What Are the Major Differences Between Social Security, Medicare, and Medicaid?
Quick Answer
Three different programs. Social Security is income. Medicare is health insurance. Medicaid is a needs based program that can pay for long-term care when you meet Georgia’s financial and medical rules. Most families use the names interchangeably, and that is where the expensive mistakes start.
Sorting the three out
Let me do this quickly, because once you see it you will not unsee it.
Social Security sends you money. You paid in over a working lifetime and now a check arrives every month. It does not pay a single medical bill.
Medicare is your health insurance in retirement. Doctors, hospitals, prescriptions, and short rehabilitative stays. You earned it the same way, through work history.
Medicaid is different in kind, not just in detail. It is needs based, which means eligibility depends on what you own and what you bring in. And it is the only one of the three that pays for a long nursing facility stay.
Why the confusion costs money
Guess what happens when a family assumes Medicare covers the nursing home? They wait.
They wait through the covered rehab days. They wait through the first private pay invoice, because surely this is temporary. By the time somebody says the word Medicaid out loud, months of savings are gone and several options have quietly closed.
The biggest thing I want you to realize is that the clock in this situation is not generous. Every month of delay is money that cannot be protected anymore, because it has already been spent.
Where the money actually comes from
Social Security income does not disappear when someone enters a facility. In a Medicaid case most of it goes toward the cost of care, and the resident keeps a small monthly personal needs allowance. It is a modest number and it changes each year.
Medicare may cover the front end. A limited skilled stretch after a qualifying hospital stay, with a coinsurance portion partway through.
Medicaid is what covers the long haul, assuming eligibility is established.
The Georgia specifics
Georgia is an income cap state. If monthly income runs over the limit, a Qualified Income Trust is required, and what that means is a Miller trust that income routes through.
Georgia also applies a five year look back to asset transfers. Gifts inside that window get reviewed and can create a penalty period.
Do realize the dollar figures behind all of this move every year, so do not plan off a number you read in an old article.
When to talk to somebody
The moment long-term care becomes a realistic possibility, not the moment it becomes a crisis.
If a hospital is discharging a parent to a skilled facility, that is the phone call. If a spouse has had a decline that is not reversing, that is the phone call.
A note on how to use this
Everything above is being presented for educational purposes only and nothing here should be treated as legal advice. What actually applies to your family is very fact specific to your income, assets, and circumstances. I am only licensed in Georgia and Michigan, so I can only speak to those two states, and program rules change frequently.
If you are elsewhere, get the foundation and then seek an attorney in your jurisdiction so you at least know what to ask.
Your next step
Schedule a complimentary 15 minute Strategy Session by calling 404-549-5001.
If long-term care costs are what worry you, ask about “Don’t Go Broke In A Nursing Home.” Our weekly webinar runs every Thursday at 1pm.
Related questions
- What is Medicaid?
- Doesn’t Medicare cover the cost of nursing home care?
- How are nursing home and long-term care expenses usually paid?
- What are my long-term care options?
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