Why You Should Include Medicare and Medicaid in Your Estate Plan

Estate planning is the process of planning the use and distribution of one’s assets for the remainder of the person’s life and upon that person’s death. Too often, people working on their estate plans focus on assets and forget to consider government healthcare benefits. But most of us will need healthcare benefits at some point during retirement, and not everyone has access to post-retirement private insurance. 

Medicare and Medicaid are two national healthcare programs. Each serves as a safety net for older, disabled, or low-income populations, but eligibility requirements are strict.

What Is Medicare and Who Is Eligible?

Medicare is offered in four parts, each covering different health services. 

• Medicare Part A is a type of hospital insurance, covering inpatient stays, skilled nursing facility care, hospice care, and certain types of home healthcare

• Medicare Part B is medical insurance, covering certain types of doctors’ services, preventative care, outpatient care, and medical supplies

• Medicare Part C is a healthcare plan called Medicare Advantage Plan. These plans are offered by a private company and cover both Part A and Part B as well as the following:

  • Health Maintenance Organizations (HMOs);

  • Preferred Provider Organizations (PPOs);

  • Private Fee-for-Service Plans;

  • Special Needs Plans; 

  • Medicare Medical Savings Account Plans; and

  • Sometimes prescription coverage

• Medicare Part D is a prescription drug coverage plan offered by private companies approved by Medicare. Part D adds prescription drug coverage to some of the other Medicare plans

Eligibility for Medicare is not based on income. Medicare Part A is available at no cost for anyone over age 65 who worked for ten years and paid Medicare taxes. This includes the following individuals:

• People who are receiving Social Security or Railroad Retirement Board benefits;

• People who are eligible for Social Security benefits but who have not yet filed for them; and

• People who had Medicare-covered government employment or are married to such an employee

• Individuals under age 65 may nevertheless qualify for Medicare Part A if they have been receiving Social Security or Railroad Retirement Board benefits for 24 months or if they have been diagnosed with End-Stage Renal Disease

For those who do not meet these criteria, Medicare Part A is available for a premium.

Using an online Medicare calculator will help you determine your eligibility for benefits as well as your Medicare premiums.

What Is Medicaid and Who Is Eligible?

Medicaid is a state-administered federal healthcare program for low-income individuals and families. Unlike Medicare, which is administered by the Department of Health and Human Services, Medicaid is jointly funded by the federal government and the participating state, but it is administered by the state. 

Eligibility for Medicaid is based on income and family size. Certain individuals automatically qualify for coverage:

• Low-income families;

• Qualified pregnant women;

• Children;

• The blind; and

• Individuals receiving Supplemental Security Income (SSI)

In addition to being part of a covered demographic, a person applying for Medicaid must also be a resident of the state in which he or she applies for the program and either a United States citizen or a qualified non-resident. 

The Department of Health and Human Services provides information to help determine whether you are eligible for Medicaid in your state.

Why You Should Discuss Including Medicare and Medicaid in Your Estate Plan with an Estate Planning Attorney

Healthcare can be a significant expense at any stage of life, but that is especially true for seniors. The increased likelihood of healthcare costs comes at the same the time that many people retire or slow down at work. With rising healthcare costs and lower income, planning for healthcare in your later years and retirement is critical.

Most people are eligible for either Medicare or Medicaid. (Some are even eligible for both.) But few realize that failing to apply for certain parts of Medicare in a timely manner can lead to higher premiums.

Those who enjoy care benefits through an employer or spouse should coordinate those benefits with the Medicare and Medicaid plans for which they’re eligible. But that doesn’t mean they have the option to refuse the government healthcare benefits.

Those who aren’t eligible for premium-free Medicare Part A face a late enrollment penalty in the form of a higher premium if they don’t apply when they first become eligible. So, for example, if you would owe premiums for Medicare Part A and wait two years after you become eligible to apply, you would have to pay a higher premium for four years. For this reason, be sure to consider Medicare as part of your estate plan.

Seniors may also face a late enrollment penalty for failing to apply to Medicare Part B when they first become eligible. In the case of Medicare Part B, the penalty lasts for as long as you have the plan. Your premium may be increased 10 percent for every year you delayed applying. You may also have to wait until a general enrollment period to apply.

The enrollment period for the various Medicare plans may change from year to year. Be sure to check with www.medicare.gov for the current enrollment period. In 2018, the enrollment periods for Medicare Part A and Part B were between January 1 and March 31.

Medicare Part D also has a late enrollment penalty. The penalty applies if, after your initial enrollment period, you do not have Medicare Part D or another creditable prescription plan for 63 straight days.

Where to Turn for Advice on Including Medicare and Medicaid in Your Estate Plan

Whether you’re looking ahead to your senior years or already there, including Medicare and Medicaid in your estate plan is a must. Whether you qualify for one or more of these government health programs, work with an experienced wills, trusts, and estate planning attorney to coordinate benefits and avoid unnecessary late enrollment penalties. Call me, Anna M. Price, an experienced WV estate planning lawyer at Jenkins Fenstermaker, PLLC, to help coordinate government healthcare benefits in your estate plan. You can reach me by calling 866.617.4736 or by completing my online contact form.