The federally-appointed Commission on Long-Term Care included reverse mortgages as a way to fund long-term services and supports among other recommendations to Congress on how to address the needs of the aging population.
On Wednesday, the committee submitted the final report to Congress following a Sept. 12 vote in favor of its recommendations, which are meant to renew national discussion regarding how to address the issues and challenges of the aging American population. The vision is to create “a more responsive, integrated, person-centered, and fiscally sustainable LTSS delivery system that ensures people can access quality services in settings they choose.”
Currently, the federal and state governments pay for 62% of paid LTSS, amounting to more than $130 billion a year, the Commission’s report says.
“The need for LTSS and the cost to governments will grow dramatically over the next two decades with the population aging, increasing the burden on already underfunded government health care programs. Preparing to meet the LTSS needs of the population and ensuring adequate financial resources will take time,” it says. “The process should begin now.”
The use of reverse mortgages and a funding source for long-term care was named as one alternative approach to strengthening LTSS financing through private options, among other recommendations.
“Use reverse mortgages to enable seniors to use the value of their home equity to fund long-termcare services, including while remaining in their homes,” says the report. “Enable retirees to pre-qualify so funds would be available when needed.”
The commission also recommended several ways to tighten Medicaid eligibility for people aged 62 and older by considering assets that are currently excluded from eligibility tests as countable, and by removing opportunities for “gaming” the program rules.
Public resources should be focused on providing care to the needy and poor, not the better-off households who are then able to leave large bequests, says the report. Limiting how much home equity is allowed for Medicaid eligibility could encourage people to turn to a reverse mortgage.
“Limit the home equity exemption to $50,000 (this would redirect many households to use reverse mortgages to fund LTSS and discourage the game of investing otherwise countable assets in exempt homes),” the commission proposed.
The commission, created as part of a fiscal cliff law that repealed the CLASS Act, has been tasked with advising Congress on how best to achieve long-term care reform.
Written by Alyssa Gerace