medicare Supplement Insurance after you’ve been approved for Medicaid and relocate to the nursing home. This is because Nursing Home Medicaid will cover all of your healthcare costs – skilled care (physicians and nurses), non-skilled care, medications, supplies and durable goods, etc. – and the Medicaid Supplement Insurance would be an unnecessary expense.

However, it would be advisable to keep your Medicare Supplement Insurance while you are applying for Nursing Home Medicaid and until you have been officially accepted into the program by the state.

In the Community

The answer is not so clearcut when it comes to keeping Medicare Supplement Insurance if you or your loved one is still living in the community and receiving long-term care benefits through Home and Community Based Services (HCBS) Waivers Medicaid or Aged, Blind and Disabled (ABD) Medicaid. Living “in the community” can mean living in your own home, the home of a loved one, an assisted living facility, adult foster care, memory care units or other settings outside of a nursing home.

Each HCBS Waiver program in every state covers its own specific set of long-term care goods and services that it will provide in certain settings in the community. Some offer comprehensive coverage in a wide variety of settings, while others only offer one specific service in a specific location. Since this is the case, each person must determine their needs, how those needs are covered by the HCBS Waiver, how those needs are covered by Medicare Supplement Insurance, and how much money the Medicare Supplement Insurance would save them by paying for services to take care of those needs, versus the cost of the Medicare Supplement Insurance itself.

The same is true for someone with ABD Medicaid. Long-term care benefits for ABD Medicaid vary greatly by state, program and the beneficiary’s needs, so each person would need to determine how those benefits address their needs and if the cost of Medicare Supplement Insurance would make sense in their specific case.

Program of All-Inclusive Care for the Elderly (PACE)

The Program of All-Inclusive Care for the Elderly (PACE) will coordinate Medicaid and Medicare benefits for dual eligible seniors who are covered by both programs. PACE will streamline all healthcare and long-term care coverages and benefits into one comprehensive plan and delivery system. Seniors must require a Nursing Facility Level of Care but live in the community to be eligible for PACE. The program also administers vision and dental care, and PACE day centers provide meals, social activities, exercise programs and regular health checkups and services to program participants. To see if PACE is available in your area, use this interactive map from the National Pace Association.