The Medicare program was first enacted in 1965 by the Johnson administration. The idea at the time was to develop medical coverage for seniors and disabled people. However, in 1965, no thought was given to long term catastrophic illness. In that sense, not a whole lot has changed. In any event, Medicare was, and still is, a short term solution. Unfortunately, many people who are covered under the Medicare program incorrectly believe that they don't need to do any additional planning because they have Medicare, and very often a Medigap policy that pays the deductibles and co-insurance that Medicare does not pay. However, Medicare is really no more than a short term answer and needs to be clearly understood in order to properly understand its place in elder law planning.

Medicare will cover up to 150 days of hospital care. There are deductibles and daily co-insurance payments that increase as the time in the hospital increases. There is a $992 initial deductible when entering the hospital in 2007. Starting day 61, there is a co-insurance payment of $248 per day that continues through day 90. Each individual is entitled to up to 90 days in the hospital at any time, assuming it is determined that there is a need for acute care. In addition, each individual eligible for Medicare is entitled to 60 lifetime days in the hospital. The lifetime days have a co-insurance payment of $496 per day, but can only be used once in a lifetime. However, that means that an individual could stay in a nursing home for up to 150 days at any given time and be covered throughout that period by Medicare. Most Medigap policies will not only cover the co-insurance and the deductibles, but will often cover up to 365 days in a hospital, again assuming that the level of care requirement is met.

In addition to hospital coverage, Medicare covers up to 100 days in a nursing home. The first 20 days are paid in full and the next 80 have a $124 per day co-insurance. Many clients are under the false belief that since they have Medicare they are covered for nursing home stays. They are shocked to find out only when the nursing home scenario has actually arisen that the Medicare coverage, at most, is only for 3 1/3 months. Medicare will cover the nursing home stay if there is at least a three day hospital stay within 30 days of the nursing home placement, and if the level of care in a nursing home is skilled care, as opposed to custodial care. Typically, upon entrance to a nursing home, there is some need for rehabilitation and that falls under skilled care. Skilled care could also be occupational training or the need for a respirator as well as intramuscular and insulin injections or a feeding tube. There are a number of specific needs that automatically qualify as skilled care. In addition, skilled care includes monitoring, observation and assessment of a person's condition. The 100 days is not guaranteed, and if it is determined that the level of care in the nursing home has been reduced to custodial before 100 days, the coverage will be terminated.

Medicare is also available in home care cases after a person is discharged from the hospital. However, once again, the Medicare is short term limited coverage and not meant to assist a person who needs a home health aide on a long term basis. Medicare will only provide home care aides if it is found to be necessary and piggy-backed onto skilled care in the home. The skilled care will be provided typically for a short period of time, and the home health care attached to the skilled care is limited to 20 hours a week. Normally, the coverage will end long before the need for care has actually ended.

Medicare has always been considered a short term medical benefit. It would be a mistake to consider having Medicare as a solution to long term catastrophic illness. While Medicare serves a useful purpose in the short term, the need for either long term catastrophic insurance or Medicaid planning is not eliminated by the Medicare program.