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 health care 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.

 People with Medicare Advantage plans, or Medicare C, do not need and are not eligible for Medicare Supplement Insurance.

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 through three programs – Nursing Home Medicaid, Home and Community Based Service (HCBS) Waivers and Aged Blind and Disabled (ABD) Medicaid, also known as Regular Medicaid. This is different from Medicare, which does not cover long term care.

To qualify for Medicaid, 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 for ABD Medicaid.

Nursing Home Medicaid and ABD Medicaid is an entitlement, which means if an eligible person applies for either program, they are legally guaranteed acceptance into that program. HCBS Waivers, however, are not an entitlement and eligible people who apply may be put on a waiting list to receive benefits if the Waiver program they applied for is already at maximum capacity (each state has multiple and various Waiver programs).

 

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 greatly on which one of the three Medicaid Long Term Care programs you are on – Nursing Home Medicaid, Home and Community Based Service (HCBS) Waivers and Aged Blind and Disabled (ABD) Medicaid, also known as Regular Medicaid.

 

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 are accepted into the Nursing Home Medicaid program and relocate to the nursing home facility. This is because Nursing Home Medicaid will cover all of your health care costs – skilled care (physicians and nurses), non-skilled care, medications, supplies and durable goods, etc. – once you are in the program and living in a nursing home.

Plus, to be eligible for Nursing Home Medicaid, individuals must give up most of their income, even if it is low, to help pay for the nursing home cost. They are only allowed to keep a small amount (usually a $30-$150 “personal needs allowance”) that, in many cases, wouldn’t even be enough to pay for the Medicare Supplement Insurance premium.

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.

 

On a Medicaid Waiver or Regular Medicaid

The answer is not clear when it comes to keeping Medicare Supplement Insurance while using Home and Community Based Service (HCBS) Waivers Medicaid or ABD Medicaid.

Each HCBS Waiver program in every state covers its own specific set of health care services and/or goods. Some offer comprehensive coverage for a certain area of health care, while others only offer one very specific service. 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, 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.