LTC Bullet: New Book on Reverse Mortgages Plus an EXTRA

Thursday, March 17, 2005


LTC Comment: Tom Kelly's new book on reverse mortgages is a good introduction to a sensible source of supplemental retirement income for older Americans. More after the ***news.***

*** EXTRA. The U.S. Senate is about to vote--probably this afternoon--on a matter critical to long-term care financing. Senator Bingaman (D-NM) and Senator Smith (R-OR) have proposed an amendment to the 2006 budget resolution that would eliminate $14 billion in Medicaid cuts proposed by the President and set up a bipartisan commission to study the program and recommend major reform. Families USA, AARP and the major LTC provider associations support the amendment. Budget hawks oppose it.

The Center for Long-Term Care Financing does not take positions on specific legislation, but there is a sense in which this vote is a rare no-lose, win/win situation. If they leave the cuts in, Congress will need to find a way to do the cuts without hurting the poor.

We have the solution: "How to Save Medicaid $20 Billion Per Year AND Improve the Program in the Process" If they eliminate the cuts and go with the commission, it will need advice on how to control Medicaid's exploding costs while saving the program as a long-term care safety net for the poor. We have the answer to that also: "The Realist's Guide to Medicaid and Long-Term Care" .

Either way, the big news is that serious consideration of Medicaid's role in long-term care financing is finally about to happen. That is good for Medicaid, good for LTC providers, good for LTC insurers, and magnificent for genuinely needy older Americans who have nowhere else to turn for long-term care than to Medicaid. Keep an eye on C-Span 2 to see which way this important vote swings. ***

*** CLTC MASTER CLASS SCHEDULE. The Center for Long-Term Care Financing does not endorse specific companies or professional designations, but we are acutely aware of the need for education and certification of LTC insurance agents. We've often found that LTCi agents with the "CLTC" certification rank high in professional knowledge and expertise. We also appreciate the financial support provided to the Center for Long-Term Care Financing by the Corporation for Long-Term Care Certification. As a public service, we will provide each month a schedule of forthcoming CLTC classes with a link to further information. The Corporation for Long-Term Care Certification will offer the "Certified in Long-Term Care" (CLTC) program in a classroom setting referred to as a Master Class on March 24 and 25 in Tampa, FL; on March 31 and April 1 in Waltham, MA; on April 5 and 6 in Atlanta, GA; on April 6 and 7 in Portland, OR; on April 11 and 12 in Portland, OR and Grand Rapids, MI; on April 14 and 15 in San Juan Capistrano, CA; on April 19 and 20 in Englewood, CA; and on April 25 and 26 in Lincoln, NE. For more information, call 877-771-2582 or go to .***

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The LTC Data Update #5-008--The Maestro on the Need for Retirement Planning (Alan Greenspan on aging demographics, unfunded liabilities, and personal responsibility.)

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LTC Comment: It's no secret LTC Bullets and the Center for Long-Term Care Financing believe that, one way or the other, home equity will end up paying for a large share of long-term care in the future.

Either America requires it up front as a condition of getting LTC help from Medicaid as we proposed in "How to Save Medicaid $20 Billion Per Year AND Improve the Program in the Process" .

Or, lawmakers will let Medicaid collapse as it is on course to do now and before long the only way to get decent long-term care will be to pay privately for it. Because of the expense, home equity will be the only place for most people to turn then for LTC.

Whichever course the country takes, home equity will bear more and more of the burden of long-term care in the future. That's why having an affordable private financial product that allows older people to tap their home equity for supplemental income is so important. And that's why Tom Kelly's new book is so necessary and timely.

Tom Kelly is a former real estate editor for the Seattle Times. He currently writes a column and hosts a radio program, both of which are nationally syndicated. His new book is The New Reverse Mortgage Formula: How to Convert Home Equity into Tax-Free Income, John Wiley & Sons, Inc. Hoboken, New Jersey, 2005. You can buy it directly from Wiley at . We found it discounted on Barnes and Noble at and on Amazon at .

Kelly's book covers every aspect of reverse mortgages and home equity conversion (HEC). Our primary interest is how HEC can help finance long-term care. Kelly has two chapters on that subject: "Chapter 7: Aging in Place . . . and Funding Health Care: The Prime Target for Reverse Mortgage Money" and "Chapter 8: Reverse Mortgage Cash for Modification: The Changes That Will Allow All Ages to Stay at Home."

He quotes Dr. Barbara Stucki, author of the National Council on the Aging's "Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages for Long-Term Care: A Blueprint for Action," which we reviewed in "LTC Bullet: Use Your Home to Stay . . . Off Medicaid" .

"'I really didn't know if I would find a pony until I started digging,' Stucki said. 'I found a pony, and it was a lot bigger than I thought. These good candidates [13.2 million American homeowners over the age of 62] could get on average $72,128 on a reverse mortgage. That was the key for me. It showed there was a significant chunk of change for millions of households. While some homeowners have pulled equity out of their homes to make improvements as they've aged, the concept of home equity to pay for health care is relatively new. Using reverse mortgages for many can mean the difference between staying at home or going to a nursing home." (pps. 114-115)

Kelly also quotes Center for Long-Term Care Financing president Stephen Moses:

"For years, Moses has floated the controversial idea of eliminating home value from the Medicaid component. That way, consumers would either have to buy long-term care insurance polices or spend home equity (via a reverse mortgage) before qualifying for Medicaid.

"'It would go a long way to solving the health care mess in this country,' Moses said. 'It would improve the quality of care, reduce the enormous amount of money the government pays to health care while retaining Medicaid for the poor.'" (p. 124)

Moses also says "If you are ready to think outside the LTC box, get Tom Kelly's book on reverse mortgages, and consider how much quality long-term care an extra trillion dollars or so could buy."