section 1 - The American College Online Learning Center

for the duration of the three years. Without the long-term care insurance, Mariawould lose $109,500 from the funds plus taxes and lost interest. She needs thismoney to sustain her after Tony’s death.j. Disadvantages of long-term care insurance:(1) Long-term care premiums may be spent on a benefit that is never used.(2) Long-term care insurance will not help for mild frailty risk (the client is onlyslightly confused, but not cognitively impaired or is limited but cannot meetthe 2 activities of daily living requirement).2. Capitalize on the house. Institute a reverse mortgage program, downsize to a retirementcommunity, choose to reside in a continuing care retirement community (CCRC), ortake a home equity loan.a. The reverse mortgage (described briefly earlier and in greater detail in a latersection of the curriculum) can be an effective way to pay for a home health carelong-term care need.b. Example: Lou Anne and Jose have reached the later years of retirement whenLou Anne falls and breaks her hip and is no longer able to bathe or dress herselfand has limited mobility. The funds from a reverse mortgage could provideadequate income to pay for home health and custodial care, which will supplementJose’s contribution to the caregiving event.c. The reverse mortgage can provide the funds necessary to offset some of theexpenses of incapacity risk.d. Example: Kerri is a widow who has lost the ability to perform functions of homemaintenance and needs help paying the bills. She can use part of the money fromthe reverse mortgage to pay workers to keep up the home maintenance and theother part to pay a daily money manager to help pay bills.e. The reverse mortgage can provide a pool of funds from which to pay for uninsuredmedical bills.f. Example: Kathy has to have a major medical procedure and a large amount of thecost for it is not covered by her Medicare and Medicare supplement insurance.She can take out a reverse mortgage line of credit to pay the bills when theycome due.g. Disadvantages of using a reverse mortgage to pay for long-term care risk, frailtyrisk, or health care expense risk:(1) The funds available may not meet the cost of the risk.(2) The use of a reverse mortgage may undermine the desire to leave thehouse as a legacy to an heir.h. If the client plans ahead, they could have downsized to a retirement communityor a continuing care retirement community (CCRC). The act of downsizing is tosell the family home to gain assets for retirement by moving into a less expensiveretirement home. This can be done regardless of the client’s health.i. A CCRC will require the client to be in good health to be admitted. However, if theclient wants to minimize the risks of long-term care and frailty, this is an excellentoption for the following reasons:(1) CCRC’s provide a variety of levels of living experiences ranging fromindependent living in a private structure (house or apartment) to assistedliving, to nursing home care.5.17