In 2003–2004, staff at the National Council on the Aging (NCOA) — a voluntary network of organizations and individuals that works to improve the health and independence of older persons — developed a report outlining steps to encourage 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 age 62 and older to tap into the equity (value) they have accumulated in their homes and convert it into cash, which they can use to pay for home and community-based long-term care services and insurance.

The report, titled Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages for Long-Term Care: A Blueprint for Action, contains estimates of the number of seniors who could benefit from reverse mortgages, the potential savings for the Medicaid and recommendations on promoting their use. The report is available online.

Key Findings

• Almost half (48 percent) of homeowners age 62 and older (13.2 million) are candidates for using a reverse mortgage for long-term care at home.
• Older households could receive $72,128 on average from a Home Equity Conversion Mortgage (the most popular form of reverse mortgage) to pay for immediate needs and to help prevent premature institutionalization.
• Increasing the market for reverse mortgages could save Medicaid from $3.3 billion to $5 billion annually by 2010, representing 6 to 9 percent of total projected annual Medicaid expenditures.

Funding
The Robert Wood Johnson Foundation (RWJF) provided NCOA with a grant of $99,833 to support this unsolicited project.