Using Home Equity to Pay for Long-Term Care

Owning your own home can be a wonderful thing, and it’s certainly an accomplishment, but it also has a lot more perks than you might initially think. For example, owning your own home provides you with an asset that you can borrow against when you need help paying for long-term care. Elderly adults are able to use their home’s equity to pay for any necessary long-term care. This can work to get rid of a lot of pressure on other family members and help provide adequate care to older adults as they continue to age.

Most conventional home equity loans are used to pay off things like any existing debts, mortgages, or make any home repairs. Although, the home equity isn’t completely free, since you have to pay the loan back with interest on top of that.

Conversion Mortgage Loans

The HECM (Home Equity Conversion Mortgage) reverse mortgage program, put in to place by the Federal Housing Administration, is a government program designed to help elderly homeowners get to and use the equity in their homes. While the program operates in much the same way as a conventional home equity loan, there are a number of options for payment available to you, and each one is in place to meet a specific need:

  • Tenure—This offers equal monthly payments for as long as the person borrowing remains alive and keeps the property as principal residence.
  • Term—It requires equal monthly payments, like a tenure plan, but these are made for a fixed period of time, specified by the borrower.
  • Line of Credit—Different from tenure and term plans, these plans allow for unscheduled payments at a specific time stated by the borrower, as well as in the amount the borrower requests until the line of credit is no more.
  • Modified Tenure—This combines both scheduled monthly payments and unscheduled payments on demand, but only so long as the borrower keeps their home as the primary residence.
  • Modified Term—This option combines scheduled monthly payments and unscheduled payments on demand for a fixed period, as determined by the borrower.

Requirements and Costs for HECM

  • Must be over 62 years of age.
  • Must have current mortgage either paid off or paid down by a good amount.
  • Must keep home as the primary residence to qualify for the program.
  • Must not be delinquent on any federal debt(s).
  • Mandatory counseling is required in a consumer education session

In these counseling sessions, you won’t just go over eligibility requirements and provisions to repay the loan, but also the financial effects of an HECM loan, as well as alternatives available for those who might be better off with other means of funding. These types of loans often come with a variety of fees and service charges too, though a majority of the costs of an HECM loan can be dealt with through any proceeds from the loan itself. This is good for older adults since they don’t have to pay any out-of-pocket expenses. These fees and charges include things like any initial and annual mortgage insurance premiums, an origination fee, various services fees, third-party charges, and interest on the loan in particular.

The origination fee is normally the most expensive of those. This fee is charged by lenders as compensation for processing the loan and can range from up to $2,500 for those homes valued at less than $125,000 to two percent of the first $200,000 of a homes’ value plus one percent of any amount over that number. It is important to note that these fees are capped at $6,000.

Important Questions to Ask

Making use of your home’s equity to cover any long-term care costs you have is not something you should rush into doing. Before making the final decision to use a HECM loan (or any other type of home equity loan, for that matter), potential borrowers should ask themselves the following questions:

  • Do I want to make use of the equity in my home to pay for long-term care costs?
  • Will the approximate value of my home help to cover any care costs well enough when I take on a reverse mortgage?
  • What are any potential drawbacks or consequences of a reverse mortgage?
  • What is the first thing that should be done to take care of long-term care costs after unlocking home equity?

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

Impact of Gifts Made in the Last Five Years

We all would like to think that Medicaid will be there for us without question if we happen to need it later on in life. However, there is something called a Medicaid Look Back period that can potentially affect your eligibility to receive Medicaid benefits.

What this means is that you cannot transfer any assets to any person, be they family members, loved ones, friends, or even any charitable organizations within five years of applying to receive benefits from Medicaid. This is what is known as the Look Back period mentioned above. New Jersey doesn’t want its citizens to have to move into a nursing home when you’ve given all your money to your family, children, or anyone else, and then qualify for Medicaid shortly thereafter. To make sure it doesn’t happen, Medicaid has instituted a penalty period—a length of time in which someone who transfers any assets will be rendered ineligible to receive benefits.

Let’s see an example:

The average cost of care per month in New Jersey is $9,369 (or more). So, if you give away property that has a worth of $100,000, you will then be ineligible for Medicaid for 10 months (as $100,000 divided by $9,369 =10.67 months).

Someone applying for Medicaid has to disclose any and all of his or her financials (both income and expenses) within five years of filing the application, again referring to the Look Back period. The Board of Social Services will then determine whether or not the applicant has transferred any assets for less than fair market value.

However, not all transfers will be penalized. If you transfer assets to any of the following, you will be exempt from ineligibility:

  • A spouse
  • A blind or disabled child
  • A trust for the benefit of the blind or disabled child under the age of 65 (even if said trust is to benefit the Medicaid applicant, under specific circumstances).

What’s more, there are special exemptions that apply to transferring a home. You can transfer your home without incurring penalty to the following:

  • The applicant’s spouse
  • A child under the age of 21 who is also blind or otherwise disabled
  • A trust for the sole benefit of the blind or disabled child under the age of 65 (even if said trust is to benefit the Medicaid applicant, under specific circumstances)
  • A sibling who lived in the home during the year before the applicant’s institutionalization who already has equity interest in the home.
  • A “caretaker child,” one who is defined as a child of the Medicaid applicant who lived in the house for a minimum of 2 years before the applicant was institutionalized and who cared for the applicant so he or she could stay out of a nursing home.

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

Deciding Between Home Care and Institutionalized Care

When trying to plan out the care of an elderly loved one, numerous things can come up that need to be taken into consideration. For now, let’s look at some of the questions you should ask, and some of the differences between home care and care at assisted living facilities and nursing homes.

First off, when you’re thinking about which services to use, an outline of your loved one’s specific needs would be beneficial. List those concerns and write out answers to them. Some questions that you can ask to assist in this process include:

  • What type of help does my loved one need to be able to live as independently as possible?
  • What are his or her healthcare, nutritional requirements, supervision, companionship, housekeeping and transportation needs?
  • How much money is allotted to pay for these services?
  • Will insurance cover any of them?
  • What days and times do they need assistance?
  • What can I, as a family member or friend, do to help them?

Now, let’s look at some differences in the different types of health care.

Home Care

This service is provided either by professionals or family members. Professionals can give care ranging from several hours a day to 24/7 care, entirely depending on the needs of the patient. For those who just need help with daily tasks, home care is nothing more than helping with common chores. Others might need help with medications, injections, or other medical help. In these situations, certified health training is required. Home care takes both a level of healthcare and supportive services to help with the individual who is homebound, sick, or disabled, but who is living at home safely. The hours, types of care, and level of care given varies by providers.

Independent Living Facilities

This type of facility allows elders to rent condos or an apartment on a community campus. On campus, there are services that provide a wide array of socialization options, and for those who are in good health, a major benefit of these is that they allow the person to stay socially active and lessen chances of social isolation or depression. Healthcare services aren’t normally provided here, so this isn’t the best option for those with major health issues.

Assisted Living Facilities

These are very similar to their Independent cousins except for the fact that an assisted living facility provides basic health services, while ILFs do not. Residents at this type of facility live independently in their own apartments but also have access to help when needed, as there are personal care staff on-hand to help with any common chores. No skilled nurses are normally on-site, so the types of health care services provided here are often limited.

Nursing Home Care

When a person requires 24-hour care, he or she is normally moved into a nursing home, where they can get care for major medical needs from a variety of medical professionals. Residents might see RNs, LPNs, doctors, and therapists daily. Nursing home residents often live in a room on facility grounds and share them with other residents. Other needs and services provided include things like housekeeping, laundry services, meals, and recreational opportunities.

It is important to remember that the right decision to make is one based on the person’s specific needs as well as what is financially feasible for the family.

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

Other New Jersey Intestate Succession Rules

Here are a few things you ought to know about rules of succession if you die intestate.

  • Survivorship period. In order to inherit property or shares under New Jersey’s intestate succession laws, an individual has to outlive you by 120 hours. For example, if you have a car accident and your sibling is with you, and he or she passes away a few hours after you, his or her estate would not get any of your property.
  • Half-relatives. Any half-relatives you have inherit property the same way they would if they were considered “whole” relatives. So, your sister, who has the same father as you (but not the same mother), would have the same right to your property as she would if you had both of your parents in common with each other.
  • Posthumous relatives. Relatives who were conceived before—but born after—you died, would inherit the same as if they had been born while you were living, so long as they survive a minimum of 120 hours after birth.
  • Immigration status. Any relatives you have who are entitled to an intestate share in your property will get it whether or not they are citizens or even legally in the country.

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

How to Know Your Personal Needs Allowance

A Personal Needs Allowance (aka PNA) might be another unfamiliar term for you. It can be confusing, but it doesn’t stay that way if you know what it is and what it does. Let’s take a look and clear up any confusion you might have right now:

What is a Personal Needs Allowance (PNA)?

It’s exactly what it sounds like it is: a standard amount of income than an institutionalized client can use for things like housing, clothing, personal items or other incidental things. The personal needs allowance might also be referred to as the Clothing and Personal Incidentals (or CPI). It is taken from the client’s countable income when determining the cost of care responsibility.

How is PNA Determined?

The PNA is determined according to the client’s living arrangement, any authorized services, and marital status. If someone is in multiple settings per month, the personal needs allowance that is used in the cost-of-care evaluation will be the highest PNA the person was eligible to receive at any point throughout the month.

 

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

Healthcare Assessment and Evaluation

A health care assessment may be necessary to help you get the proper assistance and care that you’ll need later in life. It may also be called an “assessment of need.”

When you go for the assessment, oftentimes there will be a specialist (normally an occupational therapist) who will look over your specific needs and discuss them with you. In doing so, they ensure you receive the correct, best support you need wherever you need it. Needed services might include things like healthcare, equipment, help in the home, or residential care. The assessment should show which needs are vital, and show any risks you run if you weren’t getting help. If need be, the local health and social services teams will put together a support package for you and talk about it with you, and also write up a care plan. This may include services from both private and voluntary organizations. If other services are required, such as housing or benefits advice, you will be able to get in touch with any necessary local services.

Some services and support you could receive include the following:

  • Home care help with things like cleaning and shopping
  • Disability equipment and adaptations to the home
  • Day centers to give you or your caregiver a break
  • Day care for your child if either you or they have a disability
  • Residential care or nursing home care

If you’ve gone through the assessment and it’s been determined that you require help from social services, you could potentially get direct payments to choose and purchase them on your own. Otherwise, you can get them directly from your health trust.

You should be aware that a great many people’s health and social needs change over time. You should make it a point to regularly review your plan, and it should be done at times or intervals that have been previously specified in the care plan or at any other time it is deemed necessary to do so.

If you desire to be reassessed thanks to a change in your needs, you’ll need to contact your local trust.

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

Family Support for Long-Term Care in the Home

Caring for an elderly loved one can be a huge undertaking. You want to care for your loved one, but the task may prove to be too much to handle if caregivers are not receiving the support they so desperately need. That’s why it is vital that all available family members who are willing to help actually do so. That means switching up tasks or asking to watch someone while another family member takes a much-needed break. It is important to remember that the care recipient isn’t the only one who needs looking after. It is just as important (if not more so) for caregivers. Also, finding and joining a caregiver support group in your area can be a great way to get encouragement and support from others who are also going through the same experience. Scott Counsel can help you find any caregiver support group(s) that may be in your area.

Remember: If a caregiver isn’t properly cared for and supported themselves, the loved one they’re trying to care for isn’t going to receive the level of care he or she needs either.

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

Medicaid Planning Strategies

Medicaid is a huge program, and one that can be incredibly confusing to figure out. Rules vary by state and change all the time, so a Medicaid Planner can be beneficial in helping you prepare to take the journey of Medicaid eligibility. While there are in fact public employees that can help you by offering free assistance to those qualified individuals, the unfortunate truth is that not everyone is qualified for free assistance, so hiring a Medicaid Planner is a necessity in those instances.

If you’re worried about the cost of hiring such a person, you should be aware that the average cost of a Medicaid Planner is less than what it costs for a one-month stay in a nursing home. While there can be numerous costs when it comes to hiring a Medicaid Planner, it really is dependent on the Planner him/herself, as well as the specific needs of the person or persons hiring the Planner.

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

Knowing When to Intervene

Going for regular visions tests is important for everyone, but especially those elderly family members in our lives.  If you are with your loved one in the car and notice continuous or consistent squinting or leaning forward trying to make sense of things, or perhaps they may be swerving a lot, it could be time for a discussion regarding their fitness to drive. You may meet more than a little reluctance, and it most certainly will not be an easy conversation to have.

Something that might help is simply letting them know that you understand their displeasure. You don’t like the idea of the conversation any more than they do, because you don’t like seeing them struggle to do something that a vast majority of society often takes for granted. Conversely, they could even open up to you about the struggles they’ve been having when it comes to driving. If so, it can work to alleviate much of the pressure both of you are probably feeling.

However, if you are met with that aforementioned reluctance, it may just be because they are afraid and don’t want to face that fear. If you’re getting the sense that your loved one is fearful, there are some ways that you can help.

First and foremost, suggest a vision test so that you both can know exactly what it is that’s causing the issue. It could be that they just need a new pair of glasses or an updated prescription for their current pair. Whatever the root issue is, it’s likely to leave them feeling apprehensive. You can help them by offering to make trips to the grocery store or running errands for them.

The most important thing is that they know they are not alone in dealing with this problem or these issues, whatever the circumstances. That can be a great load off of them mentally, as it frees them up to accomplish the tasks they can while not worrying so much about those they can’t. If you and they are still facing reluctance, simply reassure them that you understand they don’t like it—that you don’t like it either, but you want to help them to live as normal and fulfilling a life as they are able. If you can do that by just driving for them or running errands, then it might take some getting used to, but eventually things will turn out for the best—for both of you.

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

Identifying a Family Representative and Caregiver

Taking care of an elderly loved one is a monumental undertaking, and choosing a specific member of the family to act as representative, or bestowing on him or her the title of “Caregiver” is something that should not be taken lightly.

If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.

This way, you lessen the strain placed on yourself, your family, and, perhaps most importantly, the loved one for whom you are caring.