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I always get Medicaid and Medicare confused – Can you tell us the difference?

Distinguishing between Medicare and Medicaid can be confusing, but there are several key differences between the two.

Medicare: Generally, Medicare is available for people age 65 or older, younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or transplant). Medicare provides health insurance for most senior citizens. It is not a means-tested program.

The Medicare program is administered federally and, therefore, should be uniform throughout the United States. Generally, Medicare is designed to address short term medical needs. There are four (4) different parts of Medicare:

  1. Medicare Part A – Hospital Insurance;
  2. Medicare Part B – Medical Insurance;
  3. Medicare Part C – The component for Medicare Advantage Plans; and
  4. Medicare Part D – Prescription Drug Coverage.

Medicaid: On the other hand, Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities. Medicaid is administered by states, according to federal requirements. The program is funded jointly by states and the federal government.

Unlike Medicare, Medicaid is a means-tested program that has income and resource limitations on eligibility. The Medicaid program is administered by the state (or county) and, therefore, can differ from one state to another. Medicaid is designed to address both short-term and long-term care needs, including long term care for seniors and people with disabilities, at home or in a nursing home.

What is the process to get your loved ones Medicare?

Medicare Part A coverage is automatically available to every person over the age of 65 who is entitled to receive monthly Social Security or Railroad Retirement benefits starting on the first day of the month that he or she turns 65. This automatic eligibility is extended to the insured’s spouse, dependents, and survivors provided that they are over the age of 65 as well. If you automatically qualify for Medicare Part A, you will get your Medicare card in the mail approximately three (3) months before your 65th birthday.

Medicare Part B is an optional program that is available to all persons that are eligible for Medicare Part A or who are 65 years of age or older and are citizens of the United States or lawful resident aliens that have resided in the United States for at least five (5) continuous years. It should be noted that all persons eligible for Medicare Part A Benefits will automatically be enrolled for Medicare Part B unless the individual specifically declines the coverage. There is a monthly premium for Medicare Part B that is adjusted every year.

Medicare Part B benefits are also available to individuals under age 65 that have a disability. However, such an individual must receive disability benefits from Social Security for 24 months or certain disability benefits from the Railroad Retirement Board, or suffer from end stage renal disease (ESRD) that requires dialysis or amyotrophic lateral sclerosis (ALS).

What documents should you have in place if you have an elderly parent?

The elder law attorney will encounter many seniors that desire the ability to qualify for Medicaid in order to pay for their long-term care expenses while protecting their assets as much as possible.  However, every client is unique. One size does not fit all in estate planning. The attorney must focus on the specific needs of each particular client. Key factors such as the Client’s health condition, marital status, family composition, wealth, and, of course, the Client’s goals, should all be considered.

That being said, comprehensive advanced directives are a crucial part of an estate and advance plan. The elderly client should have:

  1. Durable Power of Attorney
    • The expansive Comprehensive Durable Power of Attorney can be used to facilitate an estate plan. It permits the principal to appoint an agent or agents to handle their financial affairs in the event that they are unable to handle those affairs themselves. The agents named in the Durable Power of Attorney have a fiduciary responsibility to the principal and, therefore, must act in accordance with the principal’s instructions or, if the principal is unable to give instructions, then the agent must act in the principal’s best interest.
  2. Health Care Proxy
    • This document allows the Client to appoint someone to make health care decisions on their behalf should the Client lose the ability to make those decisions himself or herself.
  3. HIPAA Authorization
    • Pursuant to Federal law, only you, your physician, and an authorized agent can access your medical records. This document permits the Client to authorize an agent to access his or her medical records.
  4. Living Will
    • This document permits the Client to express their wishes in regard to end-of-life medical treatment.
  5. Appointment of Agent to Control Disposition of Remains
    • This document permits the Client to appoint an agent to control his or her disposition of remains upon his or her passing. This is a written authorization that permits your agent to control your funeral arrangements or any other arrangements in regard to your remains after your demise.

In addition to the advance directives, the elderly Client should also have a Last Will and Testament and, in many cases, a Medicaid Asset Protection Trust.

What documents do you need for yourself?

Again, every client is unique. One size does not fit all and the Client’s individual needs, goals and circumstances must be considered before preparing an estate and advance plan.

It is beneficial for everyone to have comprehensive advance directives. These include:

  1. Durable Power of Attorney;
  2. Health Care Proxy;
  3. HIPAA Authorization;
  4. Living Will; and
  5. Appointment of Agent to Control Disposition of Remains.

In addition to the Advance Directives, the Client should have a Last Will and Testament.

Testamentary substitutes, such as a Revocable or Irrevocable Trust, are also important estate planning tools depending on the specific needs and goals of the Client.

An article published by NerdWallet on January 14, 2020, entitled “Does Marriage Have to Mean Merging Money?” by Alice Holbrook discussed the pros and cons of couples merging their finances or combining their assets after they get married. I strongly believe that couples should discuss their financial situations before they walk down the aisle.

The article discusses three different methods that couples can implement in order to manage their finances after they tie the knot.

Separate Accounts

Each spouse maintains their own separate account and each spouse takes on different expenses of the marital unit.

Joint Account(s)

The couple combines their assets and pays all expenses from the same account.

Hybrid Approach

This method is becoming more and more common. Each person maintains their own account for their own personal spending and then the couple has a joint account for the home and other marital expenses. This can often lead to less friction when it comes to spending on things that only affect one person, like a night out with friends or student loan debt.

Every couple is unique and needs to decide on the method that works best for them as a couple. The article discusses some things that each couple should consider before deciding on what method is right for them, such as:

Convenience

A joint account may be easier to maintain and track. It eliminates the stress of tracking multiple accounts at various financial institutions.

Different Incomes

Often times, spouses make dissimilar incomes; this often leads to difficulty when dividing expenses.

Spending Habits

It is not always easy sharing your spending habits with your significant other, but it is important to discuss it.

Regardless of the method you choose, you need to openly discuss your finances with your future (or current) spouse and decide if you should combine assets. Having a future together means sharing financial goals!

In New York, an executor is entitled to commissions for the services that he or she provided on behalf of the estate. It is important to review the terms of the decedent’s Will to see if there are any provisions regarding how the executor should be compensated. If there are no provisions regarding the executor’s compensation in the Will, then the executor will be compensated in accordance with New York’s Surrogate’s Court Procedure Act (SCPA) § 2307.

More Than One Executor

Some people like to nominate more than one executor to administer their estate. When there are multiple executors nominated in a Will and the Will is silent on how the executors should be compensated, we need to look at SCPA.

SCPA

Pursuant to SCPA § 2307(5), the gross value of the estate determines the amount each executor is entitled to receive when there are multiple executors appointed, subject to SCPA § 2313. For example:

  1. If the gross value of the estate is less than $100,000, then the commissions allowed to one executor are to be apportioned to each executor according to the services rendered by them respectively.
  2. If the gross value of the estate is at least $100,000 but less than $300,000, then each executor is entitled to receive a full commission. However, if there are more than two executors appointed to administer the estate, then the commissions allowed to two executors are to be apportioned among each executor according to the services rendered by them respectively.
  3. If the gross value of the estate is $300,000.00 or more, each executor is entitled to the full compensation on principal and income allowed to a sole executor unless there are over three executors. However, if there are more than three executors, the compensation to which three executors would be entitled is to be apportioned among all the executors according to the services rendered by them respectively.

However, pursuant to SCPA § 2313, if a person dies after August 31, 1993 and nominates more than two executors in his or her Will, no more than two commissions shall be allowed unless the decedent specifically provided otherwise in his or her Will.

All of this can be complicated, but with the guidance of an experienced attorney, you can rest at ease knowing the executor(s) of your Will will be compensated accordingly.