Can a reverse mortgage pay for a client's in-home care?

How can the money be used for care?

• In-home care aides or visiting nurses
• Home modifications: grab bars, a walk-in shower, a first-floor bedroom, ramps
• Paying a family caregiver, with a proper written agreement
• Covering living costs so savings can go toward care

A line of credit works well because care needs change: draw only what's needed, when it's needed.

When is it a good fit?

When the client wants to age in place, the home can be made safe, and care needs can be met at home for years, not months. It can also be a bridge while long-term care insurance benefits begin.

When is it a poor fit?

When the client is likely to need assisted living or a nursing home soon. On a HECM, the loan generally comes due if the last borrower is away from the home for more than 12 months in a row. If a spouse or co-borrower still lives there, the loan usually doesn't come due. See assisted living and reverse mortgages.

What about Medicaid?

Loan proceeds aren't income, but money held into the next month can count as an asset for needs-based programs. Draw as needed from the line instead of taking a lump sum. See Medicaid, Social Security, and Medicare.

Our take

Care decisions are emotional, and families often wait until there's a crisis. The best time to set up a line of credit is before care is needed, while the client is healthy and has time to plan. Bring the family in early; I'm happy to explain the options to everyone at once.