Reverse Mortgages for Healthcare purposes
October 21, 2020 | Posted by: Maria Pezza
Healthcare costs for aging Canadians is a topic that many retirees have underestimated. In fact, in the 2014 Sun Life Canadian Health Index, 44% of Canadians didn’t expect to pay anything for the medication in their later years, thinking that these expenses were covered by their provincial health insurance. However, many were unaware that without private coverage, Canadians 65+ can expect to spend over $5,000/year on out-of-pocket medical costs. This number is anticipated to increase over time, according to the 2014 BMO Wealth Institute Report.
Breaking down the costs
Many Canadians are unfamiliar with healthcare costs post-retirement. In fact, according to a Leger Marketing survey in 2014, over 56% of Canadians were unaware of the cost of long-term care within their province. Because of this, over two-thirds polled didn’t have a financial plan to cover the costs. Aging Canadians without a plan could be facing challenging financial times and may be in need of a solution they hadn’t previously considered.
Aging Canadian households, keep in mind these additional health care expenses:
Prescription drugs – Make up the largest portion of out-of-pocket spending at approximately $500/year. ( Financial Post – September 8, 2014 )
Mobility aids – Canes, walkers, and wheelchairs can cost anywhere from $150 to $10,000 for a high-end electric wheelchair.
Caregiving costs – A personal care worker for a severely disabled person can cost $16-$30/hour or a registered nurse can cost $24-$76/hour. (2014 BMO Wealth Institute Report)
Other health-related expenses – Government health insurance plans don’t cover dental care, physiotherapy, ambulance services, and prescription eyeglasses. These are all out-of-pocket expenses unless you purchase private insurance to cover these services.
How can a reverse mortgage help?
Aging Canadians are often surprised by all the hidden medical costs that can arise over time. In addition to medication, however, the cost of food, clothing, and shelter have all risen over the last decade, according to the BMO Wealth Institute Report. A reverse mortgage can act as a solution to help with these additional and unexpected expenses.
A reverse mortgage is a financial solution for Canadian homeowners 55+ to access up to 55% of the equity in their home in tax-free cash (lump sum or monthly, conditions apply). As money is tax-free, it does not affect government benefits such as OAS or GIS. A reverse mortgage can be a great way to access the equity in your home to pay for medical expenses or to retrofit your home for your aging needs.