Can A Reverse Mortgage Satisfy The LTCI Need Of Boomers?
When there is a growing need for long term care insurance and a growing pot of funds to draw from, does it make sense for boomers to tap into the equity in their homes?
That depends on whom you talk to and how it is done, according to interviews.
Tapping growing home equity values by using reverse mortgages is one way to foot the bill for long term care, said David Blaszczak, a representative with the Centers for Medicare & Medicaid Services, a division of the Department of Health and Human Services in Washington. Blaszczak made his remarks at the winter meeting of the National Association of Insurance Commissioners, earlier this month.
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The Department of Housing and Urban Development will offer a 2% discount on reverse mortgages as part of closing costs to help pay for LTC insurance, Blaszczak said. A homeowner applying for the discount would have to use all of the money taken out from the loan to buy LTCI, he said.
The authority to do it exists and implementation can begin once a regulation is finalized, Blaszczak added.
Making LTCI available to Americans is important, he said, because “the issue of how Americans will pay for LTC becomes increasingly pressing as the baby boom generation ages.
“Continued reliance on public funding is problematic and the need for expanded LTC financing options must be addressed. This is an issue of significant concern for beneficiaries, their caretakers, providers and for stewards of the public programs that today bear the brunt of the cost,” he said.
CMS maintains the issue is significant enough to award a $295,000 grant to the National Council on the Aging, Washington, through May 30, 2004, to study the use of reverse mortgages for long term care expenses.