Mellody Hobson: Preparing for Long-Term Care

3. Dependent Care Account

Another option to defer costs for long-term care is a dependent care flexible spending account. A dependent care FSA allows you to defer a maximum of $5,000 in pre-tax income each year to cover certain expenses for eligible dependents, which include any dependent children under age 13 or any person living with you claimed as a dependent and who is physically or mentally incapable of self-care, such as an elderly parent.

Eligible expenses include the costs of adult day care (does not include overnight and nursing home facilities); day care and housekeeping services provided in your home for a qualifying dependent; day care provided outside of the home, preschool or summer day camp; and food supplied by a day care.

4. Have your house pay you

Not only are long-term health care costs increasing exponentially for seniors, but personal debt among the retired is growing rampantly as well. According to a report by SmartMoney, nearly one-third of seniors has $4,000 in credit card debt -- an 89 percent increase in the last 10 years. As such, one possibility for seniors with debt could be to take on a reverse mortgage.

Reverse mortgages let you tap into home equity and repay the loan with proceeds from the eventual sale of the property -- often at death. The greatest appeal of a reverse mortgage is that you can be guaranteed a source of monthly income for as long as you need it, even if you live beyond your life expectancy. Currently, about 13.2 million households could qualify for an average of $72,128 apiece in reverse-mortgage loans.

A reverse mortgage is a loan against your property that you do not have to pay back as long as you live in your home. The total of the loan must be paid back when the last surviving borrower dies, sells the home or permanently moves away. In most cases, in order to qualify for a reverse mortgage, you must be at least 62 years of age.

Key facts about reverse mortgages:

The home must be the primary residence for the borrower and generally, only single family, one-unit dwellings are eligible.
There are three major reverse mortgage providers in the United States: the Federal Housing Administration Home Equity Conversion Mortgage, which is a federally insured reverse mortgage; the Fannie Mae Home Keeper loan (and the Home Keeper for Home Purchase loan); and the Equity Guard Plan and the Cash Account Plan.

The costs associated with getting a reverse mortgage vary depending on the product you choose. However, costs typically include the origination fee (which can be financed through the reverse mortgage), an appraisal fee and charges similar to those associated with a regular mortgage.

The money provided through a reverse mortgage does not affect your regular Social Security or Medicare Benefits. However, it may affect your ability to be eligible for state and federal government assistance programs, such as Medicaid.