The bulk of long-term care is going to take place in single-family, owner-occupied homes, according to Louis Tenenbaum, founder of HomesRenewed, but most homes aren’t equipped to support the caregivers and older people who live in them.
HomesRenewed is a coalition of businesses and organizations dedicated to increasing the number of aging-friendly homes in the United States. Tenenbaum spoke on a webinar sponsored by the National Reverse Mortgage Lenders Association on Thursday about how advisors can help older clients stay in their homes for as long as possible.
Almost 90% of people 65 and older want to stay in their homes as they age, he said, referring to a 2014 study by AARP. However, most homes were designed during the postwar housing boom, and they haven’t kept up with increased longevity, according to Tenenbaum.
“Our homes need to be in line … with the current and future reality of American demographics,” Tenenbaum said.
(Related: Planning for Longer Lives: Fading Capacity)
Discussions around aging in place tend to focus on the older person’s independence, Tenenbaum said, but a better focus would be “interdependence.” Independence may be the ideal people strive for, but “interdependence is the reality” because older people will be supported by friends, family and service providers when they age in place.
Updating a client’s home to facilitate aging in place may start with updating appliances like refrigerators and washers or dryers to new models that are more accessible to someone with limited mobility, like French door refrigerators or ventless washer/dryer units, according to Todd Brickhouse, founder of Todd Brickhouse Accessibility Associates.
Brickhouse noted that manufacturers like American Standard and Kohler have taken note of the aging population and are releasing “products that are geared toward the senior population, who have a more expendable income and own houses where they have built up equity and can afford nicer renovations.”
Bigger updates include retrofitting bathrooms with grab bars, lower sinks and roll-in showers with linear drains, and replacing stairs and entryways with ramps or lifts.
Brickhouse said bathrooms and entryways are the most important areas to upgrade. He noted that in New York, where he’s based, bathroom renovations to improve accessibility can cost between $17,000 and $25,000.
Where a home is located and the materials it’s made with may present challenges in retrofitting it for an older person’s needs, Brickhouse said. It can be difficult to install ramps and lifts in townhomes and brownstones, or neighborhoods where homes are close together.
Reverse mortgages can help clients who are 62 or older pay for these upgrades, in addition to insurance and private savings.
Some properties aren’t eligible for a reverse mortgage to fund accessibility upgrades, like investment properties or vacation homes, according to Craig Barnes, a certified reverse mortgage professional at Reverse Mortgage Funding LLC. However, Barnes noted that multifamily units are eligible for a reverse mortgage, or home equity conversion mortgage (HECM), as long as one of the units is the borrower’s primary residence.
“The property has to be owner occupied and has to be the primary residence,” Barnes said.
Funds from a reverse mortgage can be drawn as a lump sum or line of credit. Tenure and term payments are regular payments to the client. A modified tenure or term payment combines a tenure or term schedule with a line of credit.
HECMs are “non-recourse loans,” meaning the home is the only source of repayment for the loan, Barnes said.
As of 2014, client couples are eligible for an HECM even if one spouse is younger than 62, according to Barnes. Clients must be married for the duration of the loan, and the non-borrowing spouse can remain in the home even after the other spouse’s death.
Advisors may have clients who work with an occupational therapist to help them with a disability or long-term illness. If those clients decide they need to update their homes to make them more accessible, Tenenbaum suggested getting the therapist’s input on any planned renovations to make sure they will work for that particular client.
Brickhouse agreed, adding, “You can have five people with multiple sclerosis and their capabilities can be completely different from each other.”
While Medicare doesn’t cover accessibility renovations, Brickhouse said, “there’s a tremendous amount of funding available for children with disabilities” through Medicaid.
He said about 70% of his firm’s work is for children with disabilities. “Some funding is a one-time cap of $20,000,” he said, and “there’s other funding through different Medicaid processes that are $25,000 to $30,000 per year.”
— Read 5 Long-Term Care Hybrid Perspectives on ThinkAdvisor.