Reverse Mortgages: How Government Benefits Change


Receiving additional income from a reverse mortgage doesn’t automatically disqualify you from getting Medicare or Medicaid, but in some cases it could affect your eligibility for those and other government-backed programs that benefit your health.

Here’s how a reverse mortgage from companies like Wells Fargo (Stock Quote: WFC), Bank of America (Stock Quote: BAC) , MetLife (Stock Quote: MET) and other lenders might affect your ability to get government help with health care.

Reverse Mortgages and Medicaid

Medicaid is backed jointly by federal and local governments to provide health insurance to seniors, children, and the blind and disabled with limited incomes. If you’re already on it, you’ll know that you must bring in less than a certain amount of monthly income, depending on what state you live in.

Since it’s a need-based government benefit, if your reverse mortgage payment puts you over the monthly eligibility limit, you may no longer qualify for health coverage through Medicaid.

To learn more about how a reverse mortgage could affect Medicaid eligibility in your state, search the Centers for Medicare and Medicaid Services Web site for information on your state or contact your state Medicaid office.

Maintaining Medicare Coverage

If you already qualify for Medicare, the cash you get from a reverse mortgage doesn’t affect your eligibility for the federally-funded health benefits.

Food Stamps

The proceeds from a reverse mortgage could affect your eligibility for food stamps, a benefit that’s granted based on your income.

However, if you spend your reverse mortgage payout when you receive it, for example if you receive monthly reverse mortgage payments and use them to cover your day-to-day expenses, it may not be considered a resource at your disposal, according to the American Bar Association Family Legal Guide.

If you’re already on Medicaid or Medicare or you’re receiving food stamps, you might want to contact your local Medicaid office, Medicare office at 1-800-Medicare or your local Supplemental Nutritional Assistance Program office before applying for a reverse mortgage.

Related Stories:

Reverse Mortgage 101: Your Questions Answered

Reverse Mortgage: Ways to Get Paid

Reverse Mortgage: How Much Can You Get?

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