Do You Have to Be Bankrupt to Get Medicaid?

3 answers | Last updated: Dec 04, 2016
A fellow caregiver asked...

Under what circumstances can Medicare or an insurance company bankrupt a senior citizen before they pay for their long-term care expenses?

Expert Answers

Barbara Steinberg is the CEO and founder of BLS Eldercare Financial Solutions, which specializes in helping families pay for long-term care for their loved ones. A registered financial gerontologist, she speaks regularly on the topic of paying for long-term care and is a financial expert for

I think you're referring to Medicaid, not Medicare. Medicare is a federally-funded health insurance program. Many seniors have Medicare Supplement insurance purchased from health insurance companies. Medicare and health insurance companies pay for medically necessary health care expenses. Medicare and private companies pay very little for custodial care, which is what most long-term care expenses are used for.

On the other hand, Medicaid is a program jointly-funded by the federal and state governments for financially needy seniors. Medicaid is administered by the states and each state sets the maximum level of assets that a senior can keep under the program. In most states, the limit is $2,000.

If a senior qualifies for Medicaid, but has assets above the limit, he or she is required to either spend down the excess assets prior to applying for Medicaid or pay privately for long term care until the assets are below the limit. So yes, if your parents have assets above the maximum level required by the state and they want to qualify for coverage under Medicaid, they must spend their assets until they meet the eligibility requirements for their state.

Keep in mind: the goal of Medicaid is not to pay for everyone's long term care. It is a provider of last resort for those seniors who have depleted their assets.

Community Answers

Karenlorenzo answered...

I agree, Medicare does not pay for long term care, you can get skilled care through medicare though. And private insurance companies do not wait for your to be bankrupt either, it depends on the elimination period that you choose for your long-term care insurance policy, once the benefits trigger. Medicaid has a 5-year look back period so keep in mind that assets should be spend down to pay for care and not to hide or protect them from the government. Here's a couple of resources to help you understand medicare, medicaid and long-term care:

Eric hamel answered...

Medicare and medicare are both an entitlement program and these two are some of the three major entitlement program of the US, once you reach the age of 65, you are entitled and eligible for medicare benefits while medicaid on the other hand is a mean tested program wherein you have to pass the poverty criteria to be eligible, based on, insome cases, people spend down their assets in order to qualify. In addition, medicare only covers medically necessary services and not custodial care.