When I do a 2.0 version of Grand Plans: How to Mitigate Geri-Drama in 20 Easy Steps, I’m going to combine a chapter and add a new one and it’s going to be called “Get educated on the AREs, AIDs of your senior MEDIC options” or more to the point, “Get a Grip on Your Medicare, Medicaid Options…STAT!”

These government-sponsored programs are complicated and imperfect, but as tax-paying citizens of the United States of America we must know how to utilize these offerings and apply them to our Grand Planning efforts. They can save us and our caregiving families a lot of headache, money and time.

Many folks don’t the difference between Medicare and Medicaid, so if you aren’t educated on the ins and outs of these programs…not to worry, you are in good company. But let’s clear that up right away with some base knowledge. According to the Department of Health and Human Services, here’s the primary difference between Medicare and Medicaid: “Medicare is federal health insurance for anyone age 65 and older, and some people under 65 with certain disabilities or conditions. Medicaid is a joint federal and state program that gives health coverage to some people with limited income and resources.”

Got it? Let’s keep digging.

I’m going to start getting specific on the definitions with Medicare because that’s the one that has all the different-lettered parts, which can throw us all off in our understanding. According to Medicare.gov, Medicare and its parts are:

• Part A (Hospital Insurance) Part A helps cover: inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care.
• Part B (Medical Insurance) Part B helps cover: Services from doctors and other health care providers; Outpatient care; Home health care; Durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment); Many preventive services (like screenings, shots or vaccines, and yearly “Wellness” visits)
• Part D (Drug coverage): Part D helps cover the cost of prescription drugs (including many recommended shots or vaccines). You join a Medicare drug plan in addition to Original Medicare, or you get it by joining a Medicare Advantage Plan with drug coverage. Plans that offer Medicare drug coverage are run by private insurance companies that follow rules set by Medicare.
• Medicare Supplemental Insurance (Medigap): Extra insurance you can buy from a private company that helps pay your share of costs in Original Medicare. Policies are standardized, and in most states named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, no matter which insurance company sells it.

Basically, Medicare helps pay for your healthcare costs and drugs, including Hospice care, which is an incredibly wonderful benefit that we should all consider using.

If you’re not confused yet, I’ll continue with some tidbits about Medicaid. According to Medicaid.gov, Medicaid is:

“…a joint federal and state program that, together with the Children’s Health Insurance Program (CHIP), provides health coverage to over 77.9 million Americans, including children, pregnant women, parents, seniors, and individuals with disabilities. Medicaid is the single largest source of health coverage in the United States. To participate in Medicaid, federal law requires states to cover certain groups of individuals. Low-income families, qualified pregnant women and children, and individuals receiving Supplemental Security Income (SSI) are examples of mandatory eligibility groups. States have additional options for coverage and may choose to cover other groups, such as individuals receiving home and community-based services and children in foster care who are not otherwise eligible. The Affordable Care Act of 2010 created the opportunity for states to expand Medicaid to cover nearly all low-income Americans under age 65. Eligibility for children was extended to at least 133% of the federal poverty level (FPL) in every state (most states cover children to higher income levels), and states were given the option to extend eligibility to adults with income at or below 133% of the FPL. Most states have chosen to expand coverage to adults, and those that have not yet expanded may choose to do so at any time. See if your state has expanded Medicaid coverage to low-income adults.”

And there are layers upon layers upon layers of details to learn under both program headers. Medicaid and Medicare are twisty, turny and stomach-churning programs and sometimes it is extremely irritating to ascertain helpful information and direction. But stick with it! Though you may never be a Medicaid/Medicare expert, it behooves all of us to at least understand the options that might be available to us or our loved ones as we look to prepare a strategy for our senior living.

For example, I mentioned hospice earlier. Hospice care is usually fully reimbursed by Medicare or Medicaid and can be a wonderful “free” resource when our health is terminal or in decline. In addition to weekly home visits and observation, a hospice patient also has access to “free” medical resources like beds, oxygen and even adult diapers. This is something to know about as we approach the Golden Years.

And you might consider the parameters of Medicaid as you engage in financial planning for retirement. Caregiving and senior living arrangements are super costly, these are major line items for our last inning! If you need 24-7 in-home care, for example, that may cost you $300,000 or more annually. Full pay in an assisted living facility may be a little less expensive, but still — paying $8,000-$12,000 a month can be pretty darn hard to stomach for a long stretch of time! So you can either save a sh** ton and plan to self-pay that amount, invest in long term care insurance to help alleviate those costs, consider a life insurance policy that can recoup those expenses for your heirs or you can do none of that, run out of money and forgo any funds or resources that otherwise would have been left to your children and grandchildren, thereby eroding any generational wealth you may have intended to leave your family.

Understanding the qualifications for Medicaid can help you approach some of that planning. There is real strategy, for example, in gifting funds from your estate to your heirs ahead of time and making sure you have enough money left to weather five years of self-pay care or senior living before spending it all down and planning to lean on Medicaid for future long term care costs. This is not suss, btw, it is a worthy consideration!

At the end of the day, I think it is important to meet with an elder or estate law attorney who can help navigate all these nuances and work with your financial planner to figure out a strategy that meets your unique needs and helps achieve your personal long term care goals. Don’t let any of it be a surprise or an “if I’d only known” situation. Our golden years are much too precious to be sidetracked by insufficient knowledge of government support — support we are all due as citizens of this amazing country!