the community newspaper for east oahu since 1987

Reverse Mortgages Can Pay for Home Health Care Needs

by SHARI S. MOTOOKA-HIGA, CSA, CLTC
Sun Contributors
Archived May 2007 article

For many of Hawaii's seniors, planning for future long-term care needs can be exasperating. Quality long-term care services are costly. On February 8, 2006, President George W. Bush signed into law the Deficit Reduction Act (DRA) of 2005. This law significantly impacts Federal programs such as Medicaid. The recent changes in Medicaid laws have made it more difficult for island residents to rely on government assistance or deplete assets to qualify for public programs. Given Hawaii's 'ohana-oriented culture, family members often band together by pooling their resources and using a "paycheck-to-paycheck" approach.

According to a recent AARP survey, Hawaii residents are increasingly concerned about their ability to pay for long-term care. "Given the rising cost of nursing home care, a majority of respondents (80 percent) said it was important to have long-term care services that would help them or a family member stay at home as long as possible. Should they become ill or disabled, more than eight in 10 people in Hawaii said they would prefer to receive care in their home - provided by family, friends, or home-care professionals."1

A reverse mortgage is one option that can assist with long-term care financing. For many of Hawaii's seniors, their largest financial asset is not sitting in their bank accounts. It's in their homes. Tapping into home equity through a reverse mortgage can be a viable solution to supplement home health care expenses to pay for home modifications that support aging in place. A reverse mortgage is a loan program that allows a senior homeowner to borrow against his equity. These special loan programs do not have strict income or asset qualifying requirements, which is a plus for seniors, who often rely on fixed social security incomes. Unlike conventional mortgages or home equity loans, there are no monthly payments as long as you continue to live in your home as your main residence. There are a number of misconceptions surrounding reverse mortgages. However, many lenders offer free educational seminars to the public.

No one can predict the future. Therefore, it can be a challenge to plan for your long-term care needs. Remember, those who weather a catastrophic situation are those who have prepared in advance. As you prepare for your future long-term care needs, it is important to research all your options so you can make an informed decision. Unfortunately, there is no one best solution for long-term care costs. Base your decision on your own objectives, needs, and budget. It's important to meet with a knowledgeable and experienced professional to determine if a reverse mortgage is suitable for you.

1"Survey Reveals Hawaii Residents' Concern Over Cost of Long-Term Care." AARP.org. Hawaii News. April 17, 2007

Shari S. Motooka-Higa, CSA, CLTC is a Certified Senior Advisor, Bank of Hawaii - Reverse Mortgage Manager.