1. Home Equity: A Strategic Resource for Long-Term Services and Supports 1 Barbara Stucki, Ph.D. Long Term Care Discussion Group March 26, 2015

2. Overview How and when home equity being used to sustain people with disabilities and chronic conditions? Can home equity fill financial gaps and expand shorter-term options for planning and prevention? Could shifting homeowner attitudes and needs about accessing this asset have unexpected consequences that might alter their ability to pay privately for assistance? SOA Monograph: Managing the Impact of Long-Term Care Needs and Expense on Retirement Security 2

3. Expenditures for Community-Based Long-Term Services and Supports for People Age 65 and Older, 2011 77.0% ($20 Billion) 3.8% ($1 Billion) Source: Congressional Budget Office (2013). Rising Demand for Long-Term Services and Supports for Elderly People. Washington DC: CBO. (Exhibit 4)

4. How Many Homeowners Get Medicaid LTSS? CBO 2013: About 11% of people age 65+ who live in private homes (owned/rentals) are enrolled in Medicaid. NLTCS 2004: Among older homeowners using paid care, about 12% report that they received assistance with these expenses from Medicaid. GAO 2007: A review of 540 Medicaid nursing home applications found that 25% of applicants owned homes. 4

5. Even with the home equity test required for Medicaid eligibility under the DRA, only 37 states require Medicaid applicants to provide documentation of a primary residence. Among these states, only three require documentation on the value of the home or an applicant’s equity interest in the home. GAO (2012). Information Obtained by States about Applicants’ Assets Varies and May Be Insufficient. 5

6. Expenditures for Institutional Long-Term Services and Supports for People Age 65 and Older, 2011 41.2% ($40 Billion) 11.3% ($11 Billion) Source: Congressional Budget Office (2013). Rising Demand for Long-Term Services and Supports for Elderly People. Washington DC: CBO. (Exhibit 4)

7. Mean Value of Asset Holdings Among People Age 65 and Older, By Number of Nights Spent in a Nursing Home Total number of nights calculated based on nights spent by an individual in a nursing home or long–term care facility between 2008-2010 (Health and Retirement Study). Values in 2010 dollars. Housing wealth includes value of the primary residence minus mortgages and home loans. Source: Banerjee S (2012). Effects of Nursing Home Stays on Household Portfolios. EBRI Issue Brief No. 372.

8. Magnitude of Use of Home Equity for LTSS About 70% of residents in assisted living and independent living move from a home or apartment. In 2011, about 5% of households age 65+ had a home equity line of credit loan (HELOC). – 19% of households with an outstanding HELOC are 65+. – 4% of HELOC borrowers use these loans to pay for education or medical expenses. About 2% of households age 62+ have a reverse mortgage. – 28% concerned about health care and LTSS expenses. – 5% used their RM for immediate health-related needs. 8

9. Change in Median Net Worth Among Older Families From 2001 to 2010 Source: Bricker J et al. (2012). Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances. Federal Reserve Bulletin Volume 98 Number 2. Age Group

10. Home Equity as a Retirement Resource Financial Freedom 2007 —Among homeowners age 62 to 75, 14% are somewhat likely to use a home equity loan or RM, 25% are undecided. Fidelity Research Institute 2007 – 13% of retirees used home equity; 7 percent plan to do so. – 21% of pre-retirees plan to tap house wealth to supplement income; 20% are undecided. Insured Retirement Institute 2011 – for 9% of pre- retirees age 50-65, the sale or refinancing of their home would be a major source of retirement income; 19% see it as a minor source. 10

11. For More Information Contact: Barbara R. Stucki, Ph.D. Co-founder and CEO NestCare FPC 1401 Los Gamos Drive, Suite 200 San Rafael, CA 94903 541-322-5610 (direct line) bstucki@nestcare.com 11