Medicaid
A joint federal-state program providing health coverage to low-income individuals and families, including nursing home care not covered by Medicare.
Example
“After spending down assets in a nursing home, she qualified for Medicaid to cover long-term care costs.”
Memory Tip
MEDICAID = medical AID for low-income. Medicare is for AGE (65+). Medicaid is for income (low).
Why It Matters
Medicaid is crucial for retirement planning because it covers long-term nursing home care that Medicare does not pay for, which can cost tens of thousands of dollars annually. Understanding Medicaid eligibility and planning for it can protect your savings and assets from being completely depleted by healthcare expenses in your later years.
Common Misconception
Many people believe that Medicare covers all their healthcare needs in retirement, but Medicare actually does not pay for extended nursing home care or custodial care. Medicaid fills this gap, but only for those with limited income and assets, making it essential to plan ahead rather than assume Medicare will handle everything.
In Practice
A 72-year-old with limited savings needs to enter a nursing home costing 8,000 dollars per month. After Medicare covers initial skilled nursing care for 100 days, Medicaid can take over if the person qualifies based on income and assets, potentially covering the remaining 7,000 dollars monthly cost and protecting what little savings they have left.
Etymology
MEDI- (medical) + AID (assistance). MEDICAL AID for those who cannot afford care. Created alongside Medicare in 1965.
Common Misspellings
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Related Terms
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See Also
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