3.2 INDEPENDENT LIVING
3.201 "Aging in Place."
A. In General. Many older persons seek to "age in place"—to continue living where they are and bring in supportive care to help maintain their independence. Most supportive care in America is provided by family members, but the prevalence of this kind of support has declined as more adults now work outside the home and the mobility of the American population has led to widely dispersed family members. Consequently, older persons who wish to continue living in their homes have had to resort to professional in-home services. The question for many is how to afford these services. The elder law attorney should be able to suggest some solutions.
B. Reverse Mortgage as a Source of Payment for Home Care. Reverse mortgages are a form of home equity conversion that allows the homeowner to borrow against the value of the home but delays payment on the loan. The homeowner uses equity in the home but makes no loan payment until he or she sells the home, permanently moves out, or dies.
Borrowers can receive the loan in a lump sum, in a fixed monthly sum, or as a line of credit to be drawn on when needed. The loan amount is based on the age of the homeowner and the value of the home. 4
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Reverse mortgages may be available either as FHA-insured 5 loans or private lender insured loans. Both types of loan are very much alike except that FHA loans are limited in dollar amount by regulation. To be eligible for an FHA-insured loan, the borrower must be at least 62 years of age and hold title to the property. Borrowers must receive additional counseling about reverse mortgages from third parties approved by the Department of Housing and Urban Development (HUD).
Monthly payments received from a reverse mortgage are treated as loans rather than income and do not affect public benefits, but funds kept after the month received will be treated as countable assets if they accumulate above minimum resource allowances. 6
A client who is considering a reverse mortgage should understand that he or she will lose equity in the home in the amount of each payment received under the reverse mortgage. The client should also be aware that interest rates for a reverse mortgage are higher than for regular mortgages. The most important consideration for the client is whether the reverse mortgage will accomplish the client's goal. If the goal is to provide supportive care at home, the question to determine is whether the client's income plus the reverse mortgage payment will meet the client's expenses, including home care.
C. Private Caregivers. Most home care is not home health care but rather personal or custodial care. Personal care includes helping with bathing, feeding, cooking meals, cleaning, shopping, and providing transportation. Although professional care-giving agencies exist, most private caregivers are neither licensed nor trained. Because the quality of individual private care-givers varies greatly, the elderly person seeking such care must consider physical safety as well as affordability. When contracting for these services, the following steps should be taken:
| 1. | Identify the services needed. This will also help to determine the available sources of payment for the care. Home health care services may be provided by Medicare, while personal care assistance must be paid for privately. |
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| 2. | Determine how many hours of assistance are needed, taking into consideration informal or voluntary care services that can be provided by family members. | ||
| 3. | Consider what supplies and equipment need to be provided. To what extent must the home be outfitted to ensure that the home care tasks can be adequately performed? For example, does the bathroom have to be outfitted so bathing can be safely done? Can any of these items be paid for by Medicare or Medicaid? |
D. Personal Care Contracts. Another solution for remaining in the home is contracting with relatives to provide specific care services. Such an agreement should be in writing, the services should be expressly stated, and payment for services must be reasonable. To ensure Medicaid recognition of such contracts, a geriatric care manager should be hired to evaluate the person's need and report on the customary rates for such services in the area. The contract should be in place before any payments are made. 7
E. Long-Term Care Insurance. Some long-term care insurance policies include a home health care rider. Such...
