I attended a dementia hearing recently. Eight Wisconsin legislators were listening to ideas and problems in dealing with dementia in Wisconsin. Many of those testifying spoke of how people will not accept home care because they think they cannot afford it.
People rely on family for help and care because they cannot afford home care. The most common advice these people receive from social workers and ADRC’s is to spend down to impoverishment and end up on Medicaid. In many cases, this means selling the home and moving to a facility with absolutely nothing left at death to pass on. No wonder people are terrified of needing Long Term Care someday.
Private industry has solutions as well, and often times they are completely overlooked. I am not speaking of LTC insurance here, once care is needed it is way too late to be trying to buy insurance. Let me give you an example.
Imagine you are an older American, living in your home (the only real asset you have) with very little money in savings and trying to get by on Social Security. You know you cannot afford to pay $1000 to $2500 a month for home care and so you just try to get along by yourself or with the help of family or friends.
Someone in this position often does not realize they can utilize the one remaining account they still have – Bank of House. A reverse mortgage is not something to go into frivolously, but as a last resort, it can keep you in your home.
You could take out the available money from a reverse mortgage and spend it for care until it is gone, but wouldn’t it be much better if the money lasted as long as you did? There is a way to convert the equity in your home into an income for life – a monthly check to use for home care that continues until the day you die, no matter how long that is.
If you used the proceeds from a reverse mortgage to buy a regular life income annuity, that would probably be a very bad idea. A life income annuity is based on how long the annuity company thinks you will live – based on age and gender. Remember, your health is not the best, you need care, and may not have as long a life span as others of your chronological age who are healthy.
There is one company that takes your poor health, and thus your shorter than average life expectancy into account, and will require far less money in return for that income for life -based on your shorter than average life expectancy – than a regular annuity would. Many times I have been able to convert the equity from the reverse mortgage into enough monthly income to pay for home care and keep people in their homes for the rest of their life.
So, often it comes down to this choice: Sell the house, spend down the money until impoverished, apply for Medicaid, and end up in a LTC facility with nothing left over. Or, take the equity in the home out through a reverse mortgage, and convert it into a life income, paid monthly, for as long as you live. By taking into consideration that your life expectancy is less than other healthy people of your chronological age, you get a bigger income and can pay for the home care you thought you never could afford.
For more information visit www.TheLongTermCareGuy.com or call me at (920) 884-3030 or (800) 219-9203