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Use Your Home to Stay at Home Program Begins:
NCOA Exploring Use of Reverse Mortgages for
Long-Term Care
Nov. 6, 2003 - The National Council on the Aging,
with the support of both the Centers for Medicare and Medicaid Services
(CMS) and the Robert Wood Johnson Foundation, is laying the groundwork
for a powerful public-private partnership to increase the use of reverse
mortgages to help pay for long-term care.
The ultimate goal of the Use Your Home to Stay at
Home™ program is to increase the appropriate use of reverse mortgages so
that millions of homeowners can tap home equity to pay for long-term
care services or insurance. Reverse mortgages are a special type of loan
allowing people aged 62 and older to convert equity in their home into
cash while they continue to live at home for as long as they want.
“Because older Americans have almost $1.8 trillion
tied up in home equity, reverse mortgages have the potential to
dramatically increase the ability of older homeowners to pay for
long-term care,” said NCOA President and CEO James P. Firman. He also
noted that over 80 percent of the nation’s seniors own their own homes
and 73 percent are owned free and clear of any mortgages.
“Reverse mortgages can give millions of older
Americans choices about how they want to receive long-term care,” said
CMS Administrator Tom Scully. “Tapping their home’s equity gives them
the purchasing power they need to buy comprehensive long-term care
insurance that will provide services they need to stay in their homes
and out of nursing facilities.”
The project will combine research, consumer
surveys, and discussions with experts to identify cost-effective
government interventions and other incentives that can facilitate the
use of reverse mortgages. A Panel of Experts from government, industry
and non-profit organizations met this month at NCOA offices and began
discussing the broad range of possibilities and how to balance the needs
of consumers with the desire of government to control the costs of
long-term care.
The outcome of the project will be a National
Blueprint for Increasing the Use of Reverse Mortgages for Long-Term Care
report, which will offer new insights into the potential market for
reverse mortgages along with recommendations for administrative action,
regulatory changes, and demonstration programs.
Barbara Stucki, Ph.D., a long-term care consultant
and formerly a senior policy analyst for the American Council of Life
Insurers, is the Use Your Home to Stay at Home™ project manager.
The CMS grant totals $295,000 and The Robert Wood
Johnson Foundation grant $99,900.
For a fact sheet on reverse mortgages, please see
Background
below.
Founded in 1950, The National Council on the Aging
is the nation’s first charitable organization dedicated to promoting the
dignity, independence, well-being, and contributions of older
Americans. NCOA serves as a national voice and powerful advocate on
behalf of older Americans. NCOA is an innovator, developing programs
such as BenefitsCheckUp®, Foster Grandparents and Family Friends. NCOA
is an activator, working with its thousands of community organization
members nationwide to provide needed services to older people. For
more information, visit
www.ncoa.org.
BACKGROUND
Reverse Mortgages for Long-Term Care
“Use Your Home to Stay at Home”™
Started in February 2003 by The National Council on
the Aging, the “Use Your Home to Stay at Home” project will develop a
national blueprint for encouraging the use of reverse mortgages to help
older Americans pay for long-term care services at home. Reverse
mortgages are a special type of loan that allows people over age 62 and
older to convert equity in their home into cash while they continue to
live at home for as long as they want.
Long-Term Care Costs and Home Equity
Currently, the costs of long-term care are
primarily paid out of pocket by consumers or by Medicaid, the
federal/state program designed to pay costs of health care for
low-income individuals. In 2000, our nation spent $123 billion a year on
long-term care for those over age 65, with the amount likely to double
in next 30 years. Most of those dollars pay for care in skilled nursing
facilities.
Most elders who have serious health care issues and
need long-term care want to receive help at home rather than in an
institution. Also, most seniors (80% of those over 65) own their homes
and 73% of those own them free and clear. However, up until now, seniors
have not tapped the equity in their homes to pay for long-term care in
large numbers. Also, very little of that equity, estimated at $1.8
trillion, is used in purchasing long-term care insurance.
Unlocking these substantial resources can help
“house rich, cash poor” seniors purchase the long-term care services
they feel best suit their needs. The use of private funds from reverse
mortgages would also strengthen community long-term care systems and
reduce the burden on state Medicaid budgets.
Policy Barriers and Other Changes Will Be Explored
Key policy changes can significantly alter the
dynamics and momentum for using reverse mortgages for long-term care.
NCOA’s project “Use Your Home to Stay at Home” will combine research,
consumer surveys, and discussions with experts to identify
cost-effective government interventions and other incentives that can
facilitate their use. A broad-based Panel of Experts, with leaders from
the public, private and non-profit sectors, will look at a wide range of
possibilities to balance the needs of consumers with the desire to
control government spending on long-term care. A National Blueprint for
Increasing the Use of Reverse Mortgages in Long-Term Care will offer new
insights into the market along with recommendations for administrative
action, regulatory changes, and demonstration programs.
Panel of Experts
Peter Bell
President
National Reverse Mortgage Lenders Association
Bronwyn Belling
Reverse Mortgage Education Project
AARP Foundation
Lynn Boyd
Senior Director
American Council of Life Insurers
Diane Braunstein
Program Director, Health Policy Studies, Center for Best Practices
National Governors Association
David S. Carey
Reverse Mortgage Product Manager
Fannie Mae
Priscilla Chatman
Senior Legislative Representative
National Committee to Save Social Security and Medicare
Yung-Ping Chen
Frank J. Manning Eminent Scholar's Chair in Gerontology
Gerontology Institute
University of Massachusetts Boston
John Cutler
Project Leader, Federal Long-Term Care Insurance Program
U.S. Office of Personnel Management
Donna Folkemer
Program Manager, Forum for State Health Policy Leadership
National Conference on State Legislatures
Wendy Fox-Grage
Program Principal, Forum for State Health Policy Leadership
National Conference on State Legislatures
Lynn Friss Feinberg
Deputy Director, National Center on Caregiving
Family Alliance for Caregiving
Paul Franklin
President
Franklin Funding Incorporated.
Jay Greenberg
President
LivHOME Inc.
Val Halamandaris
President
National Association for Home Care
Gail Hunt
Executive Director
National Alliance for Caregiving
James Knickman
Vice President of Research and Evaluation
Robert Wood Johnson Foundation
Kathy Kotula
Director of Health Policy
American Public Human Services Admin.
Maureen Lillis
Senior Vice President, Long Term Care Div.
CHCS Services
James R. Mahoney
CEO
Financial Freedom Senior Funding Corporation
Kevin J. Mahoney
Associate Professor, Graduate School of Social Work
Boston College
Stephen McConnell
Vice President, Advocacy and Public Policy
Alzheimer’s Association
Hunter McKay
Social Science Analyst
Office of the Assistant Secretary for Planning and Evaluation, HHS
Mark Oberhellman
Vice President, LTC Product Development
GE Financial
Duane Parde
Executive Director
American Legislative Exchange Council
David R. Plumb
Senior Associate Actuary
John Hancock Mutual Life Insurance Co.
Dan Quirk
Executive Director
National Association of State Units on Aging
Donald Redfoot
Senior Analyst, Public Policy Institute
AARP
Milt Riseman
Chairman
American Business Financial Services Inc.
Joyce Ruddock
Vice President, Long-Term Care
MetLife Insurance Co.
Dallas L. Salisbury
President and CEO
Employee Benefit Research Institute
Ken Scholen
Reverse Mortgage Education Project
AARP Foundation
Robyn I. Stone
Executive Director
Institute for the Future of Aging Services
American Association of Homes and Services for the Aging
Edward Szymanoski
Deputy Director
Office of Evaluation, HUD
Jeffrey S. Taylor
Vice President, Senior Products Group
Wells Fargo Home Mortgage, Inc.
Sandra Timmerman
Director
MetLife Mature Market Institute
Jeanette Walton
HECM Program, HUD
Anne Werner
Independent Consultant
Nancy Whitelaw
Director, Health and Aging Services Research
National Council on the Aging
Funders
The “Use Your Home to Stay at Home”™ project is
funded by the Centers for Medicare and Medicaid Services, the federal
agency that operates Medicare and Medicaid, and the Robert Wood Johnson
Foundation.
Program Management
James P. Firman, Ed. D., NCOA president and CEO
Barbara Stucki, Ph.D., project manager
Headquarters
The National Council on the Aging
300 D Street SW, Suite 801
Washington, DC 20024
(202) 479-1200
(202) 479-0735
About NCOA
Founded in 1950, The National Council on the Aging
is the nation’s first charitable organization dedicated to promoting the
dignity, independence, well-being, and contributions of older
Americans. NCOA serves as a national voice and powerful advocate on
behalf of older Americans. NCOA is an innovator, developing programs
such as BenefitsCheckUp, Foster Grandparents and Family Friends. NCOA is
an activator, working with its thousands of community organization
members nationwide to provide needed services to older people. For more
information, visit
www.ncoa.org.
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