A New Financing Option for Long-Term Care
Presentation to the
New Funding Models Advisory Committee
Long-Term Care Task Force
June 15, 2006
Barbara R. Stucki, Ph.D.
Director, Use Your Home to Stay at
Why tap home equity for LTC?
z Promotes “aging in place” by paying for a wide
array of unmet needs.
z More resilience to manage the financial
uncertainties that come with declining health.
z Choice, control, and dignity for impaired
z Funds for early interventions as well as
Broader role of home equity
- Extra help reduces strain.
- Pays out of pocket expenses.
- Supports working caregivers.
- Home repairs, maintenance.
- Adaptive devices, home mods.
- Preventive measures.
- Strengthen ties of reciprocity.
- Neighborhood vitality.
- Reduce isolation.
LTC financing options today
Home equity – Fills a gap
Need more effective public policy
z Poor choices among impaired homeowners.
– Alternatives - Predatory loans, transferring title to
home, credit card debt.
– Unclear about appropriate use of home equity.
z Federal Deficit Reduction Act of 2006.
– $500,000 limit on home equity for Medicaid access.
z State leadership to help older homeowners.
– WA Systems Change grant application 2005.
– Make reverse mortgages a better deal – cost and
protections – Minnesota, Los Angeles, WA State.
Why Reverse Mortgages?
Options to tap home equity
z Sell the house.
z Conventional home equity loans.
z Single purpose loans (property tax deferral,
z Reverse mortgages.
Reverse mortgages – The basics
z Allows homeowners age 62+ to convert home equity into
cash while living at home for as long as they want.
z Can receive payments as a lump sum, line of credit, or
monthly payments (for up to life in the home). Loan can
be used for any purpose.