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Medicare vs. Medi-Cal

In my years of practice I have learned that there is wide spread confusion as to what the difference is between Medicare and Medi-Cal. The following is an explanation of the two programs:

  1. 1.Medicare

Medicare is a federal insurance program paid out of your paycheck during your working career. All individuals over the age of 65 are entitled to Medicare benefits provided they have made Social Security contributions, as well as disabled workers who have been eligible for Social Security disability benefits for at least two years.

Medicare has several parts including Hospital Insurance (Part A) and Medical Insurance (Part B). Those persons eligible for Social Security or Railroad Retirement benefits as workers, dependents or survivors, are eligible for Part A, Hospital Insurance, when they turn 65. If a person has not worked long enough to be covered for benefits, s/he may enroll in Part A and pay a monthly premium. If Medicare Hospital Insurance is purchased, that person must also enroll in Part B, Medical Insurance.

Participants in the Medicare program are liable for co-payments and deductibles as well as for monthly payments for Part B coverage. Medicare is not based on financial need. Anyone who meets the age, disability and/or coverage requirements is eligible.

Medicare does not pay for all medical expenses, and usually must be supplemented with private insurance ("medigap") or consumers can enroll in an HMO plan that contracts with Medicare. After 3 days of prior hospitalization, Medicare will pay up to 100% for the first 20 days of skilled nursing care. For the 21- 100 days, the patient will pay a co-payment. The premiums and copayments are increased every year. There will be no Medicare coverage for nursing home care beyond 100 days in any single benefit period.

It should be noted that Medicare only pays for "skilled nursing care," does not pay for "custodial care" and the average stay under Medicare is usually less than 24 days. Thus, few can look to Medicare to pay for any substantial nursing home costs.

  1. 2.Medi-Cal

Medi-Cal is a combined federal and California State program designed to help pay for medical care for public assistance recipients and other low-income persons. 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 and is funded jointly with state and federal Medicaid funds.

Medi-Cal rules can be complicated and are ever changing but you can take specific steps now to pre-plan for the possibility of having to become eligible for Medi-Cal. Medi-Cal strategic planning involves different consequences and objectives than “normal” estate planning and must be considered very carefully.

It is important to work with a knowledgeable attorney when preparing your estate plan. All estate plans should be tailored around your individual needs.

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