Medicare vs. Medi-Cal: What are the Differences

Categories: Estate Planning

Even by themselves, Medicare and Medi-Cal can be confusing and difficult to understand, but when a person tries to compare them, the lines get blurred. These programs are very different and not related. Knowing the benefits each program offers and how to qualify for these benefits can have a significant financial impact for you and your family, especially if long term care is needed.

What is Medicare?
Medicare is a federal program which provides basic health insurance to everyone age 65 and over and to people who are under 65 but are eligible for Social Security Disability benefits. It is not based on financial need. Medicare has four parts known as Parts A, B, C, and D. Part A is hospital insurance. Part B is medical insurance. Part C is Medicare Advantage, and Part D is prescription drug coverage.

Generally, people who are 65 or older and receiving Social Security, automatically qualify for Medicare Parts A and B. Part C is when you go through a provider for your health care services which can help you obtain additional benefits; however, this plan typically costs an additional monthly fee. In order to enroll in Part C, you must have Parts A and B. Part D is optional and requires the participant to complete a form and submit it to his or her insurer.

Medicare does not pay for all medical expenses and usually must be supplemented with private insurance (also known as “Medigap”) or you can enroll in a HMO insurance than contracts with Medicare. The costs that an individual pays in Medicare costs is based on the amount of time a person paid Medicare taxes from their pay check.

One of biggest drawback of Medicare is that it does not cover long term care with a very minor exception. After a minimum 3-day hospital stay, Medicare will pay for 100% of the first 20 days of skilled nursing care. For days 21-100, the patient will pay a considerable co-pay, which is currently about $167.50 per day. Furthermore, a patient must be making progress while in the skilled nursing facility. Once the patient stops making progress, Medicare stops paying. Medicare coverage for the skilled nursing facility ends on day 101.

It should be noted that Medicare will only pay for skilled nursing services and will not pay for custodial care, which is the type of care normally received in an assisted living facility. Therefore, Medicare cannot be relied on to pay for substantial nursing home care.

What is Medi-Cal?
Medi-Cal is a federal and California state program that helps pay for medical care for individuals that meet income and asset requirements. Although Medi-Cal recipients may receive Medicare, the Medi-Cal program is not related to the Medicare program. Medi-Cal is a need-based program.

Medi-Cal does pay for long term care, but the patient may have to pay a portion of the costs depending on their financial situation. Qualifying and applying for Medi-Cal is a complicated process, which is why it is recommended that you consult with a Medi-Cal planning attorney before submitting an application to Medi-Cal, especially if the applicant owns a home. A skilled Medi-Cal planning lawyer can help you protect your assets from Medi-Cal claims as well as remove them from the assets that Medi-Cal will look to for qualification purposes.

Why Do I Hear People Mention Medicaid?
Medicaid is a joint federal-state program which provides, among other things, long-term care for seniors. Medi-Cal is what the federal Medicaid program is called in California. Thus, Medicaid and Medi-Cal are essentially the same thing.

What’s important to remember is that you can protect your assets with proper Medi-cal planning, including the use of certain types of trusts. The sooner you see a Medi-cal planning attorney, the more assets you’ll be able to protect. Don’t wait for a crisis.