Starting long-term care conversation
Researchers with the University of Minnesota School of Public Health show that as many as 28 percent of the post-World War II generation, also known as baby boomers, will not have enough money to pay for basic retirement expenses. That includes long-term health costs, including treatments for cancer or Alzheimer’s disease.
The state could wait for this economic tidal wave to occur, or it could find ways for people to better finance their health care. One solution getting more attention at the federal level would permit families to take a reverse mortgage to pay for at-home services. That solution and others were the focus of an important health- and long-term care conference in Minneapolis this week, organized by state Sen. Linda Berglin, DFL-Minneapolis. The Reforming States Group and Milbank Memorial Fund sponsored the event.
Recently the U.S. Department of Housing and Urban Development agreed to offer reverse mortgages as a funding mechanism for long-term care. Meanwhile, Minnesota will explore the creation of a reverse mortgage program for the long-term care needs of frail, elderly residents. The high number of Minnesotans who own their own homes make this partial solution especially attractive.
Here’s an example of how the reverse mortgage option might work: A man, just diagnosed with the early stages of Alzheimer’s, wants to stay at home rather than go to a nursing home that costs $5,000 per month. The married couple own a home valued at $75,000. Rather than quickly eat up the family assets for nursing home care, the couple could purchase a reverse mortgage through a state housing finance agency with reduced closing costs. That financing mechanism uses home equity to provide $500 per month for at-home care. The money could help with yard work, home cleaning or errand services, and some time away for shopping or other recreational activities. The couple would use their own home equity to enable a family member to stay at home as long as possible.
The stay-at-home option will become increasingly important as baby boomers move into old age. For anyone convinced that such measures are premature, consider this: The University of Minnesota study projected that the number of Minnesota retirees who are at risk of insufficient resources will increase from 90,000 this year to more than 225,000 by 2021. Since declining health is inevitable, also inevitable will be steep medical costs and that “tidal wave” of the elderly.
We’re glad that Berglin took the initiative to start discussions on just what the state and its residents will do as the large population bubble of baby boomers ages. Other solutions were brought forward at the meeting, such as mandatory savings plans that would set aside money from Social Security for health-related matters, family loan programs to reduce long-term care expenses and long-term care insurance policies. All solutions deserve a hearing and a chance to develop.
The irony here stands out. Minnesotans earn higher incomes than the national average and are healthier than residents of most other states. As a consequence, they live longer. Berglin and a host of national and state officials want to ensure that the last years of life are lived as well as possible, without financial burden.
Source: Pioneer Press
