In the category of “something you hope to never use” you’ll find Medicaid. It’s a program for low-income individuals that helps with medical costs. While Medicare is a government benefit that retirees are eligible for at the right age, Medicare is more exclusive – if you are too wealthy, you are not in the club. It’s a big club though. More than 65 million Americans are covered by Medicaid, that’s about 1 in 5 Americans!
Medicaid serves all types of individuals in this country, but 43% of those enrolled are children. It’s an important government program to ensure those who cannot financially support themselves have help when big health-related events take place. Medicaid is also critical to blind and disabled individuals – one-third of Medicaid spending goes to this less-fortunate group. So while it may be easy to be concerned about the level of spending for this program, remember that you and I are blessed to be relatively healthy and have the ability to provide for ourselves.
Medicare is a counter-cyclical program – meaning when economic times get tough, more people enroll. During and immediately following the Great Financial Crisis in 2008-2009, more Americans turned to Medicaid for health care assistance – about half of whom were children, sadly. In addition to children, low-income & elderly individuals make up a sizable share of enrollees. About 10 million seniors are dual-eligible for Medicare and Medicaid.
There are several qualifiers for Medicaid. States are required to provide funding for the following groups:
- Children 18 and under in families with income below 138% of the federal poverty amount
- Pregnant women with income below 138% of poverty
- Caretakers with very low income
- Seniors and those with disabilities who receive cash assistance through the Supplemental Security Income (SSI) program
It’s important to know that Medicaid is a federal public insurance program, but it is jointly funded by the Feds and the states. So you have to be sure you know your state’s rules. Here in Michigan, there are several Medicaid programs:
- Medicaid – health care for people of all ages with low income
- Healthy Michigan Plan – coverage for individuals aged 19-64 with income at or below 133% of the federal poverty level
- Health care coverage for people impacted by the Flint Water situation
- MIChild – complete health care coverage for children 19 and under who lack insurance
- MI Health Link – this is county-specific and only for adults aged 21 and over who are already enrolled in Medicare and Medicaid
- Healthy Kids/Healthy Kids Dental – coverage for pregnant women and children 19 and under
Medicaid coverage includes several services and other health-related expenses. Federal requirements dictate that certain mandatory services are included. These items include services such as hospital and physician care, X-rays, home health & nursing home services. Long-term care is also covered – but again, you must have a very low income to qualify for assistance. This is not something anybody should strive to qualify for.
State policies commonly have even more coverage for things like prescription drugs and even dental & vision care. Other services for the elderly are covered in most states – hearing aids and personal care services.
The program mainly helps low-income people with hospital stays and drug costs in addition to seniors in long-term care. Those areas represent about 75% of the program’s spending. In America, about half of all long-term care expenses are covered by Medicaid. It’s a nearly $700 billion program – that’s about 3% of the US economy, just to put it in perspective.
While you and I may not qualify for these benefits despite paying taxes that go to funding Medicare, we should be grateful that this backstop exists. Of course, we’d like to see government programs run lean and efficient, but we should count our blessings that we have had the ability to provide for ourselves through other insurance plans. Still, if you or I fall on hard times, Medicaid is here to help us with expensive health care services.
Here’s the point
- Medicaid is a federal entitlement program meant to service the health care needs of children and the elderly, as well as adults with very low income.
- Benefits are highly dependent upon in which state you live – Michigan offers many sub-programs within the Medicaid banner.
- Medicaid is a backstop for costly hospital stays, drug costs, and long-term care.
- If you don’t qualify due to your income, consider yourself fortunate. Many families must make no more than about $30,000 per year. Individuals must make under $13,000.
Action items
- Count your blessings. Most people seeking help with their long-term financial plan and how best to invest their money do not have to resort to Medicaid. But it is still something we all contribute to – so it’s there if we need it and qualify.
- Know your state’s rules and extra benefits – particularly if you have children or an elderly parent.
- Save, save, save. Leverage a Health Savings Account and other methods to ensure you have funds for a rainy day as it relates to your health.
- Sit down with us to develop a game plan to ensure your risks are covered. Managing potential health care costs is a critical piece to a secure financial plan.