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            It’s amazing how many advisors don’t clearly understand the difference between Medicare and Medicaid.  Maybe you’re one of them or maybe you just think you know the difference. If you get confused sometimes, imagine how your clients must feel.          

            Every advisor dealing with retirees should have a good understanding of the difference between the two if for no other reason than to be able to properly guide your clients.

            For more information on Medicaid planning, our mentoring support center, and why this area of consulting is our industry’s biggest area of growth, go to www.medicaidplanning.org.

            Medicare and Medicaid both sound alike and both are government programs that provide health services to the elderly. Both programs also pay for some portion of a nursing home stay, but most people can’t tell you which one pays for what portion. 

            Here are the basics every advisor should know about Medicare:

• Medicare is an automatic primary health insurance for seniors age 65 and over.
• Medicare also provides primary health insurance for some people under age 65 who become automatically eligible because of their disability.
• Medicare does NOT pay all of a covered person’s medical expenses. The gap between the cost of services and the coverage is known as the Medigap and, as many of you already know, a private Medigap insurance plan helps cover the difference.
• Medicare now has a prescription drug coverage plan which is known as Part D with a separate premium, supported by the government and separate co-pays.

            When it comes to a nursing home, most people think Medicare covers long-term care. They get a rude awakening when they learn that the most Medicare covers is 100 days in a skilled nursing facility.  And even then, it’s not a full 100 days.

            Medicare pays full price for the first 20 days. For the remaining 80 days, the patient has to pay the first $144.50 (2012 amount; figure adjusted annually). To even qualify for that, the patient had to have spent at least three days in the hospital first and transfer to the nursing home within a limited period of time after discharge from the hospital.

            In short, Medicare is not a solution to nursing home expenses like most seniors think it will be.

            Medicaid, on the other hand, is the biggest payer of nursing home expenses.  But unlike Medicare, you don’t automatically qualify for coverage.

            Why no automatic coverage? Because the laws state that in order to qualify, patients must

dramatically spend down assets in order to qualify for coverage. For individuals the amount of “countable” assets they can own and still qualify is approximately $2,000 (which sounds crazy to most people).           

            Countable assets include IRAs, stocks, mutual funds, bonds, CDs, etc.  These assets must be repositioned using proper Medicaid planning techniques (click here to learn more) or spent on nursing home care before Medicaid will pay for expenses. And if you think clients can just give their assets away and immediately quality for aid, that’s not going to happen. Improper gifting coupled with an ill-timed Medicaid application can cause a waiting period of in excess of five years before being able to qualify for aid.          

            And any assets they let the patient keep, the state can put a lien on them and take them when the patient (or the patient’s spouse) dies through estate recovery.          

            Learn Medicaid planning and have a support team

             There are 7,000 people turning 65 every day and with people living longer than ever, the amount of people who will need Medicaid planning to preserve assets is greater than ever.           

            Because few advisors know this important subject matter and because of the client need, we created www.medicaidplanning.org. It is the only place of its kind where advisors can both learn Medicaid planning and have a support team that is second to none when it comes to making sure their clients receive the best advice.  

            If you are looking for an area to grow your business and earn significant money in the process, you need to learn Medicaid planning.

            For hard core education on Medicaid planning, you can read my book The Medicaid Planning Guidebook (click here to learn more) or take the Medicaid Planner Course.

            I will be starting a webinar series where I will be teaching the Medicaid Planning course in one-hour modules over the next few months. If you are interested in signing up for this webinar series, please e-mail info@medicaidplanning.org.  

            If you are interested in mentoring and case design support, please click here to learn more about our unique platforms.

            Finally, if your primary goal is simply to sell Medicaid-compliant annuities and life insurance in Funeral Trusts, we can also help you do that in a compliant manner.

                  Let me know if this sounds familiar. You have a long-time client who you’ve worked with for several years.  Maybe you’ve help them invest their money for retirement or you were instrumental in rolling over their 401K. Sure, they should have bought long-term care insurance … but they’re like most people and just didn’t.

                  Then you get the call one day.  The husband’s had a stroke and is in a nursing home. The family knows that Medicare’s 100 days of coverage will run out soon and they have way too many assets to qualify for Medicaid.  In fact, that’s why you get the call.  The family is trying to figure out how much money they have available to “spend down” on nursing home costs.

                  Do you understand the difference between Medicare and Medicaid? If not, click here to learn more.

                  Do you know how the Medicaid spend down works?

                  Do you know that in many cases, assets can be shifted to the healthy spouse or converted into an income to the healthy spouse and allow the married spouse to re-accumulate the income while still allowing the spouse in the nursing home to remain fully eligible for Medicaid coverage.

                  Most of the time, the only call the financial advisor receives is when the client needs to move all their money into a Medicaid-compliant annuity to avoid the spend down. You watch your client and their money you have under management fly straight out the window through no apparent fault of your own.

                  In the process you’ve missed an amazing opportunity to be a more thorough advisor to the clients and help guide them through the Medicaid eligibility process. In a majority of Medicaid planning cases, even when an attorney is involved in the planning process, there is a need for a financial advisor to help with eligibility by providing protected funeral trusts (click here to learn more) and Medicaid-compliant annuities (click here to learn more).  Many times, assets under management can also retain their original form by being transferred into a spousal annuity trust that works similar to a Medicaid-compliant annuity.

                  Medicaid Planning is Growing Every Year

                  If this scenario doesn’t already sound familiar, it soon will be. The frequency of Medicaid Planning cases continues to grow. Eighty million Americans will be over 65 by 2040 and over half of them are expected to require some kind of long-term care.[1] That’s not just going to affect your clients; it will affect your future clients, the people who you want to be your clients, and your own extended friends and family members. With the cost of an average nursing home bed being over $6,000 per month – just slightly less expensive than booking a suite at the Ritz – you can’t afford to miss the opportunities to help the people you come in contact with.

                  For many advisors that want to learn the subject matter intimately, we offer the Medicaid Planning Course. This in-depth course is the only one of its kind and teaches insurance agents, financial advisors, attorneys, care managers, nursing home administrators, funeral home directors, and certified public accountants the nitty-gritty of Medicaid eligibility, how to pre-plan to better position a client for eventual crisis, how to manage the crisis situation for the client from the perspective of their discipline, how a Medicaid plan is put together and implemented and how to file and shepherd an application. 

                  Federal regulations allow the patient to choose anyone – even a non-lawyer – to help with filing the Medicaid application.[2]  Heaven forbid you don’t understand the impact of your advice on your client’s eventual Medicaid eligibility; many advisors are being sued because their advice was inconsistent with solid Medicaid Planning principles and we want to help you avoid that.

                  Some advisors don’t want to get that involved, but at the same time they don’t want to hand the client over to complete strangers to solve their Medicaid Planning needs.  For many advisors in that circumstance, we provide numerous resources to advisors to help you help your clients.

                  This includes Medicaid Planning support services, assistance with designing a workable Medicaid Plan – including the latest tools available to help protect assets, consulting on complex cases, Medicaid-compliant financial services, annuity design support, and mentoring assistance.  To learn more about these services, click on the following link: www.medicaidplanning.org/mentoring-program

                  For those looking to expand their practices to include more Medicaid Planning opportunities, we provide assistance with marketing (www.medicaidplanning.org/marketing). We encourage planning on a team-based approach and work to supplement an advisor’s planning team with our in-house team and our network of local planners with a variety of disciplines to make sure that your clients get all the bases covered. Our goal is to provide value to you by helping you make sure that both opportunity and your clients don’t slip through your fingers when a health crisis occurs.