Has anyone used a reverse mortgage to pay for care?
Mom's in-home care is currently being paid for from her savings account. We pay about $5000 per month for someone to sit with her at night, five days per week. I am looking for other options since her money won't last forever. We live in Maryland. She won't qualify for skilled nursing care in a facility, but I am filling out the paperwork for that anyway. If she was accepted into a nursing home, she would not qualify for Medicaid even when her assets are paid down. That would cost us close to $15,000 per month. The only way Medicare and Medicaid would cover any of it is if she broke a hip and had to go for rehab. I checked into assisted living. While I liked the place, they can't provide the care she needs (if they would even accept her). She is a fall risk and they cannot use rails, alarms, or floor mats. Nor can they strap her in a chair. Again, we'd have to pay out of pocket for the facility and for someone to stay overnight. That would cost more than we are paying now. I am applying for assistance through the Veteran's Administration. That will at least be a little extra money if she is approved. She does not qualify for community based assitance because at $1100 per month SS income ($920 after Medicare is paid), she makes too much money. The limit is $300 per month :-/. When her assets get down to about $11,000 (which will be soon), we can apply for a Medicaid waiver to allow her to stay in her home, but I hear there is an 8-year wait list. While stranger things have happened, at 94, I doubt that she will be here in 8 years.... We are running out of time and money.... Since my brother lives with Mom and has life-threatening health issues, we do not want to force him out of the house in order to sell it. So, our options for paying for the care would be a home equity line of credit or a reverse mortgage. I am applying for a line of credit. She may not qualify because of her income, but I will see... Has anyone had a reverse mortgage? It always sounds too good to be true.
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Have you talked to a certified elder care attorney about this?
I reviewed one several years ago when asked to do so for someone who was considering one. The most impressive and frightening aspects I remember are the reverse amortization and the consequences.
I don't remember all the details, but the overall impact was one which was frightening. Interest on interest accrues; once you take a draw, you pay interest not only on that draw, but on the interest as well. The outstanding balance that would have to be repaid if the house were sold continues to increase.
You can forget about maintaining any equity and paying an RM off eventually, unless you're rich but if you were you wouldn't need to consider an RM.
A HELOC is a better option, if the house has value and could eventually be sold when no longer needed. The issue would be that your mother as fee holder probably wouldn't be able to get a HELOC b/c of age and income.
A possibility is that you and your husband could co-sign, or get a HELOC on your own property. Those are some serious considerations though. I would speak with a banker at a good reliable bank and ask what options might exist.
One of the qualifications for Medicare in a nursing home/long term care/skilled care facility is that the person needs to be hospitalized over 3 nights prior to going to the skilled care/rehab facility FOR THERAPY(physical occupational, and speech). Medicare pays a percentage for 100 days and after that the resident is either "private-pay" or on Medicaid.
Where did you "hear there is an 8-year wait list"..."for a Medicaid waiver to allow her to stay in her home"? Who told you this? Medicaid office or an elder care attorney?
Regarding the REVERSE MORTGAGE: DON"T DO IT! Who owns the house, only your Mom? If your Mom is the only one who owns of the house; then when she dies, the house most likely will have to be sold to your or your brother if he wants to stay in it as the house can not be inherited by someone who is not a co-owner of the house.
This is the biggest problem with reverse mortgages. I have heard of cases where the husband who owns the house dies and his wife has to BUY the house since she is not a co-owner in her husband house.
With your brother living in your Mom's house, I can understand why you say that your Mom won't qualify for Medicaid. Do you have official confirmation of that from the Medicaid office? Or do you just "think" that your Mom will not qualify for Medicaid?
The best thing you can do is to talk with an elder care attorney. They will be able to help you determine the best way to pay for your Mom's care and the best way to pay for your brother's care in the future since he "has life-threatening health issues". Good Luck.
If your Mom can get a line of credit on her house, that may be a better route. As others above had suggested, make an appointment for Mom and Mom's Power of Attorney to meet with an "Elder Law Attorney".
Now, will your brother be able to pay for the real estate tax, the homeowner's insurance, utilities, and any repairs while he lives in the house? Maybe it is time for him to downsize into something more affordable.
Mom's owns her house. When she dies, it is to be divided between the 5 kids. It is a small rancher, so it is small enough.
I did fill out an application for the HELOC with Mom and I on the application, but I would have to be put on the deed, even though I have POA. I don't want to do that. Now, I am trying to see if I can get it just in Mom's name, even if I have to co-sign. My husband and I have our own LOC, so I don't want to do that. I will see how that goes.
My Mom can afford the taxes, utilities, and insurance on her salary. My brother makes more in SSI than she does, so he should be fine with paying those expenses. (Property taxes are about $1,000 per year with a break because of Mom's income. Normally, they would be $2,400.) it would cost my brother a lot less to stay in the house than it would for him to move into an apartment.
I talked to someone at the Department of Social Services yesterday to confirm about Mom qualifying or not qualifying for Medicaid. Mom would have to go into a nursing home for a medical necessity (like breaking a hip). There is a Medicaid Supplemental Insurance she may qualify for, but she doesn't need medical insurance. Medicaid will only pay for personal and custodial care under certain circumstances. Not in Mom's case. Mom needs personal care, not skilled nursing care.
I heard from several agencies regarding the Medicaid waiver having an 8-year wait list (from an agency who handles assisted living, someone from the department of aging, and the person I spoke to yesterday from the Department of Social Services). From what I was told, there are 3,000 waivers offered and the need out ways the availability. The person from the Department of Social Services doesn't think it would be that long, but even 5 years would be too long to wait...
I don't believe that you can legally co-sign for a mortgage against property that you don't own, or at least have a fee interest in. And the fact that the house is anticipated to be apportioned amongst 5 people significantly lessens your ability to get a loan.
When she passes, (a) the 5 heirs are the only ones who would have rights to the house as collateral, and (b) If you're not one of the 5, the bank essentially loses its right to the collateral, and has nothing against which to foreclose.
The bank would have to rely on the honor and integrity of the heirs and subsequent fee holders to continue paying the equity loan; that's a big gamble.