I hear regularly from home care agencies that people are skimping by with less visits or shorter visits than they really need to care for their loved one or themselves. Not everyone can afford all the care they need because money does not grow on trees and they don’t have enough trees.
Savings may be meager, or possibly already used up. Social Security does not provide enough monthly income to afford many visits of home care, as well as keeping the heat and lights on.
Often being overlooked, is the largest reserve account people have – their home.
First let’s look at what happens if home care becomes completely unaffordable. If Medicaid is needed, but not forthcoming, the option is to move to a Long Term Care facility. The home is sold. The money is spent down. Medicaid is received, and the children may be left to finance the final expenses of burial at the end. Not a pretty scenario.
Now consider a reverse mortgage on the home. Anyone over age 62 can qualify, no credit check is performed as no payments are made. The home is the only collateral for the loan, and only the home repays the loan when the house is no longer needed due to moving out or death. You could end up owing $250,000 on a $100,000 home and the only payback is the home when sold, nobody comes to you for the extra. It is written off.
Now, you could use the proceeds of the reverse mortgage and spend those dollars down until the money is gone. This would keep you in the home longer, but perhaps not long enough. What if you could turn the proceeds of that reverse mortgage into a lifetime income, a monthly check that you cannot outlive? And the monthly check gets larger each year to keep up with inflation? Sound pretty good?
It is possible to convert a sum of money into an income for life. Typically the calculation is made by estimating your life expectancy. If you are 68 you might have about 25 years left, perhaps a few years less if male.
Rather than simply using your chronological age to determine how much you can receive per month for life from a fixed sum of money, how about if your (poor) health were taken into account? A 68 year old person needing LTC probably has a shorter life expectancy than a healthy 68 year old riding past your home on their bicycle.
By taking that poor health, and thus the shorter life expectancy into account, a larger monthly payment can be obtained from that same initial sum of money. Thus, if you need more home care than you can afford, rather than sell the home and end up on Medicaid in a LTC facility, why not use the home equity to keep you IN your home, with the proper amount of care required to keep you safe and comfortable?
Contact rraabe@TheLongTermCareGuy.com for more LTC financing strategies, or call them at 920 884-3030