Home Health Care
Use Personal and Family Assets
Some people are able or forced to pay for home health care with their own money — often by selling some assets or tapping into stock portfolios, pensions, or savings accounts. Some possible sources for financial help are discussed below.
Reverse Mortgages
A reverse mortgage is a loan against the value of a home that does not need to be repaid until the owner leaves or sells it. The arrangement allows homeowners who are at least 62 years old to convert equity in their homes into one-time or monthly cash payments or a line of credit. The loan advances are not taxable and generally do not affect Social Security or Medicare benefits.
Reverse mortgages may be a good option for those who intend to stay in their homes for the next several years and need money to remodel them to be safe or more fitting — or to pay for health care expenses while they continue to live and receive care at home.
Possible pitfalls. Reverse mortgages are usually not a good option if a homeowner is likely to sell or leave his or her home within three years or less. Some potential drawbacks include:
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Hidden costs. Reverse mortgages can be expensive to secure, usually involving high costs for processing, insurance, interest, and ongoing services added to the overall loan costs.
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Estate planning complications. If the borrower leaves the home to family members or other beneficiaries, it will be encumbered with the reverse mortgage debt if it’s not paid off before death.
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Benefit ineligibility. Equity borrowed as a lump sum or line of credit may be counted as an asset that affects eligibility for Medi-Cal. Other low-income subsidies such as food stamps may also be jeopardized.
California law requires that before applying for a reverse mortgage, potential borrowers must first receive advice on costs, implications, and alternatives from a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD).
For more information or to report potential problems with reverse mortgages, contact HUD’s Homeownership Center.
Help from Family Members
Family members, particularly children, may also be able to help cover the costs of home health care. But beware that if the financial support — cash or help with rent or other housing — is paid regularly, it may be considered as part of individual income limits when determining eligibility for Medi-Cal coverage.
But if a person is not concerned about qualifying for Medi-Cal coverage and there are relatives or others who are willing and able to contribute to care costs, it may be wise to get those commitments in writing to help avoid misunderstandings and emphasize their importance.