No, it's not universal health care, but we do have Medicare and Medicaid, federal programs that have been around since 1965 and have covered the medical bills of millions of Americans. Not everyone is eligible, and the coverage is limited, but it is government health insurance. So, what is the difference between the two programs and how does the coverage work, particularly when it comes to older Americans? Here’s Mainstreet’s crash course:

Medicare kicks in at 65 for all Americans and covers most of their medical expenses. Unfortunately, Medicare doesn’t cover quite as much as you might think, as it is primarily designed to provide coverage for short-term illnesses. Don’t expect Medicare to cover long-term nursing care, assisted-living fees or many prescription medications, though the federal government does have a prescription drug benefit plan in place too. Also, Medicare will only cover up to 100 days of nursing care after a three-day hospital stay, and in many cases it won’t even cover that much.

Medicaid is another government program intended to pay for health care services for the poor, so you will have to “spend down” your assets to qualify for Medicaid. Medicaid currently pays for the majority of nursing home stays and it kicks in when you have run out of money for your own long-term care. In the past, seniors have found ways to creatively shelter their assets in order to qualify for Medicaid. While such strategies are still possible, the government is cracking down on these practices and making it much harder to hide assets while receiving government aid. Relying on Medicaid should you need long-term care is less than ideal, however, because you will lose much of your freedom of choice when it comes to your care and in-home assistance will likely be impossible.

Ultimately, the best way to plan for your long-term care is to take out a long-term care insurance policy. Long-term care insurance pays for in-home and nursing home care up to a certain amount depending on the policy. Having long-term care insurance means that, should you become unable to perform the basic activities of daily life, your family will not be burdened with expensive nursing care costs, and you will have more choices for how you want to live.

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