Medicare

Medicare is a limited program that entitles recipients to some measure of long term insurance coverage. The stringent guidelines for coverage restrict full payment for many recipients, resulting in an average of only about 9 percent of nursing home care in the United States. All retirees who receive social security benefits also receive Medicare as their health insurance. Medicare is considered an “entitlement” program.

Medicaid

Medicaid is a joint state-federal program that pays for institutional care for qualified recipients. Since Medicaid began as a component of the welfare system, recipients must meet financial guidelines. Many people must deplete their own savings for long-term care until they become eligible for Medicaid.

Individuals who are not in immediate need of long-term care may be able to distribute or protect their assets in advance. This way, when they do need long-term care, they will quickly qualify for Medicaid benefits. This form of "Medicaid planning” may be a strategy employed by a qualified estate planning attorney to protect assets and help ease the transition for those who need long term care.