You know, I really can't complain too loudly, because this isn't my problem per say, but my sister-in-law is on medicaid and just got a whopping $7,000 bill from a nursing home where she was for almost a year for therapy. Okay, $7 grand from a year long stay isn't all that bad, and obviously medicaid picked up a large chunk, but it was supposed to pick it all up. The thing was, she didn't turn over her social security checks during her stay. If she had, they said, they would have picked up the entire bill 100%.
Here's the problem. She still had her home to pay for, and bills to keep it semi-running even when she wasn't there. If she'd given up her check, she would have lost her apartment (actually trailer, but you have to pay rent none-the-less). It would have been a no-brainer if she were going into the nursing home for life, but not for rehab. Where would all her stuff have gone? A storage unit big enough to hold even a trailer's worth of furniture and clothes and personal stuff runs over $200 a month, maybe more actually. And then there's moving, and where would she go when they released her? They expected her to go right home, and in her condition (lots of diabetic complications including double amputation, heart condition and recovery from quad by-pass, etc) it's not like she can run around and find someplace to live fast.
Two things are important, whether you are pre-retirement and on medicaid or ready for retirement income, pay attention to the Medicare plan you are getting, and see what supplements you need to avoid problems like this. they're no fun to have sneak up on you, that's for sure. Knowing what all of the ins and outs are will also help you make the best choices when the time comes, so you are prepared to do what you have to do in the event you are going to come into some bills as a result of long-term illness.