Yes, it is possible for your home to help pay for your Long-Term Care (LTC) and possibly help keep you in your home longer. For many seniors, the home equity is their largest asset. Using that asset to help keep you at home versus in a LTC facility can make sense. There are a number of strategies on how this might happen.
First, let’s review the Medicaid rules for paying for LTC. Medicaid is the fall back option for people who cannot pay for LTC themselves. If you are single, you must spend down EVERYTHING you have to $2000, including the sale of the home, auto, IRA’s, cash in life insurance over $1500, pretty much devastating your finances. If married, the spouse at home can retain use of (Medicaid will recover later, so children may not inherit) the house, one vehicle, some savings and income.
Since the house will be subject to estate recovery, where Medicaid takes it after last death preventing your children from inheriting it, why not use it to pay for your care – at home or in a facility. A reverse mortgage can facilitate removing the equity in the house and converting it into a check you can cash. You can then spend the money until it is gone, OR…..
There is a way to convert the cash you removed from the house into an income for life. Typically, this is called a life income annuity, but there is a twist for LTC. When LTC is needed, it is probably true that your life expectancy is less than others of your chronological age. Most annuity companies only take into account your age and gender. There is one that has a different twist that makes it much more beneficial when LTC is needed.
This one takes your [poor] heath and thus shorter than average life expectancy into account. By doing so, it may be possible to get a much larger check each month for life. Since your life expectancy is less than average, you can receive a significantly larger check each month, and use that to either pay for home care and stay in your house, or pay for an assisted living or other LTC facility that might not have been affordable to you otherwise.
This lets you use the home equity, which would otherwise be reclaimed by Medicaid after last death, to pay for the LTC you need, and giving you choices of how and where that care is delivered. Its your home, its your equity, why not use it for your care as you wish?
If you are healthy, planning for LTC needs, and do not have the cash flow to pay the premium for LTC insurance, why not use that home equity to purchase the LTC insurance you do not think you can afford. Once you have the coverage, you can use it to pay for care at home, or in a facility, your choice. Since the alternative is to spend the home equity until you are on Medicaid, and remaining equity going to the state after death, versus your children, it makes sense.
Lastly, if the home is going to go anyway, we here at TheLongTermCareGuy.com have ways to save some of that home equity to pass on to your children (and their spouses) that Medicaid allows. Typically, any gifts given in the past 5 years will disqualify you from receiving Medicaid, but there is a provision that will allow you to protect some for family. We can help you accomplish this.
So, when LTC becomes necessary, and you might think all is lost, there may still be options to be able to pay for care and receive that care where and how you want. It is even possible to protect some assets to pass on the family. Simply call TheLongTermCareGuy.com for help at (920) 884-3030 and schedule a time to learn your options.