Reverse Mortgages & Health Insurance Coverage

by Peter G. Miller
August 4th, 2010

I spent much of the weekend in an emergency room and that’s not a place where you want to be.

As it happened my aunt developed an intense pain in her abdomen and went to the hospital. I spent the next nine hours with her in the ER until she was moved to the hospital for surgery the next day.

I bring this story up on a site for reverse mortgages for several reasons.

First, my aunt is a senior with Medicare and supplemental coverage under a health insurance plan. Her bill will be enormous, but her actual cash cost will be a few dollars.

Second, you don’t want to go to an emergency room if it can be helped. The EMTs, nurses, doctors and technicians are being asked to do terribly difficult work under great stress. What they do is literally heroic. While I was there a seven-year old child with a heart condition passed away. It was awful for everyone.

Third, the odds are overwhelming that at some point we will all need health services of some sort. While Medicare helps seniors, the cost of health services is so great that even owing a small percentage of the bill can be bankrupting for many households.

Reverse Mortgages

I am one of those who thinks there are circumstances where an FHA home equity conversion mortgage — an HECM or reverse mortgages — is an appropriate and valuable financial tool. One of those circumstances concerns health insurance.

Let me explain:

The cost of even a brief hospital stay is huge. A single day in the hospital can cost thousands of dollars. Moreover, there are follow-up expenses and more costs.

There’s a lot of justice to these expenses when you look at the price of technology, the requirements for quality care and the wages which should be paid to healthcare professionals. That said, a cost is a cost.

For the 12 months ending in March we had 1.5 million bankruptcies — that’s up 27 percent from the prior year. The traditional causes of bankruptcy are loss of job income, divorce and medical expenses from accidents and illness.

If you do not have adequate medical coverage you can be impoverished with a single accident, disease or fall. It makes sense to plan ahead and get supplemental coverage.

The good news is that such coverage is typically inexpensive — at least in relative terms once you have Medicare. That said, a premium is a cost….

You can pay for supplemental coverage from your funds. If money is an issue, then perhaps adult children — those reverse mortgage heirs — might want to chip in. Alternatively, you can get supplemental Medicare coverage and pay for it monthly or when you need to from a reverse mortgage that has a line of credit.

The world of senior health insurance is complex. For advice, speak with local physicians, community groups and attorneys who specialize in elder law. Check for limitations and caps. Review costs. See what works best for you.

As for my aunt, she had surgery and will be fine, both physically and financially. One hopes in similar circumstances that everyone else would have the same results.

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