What's the Difference Between Medicare, Medicaid, Long Term Care Insurance & Private-Pay?

Medicare is a federal insurance program - administered by CMS (Centers for Medicare & Medicaid Services) -- that provides insurance to millions of Americans who are 65 years of age or older, are disabled, or who have permanent kidney failure. Medicare is similar to health insurance in that it typically provides coverage for medically necessary services only and not custodial or long-term care. Medicare will not cover the costs of skilled nursing facility unless it is related to a prior hospital stay, and even then the coverage is limited. Medicare does not cover services such as non-medical home care, assisted living, or personal medical alarms.

Medicaid is an assistance program jointly financed by federal and state governments for needy and low-income people of all ages. Each state designs their own program based on federal guidelines thus specific details on coverage and eligibility will vary. Depending upon the situation and based on certain qualifying conditions, Medicaid will pay for care in Skilled Nursing Facilities (SNFs). If a person is eligible for both Medicare and Medicaid, Medicare will pay for its allowable benefits period if all requirements are met, after which, Medicaid will take over coverage.

Long-term care insurance policies offer coverage to supplement what is covered by Medicare and/or Medicaid. These policies vary greatly and require that individuals meet very specific eligibility standards before any benefits are paid out. Policies range from those with very specific limits on the amount of coverage (annually or lifetime) and services covered. Some are claim specific - paying for a specific set of defined services - while others are indemnity type coverage whereby a specified payout is made if eligibility is met. Finally, rates for these programs vary based on the age and health of the beneficiary.

Private-Pay is the primary funding source for a large majority of products and service associated with long-term care. This refers to costs that are borne by the individual or his/her family. These services include a wide range of eldercare and long term care products and services that are not covered by Medicare, Medicaid or insurance. Individuals without long term care insurance must pay for these services out-of-pocket.

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