You’re Already Choosing a Long-Term Care Strategy. You Just May Not Know It.

When long-term care shows up, families either already have a plan in place or are forced to make one under pressure.

Most families don’t avoid planning for long-term care because they don’t care. They avoid it because everything feels fine right now.

The house is paid off, retirement income is working, and life has found a nice rhythm.

This plan, this muted strategy, quietly defaults to one option: we’ll deal with it later ... if we have to.

But long-term care rarely arrives at a convenient moment. It shows up alongside health changes, emotional stress, and time-sensitive decisions. And suddenly, families are not choosing between good options; they are choosing between urgent ones.

This is where home equity often enters the conversation. Not as a game plan to “use the house,” but as a way to create flexibility when flexibility matters most.

At its core, this is a simple fork in the road:

Do you wait and hope you never need a plan, or do you put one in place early so decisions can be made calmly, together, and on your own terms?

The difference is not financial sophistication. It's timing, control, and peace of mind for you and the people you love (that love you, too).

Two Common Paths Families Take

Option A: Wait Until Care Is Needed

(A reactive strategy)

What this looks like:

• Home equity stays locked in the house.

• No reverse mortgage is in place.

• Liquidity is created only after a care event begins.

Why this feels comfortable:

• No upfront loan costs, no debt accumulation.

• No decisions to make today.

• Familiar and emotionally easier to “leave things alone.”

  
  

Where the risk shows up:

• Qualification for a reverse mortgage loan may happen during illness, stress, or cognitive decline.²

• Occupancy requirements of a reverse mortgage loan may affect eligibility depending on duration and circumstances of absence from the home.³

• Cash must be created quickly, sometimes forcing investment sales or rushed home decisions.

• Many facilities require a period of private-pay liquidity, often 12–24 months, before accepting residents.⁴

The Minnesota reality:

• Medicaid (or Medical) Assistance (MA) eligibility is driven primarily by liquid assets, not home equity.⁵

• A paid-off home does not create private-pay cash flow.

• Timing mistakes can delay care options at the exact moment decisions matter most.

Option B: Establish a Reverse Mortgage Early

(A proactive contingency strategy)

What this looks like:

• A reverse mortgage loan line of credit (LOC) is established years before it is needed.

• No required monthly mortgage payments while program requirements are met.³

• Funds remain untouched unless a care event occurs.

Why families choose this:

• Access is secured while both spouses are healthy.

• The line of credit (LOC) grows over time based on the loan’s effective rate.⁶

• Liquidity is available during private-pay years.

• Forced investment or home sales are often avoidable.

Tradeoffs to understand:

• Upfront costs.

• Requires coordination if Medicaid Assistance may apply later.

• Minnesota cash-management rules (aka 'spend down' rules) must be followed carefully.⁵

The Minnesota reality:

• Undrawn reverse mortgage LOC funds are not countable assets for MA purposes.⁵

• Loan proceeds are not income, but funds retained into a subsequent month may become countable assets.⁵

• Timing and spending discipline matter far more than the existence of the loan.

Why Timing Matters More Than the Rate

In Minnesota:

• The homestead is generally excluded for MA when a spouse or dependent child lives in the home.⁵

• MA eligibility is driven by cash on hand, not home value.

• Facilities increasingly require proof of liquidity before acceptance⁴

A properly structured and managed reverse mortgage loan does not change MA rules. What it changes is who controls the timeline.

A Simple Side-by-Side View

(HECM: Home Equity Conversion Mortgage - the FHA-insured reverse mortgage loan)

The Practical Planning Takeaway

This is not about predicting long-term care. It is about risk mitigation.

Establishing a reverse mortgage loan early is not an income decision; it's a contingency conclusion, similar to putting insurance in place before the claim or loss exists.

A reverse mortgage loan does not change the rules. It gives families more control over when decisions are made.

And in long-term care planning, timing is often the difference between options and limitations.

Footnotes and Primary Sources

¹ U.S. Department of Health and Human Services, Long-Term Care Overview ² HUD FHA Single Family Housing Policy Handbook 4000.1, HECM Borrower Eligibility ³ HUD Handbook 4235.1 REV-1, HECM Occupancy and Principal Residence Requirements ⁴ Minnesota DHS, Long-Term Care Services and Facility Admission Practices ⁵ Minnesota Department of Human Services, Health Care Programs Manual (HCSPM) • Asset Exclusions • Loans and Credit Lines • Treatment of Loan Proceeds ⁶ HUD FHA HECM Program Guidance, Line of Credit Growth and Loan Balance Accrual

This content is for educational purposes only and does not constitute legal, tax, or benefits advice. Medical Assistance eligibility and long-term care planning rules depend on individual circumstances. Consultation with qualified legal, tax, and benefits professionals is recommended.