Committee Touts Reverse Mortgages Among Solutions to LTC Crisis

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.

View the full report

Written by Alyssa Gerace 

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  • There is an entire industry that exists in helping people qualify for Medicaid that otherwise don’t, which involves annuities and specialized trusts (many elder law attorneys are involved in this). Its purpose is to help people use government funds rather than their own assets for nursing home care (but usually not in home care), and to protect their assets from Medicaid recovery, in order to maximize what’s passed on to heirs. This commission appears to be addressing that.

  • Exploiting and closing loopholes is a great American pastime. It is only compromise which brings lasting solutions. Yet that is only within a very limited time frame.

    Remember the old axiom of American politics: If it is working try to find a way to correct it. This time it is group with a social engineering agenda. This group wants to level the inheritance playing field.

  • Pre-qualify? I like that idea but it would also help to have some of the Medicaid case managers better educated on reverse mortgages. On multiple occasions I’ve worked with families on a reverse mortgage only to have the case worker tell them it will disqualify their parent because they’ll have too much money in their bank account to continue to receive benefits. Even after several repeated conversations with both borrower, family and case worker they are too scared to open the LOC to help with unexpected monthly bills. One of them has hurt the relationship they have with their children because the kids are tapped out and can’t pay mom’s bills anymore. Bad on both ends. Yes, please fix.

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