How a Reverse Mortgage Affects Medicaid

admin — Wed, 05 Apr 2023 21:07:28 +0000

A reverse mortgage does not affect “non-means-tested” government benefits programs such as Medicare and Social Security. However, it can affect “means-tested” programs including Medicaid and Supplemental Security Income (SSI) because those programs test to see how much income or financial resources you have available.Medicaid (and Medi-Cal) is a government sponsored program that is intended to provide health care to low-income individuals. Medicaid eligibility requires applicants to have no more than $2,000 ($3,000 for a couple) in countable assets one day out of the month. To explain further, for an individual to be eligible for Medicaid, he/she cannot have more than $623 in countable monthly income or more than $2,000 in countable resources (car, house, etc.) The reverse mortgage is not considered income so that eligibility requirement is not affected.However, if an individual on Medicaid were to receive a lump sum of $6,500 from his/her loan and spend only $4,000 of it in the month in which it was received, putting the remaining amount ($2,500) in the bank, then he/she would no longer be eligible to receive Medicaid because after 30 days, the $2,500 would become an asset and exceed the eligibility requirements.In short, a reverse mortgage does not automatically disqualify a homeowner for Medicaid but the homeowner has to be careful with the timing of spending of the reverse mortgage funds. You should contact your state’s Medicaid administrator to determine exactly how to comply with the Medicaid eligibility requirements if you take out a reverse mortgage.

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How a Reverse Mortgage Affects Medicaid