Will a reverse mortgage affect my Medicaid and Medicare benefits?

4 answers | Last updated: Oct 21, 2016
Tannylynn asked...

I have Medicaid and Medicare. If I get a reverse mortgage, will that affect my benefits? Can I put the mortgage funds in my husband's account without my name on it? Sometimes we live together, and sometimes I am with my children.


Expert Answers

Reva Minkoff is the founder and editor of the Reverse Mortgage Minute, a blog that focuses on reverse mortgage, mortgage, and real estate news. She also writes for Reverse Mortgage Daily. Prior to going out on her own, Minkoff was the editor-in-chief of Reverse Mortgage Guides.org

Hi Tannylynn. That's a great question. While a reverse mortgage will not effect your eligibility for medicare or social security, it can effect eligibility for need-based government assistance programs such as medicaid.

To remain medicaid eligible, the total liquid assets retained by an individual cannot exceed $2,000 at the end of the month. For a couple, the amount remaining in the bank cannot exceed $3,000. While a reverse mortgage would not necessarily push a couple or an individual over these limits, prospective borrowers who are medicaid eligible should work with their reverse mortgage loan officers to make sure that the proceeds from the reverse mortgage are distributed in such a way that the amount in their bank account at the end of the month does not exceed $2,000 (individual) or $3,000 (couple). This can generally be accomplished in one of two ways. The first is for the borrower to take a lump sum payment on the reverse mortgage and spend all the money immediately. While this is often not advised, it could be useful in cases where the reverse mortgage has been taken out to pay for a major expense such as a necessary home repair. The other solution is for the borrower to get an adjustable rate reverse mortgage and work with the loan officer to ensure that the monthly payments do not put them over the limit.

While you are free to do whatever you want with the proceeds from a reverse mortgage, I am not sure as to the specifics of whether you will be able to put the proceeds in your husband's account without your name on it. That depends on your specific situation.

However, if you are intending to get a reverse mortgage without your husband's name on it, I would strongly advise you to reconsider. If the reverse mortgage were only in your name and something were to happen to you, the balance would be due immediately, regardless of whether your husband were still living in the home.

Also, in order for you to be eligible for a reverse mortgage, the home must be your primary residence. Again, I don't know the details of the situation with you and your husband, but depending on how often you live with him versus on your own, your eligibility could also be complicated.

I hope this helps. Best of luck!


Community Answers

Tannylynn answered...

Thank you for your answer,ok we are spereated the house is in both of our names,but he wants the money sent to just his account and he would give me money as I needed it - and he is taking a lump sum but with me being the youngest on the house note -as what they look for- and most of the time I do live with the kids I hope this makes sence- I just cant give up all my health gave. thanks


Rainmand answered...

If I get a reverse mortgage, will that affect my benefits?

Chances are very good you'll impact Medicaid negatively if you receive distribution via the lump sum option. You'll be okay if you receive the cash as a Credit Line, or Monthly Check, as long as you control your cash flow and don't exceed Medicare's guidelines.

If your Husband wants to take it out as a lump sum, the two of you should visit with an Estate Planning Attorney first, because that lump sum distribution can really mess up your benefits.


Sjolley2 answered...

The operating word here is generally. A reverse mortgage generally does not impact social security and Medicaid but it can depending on your circumstances. It does impact Medicaid. It's important you know if and what will be impacted in your circumstances. Consult with a HICAP advisor, tax consultant and/or financial advisor and attorney experienced in these matters. Sandy Jolley Reverse Mortgage Suitability and Abuse Expert