Hospice
Use Personal and Family Assets
While the cost of most hospice care is at least partially covered by some type of insurance, government benefit program, or charitable funds maintained by the hospice provider, some people pay for all or part of this care with their own money — often by selling some assets or tapping into stock portfolios, pensions, or savings accounts. This is often the case if hospice care is needed for only a short time — a couple months or less. However, if care is required for an extended period, most people will need to get help from a government program, such as Medicare or Medi-Cal, that enable them to keep some assets but also help pay for the care they need.
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 age 62 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.
Possible pitfalls. Some potential drawbacks of reverse mortgages, especially for those contemplating hospice care, 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 hospice care that is not covered by insurance or benefit programs—and most hospice providers will work with patients and family members to be sure they are not denied care solely because of cost. Beware, however, that if the financial support from others — cash or help with rent or other housing — is paid regularly, it may be considered part of an individual’s income, making him or her ineligible 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.
