Reverse Mortgage Affect on Social Security, Medicare & MedicaidA reverse mortgage can help alleviate financial stress by providing additional funds through a lumpsum payment, line of credit, monthly payments or any combination of the former 3 options. Reverse mortgage will not affect social security or Medicare eligibility. However, a reverse mortgage may affect Medicaid because Medicaid is a need based government assistance program.
Social SecuritySocial Security is a government backed social program designed originally to help provide stability to aging seniors. People pay money towards social security when they are young and once they reach the social security age, they may be entitled to Social Security money. A reverse mortgage will have no affect on your eligiblity of receiving Social Security.
MedicareMedicare is the government medical coverage automatically provided for any seniors over the age of 65. A reverse mortgage will have no affect on your eligiblity of receiving Medicare assistance.
MedicaidMedicaid is the government medical insurance for low income individuals. Low income is qualified as anyone with liquid resources over $2,000, or for couples, $3,000. Liquid resources means access to funds in a banking account. The way a reverse mortgage may potentially affect your eligiblity is if you choose the lump sum payment option where you receive the entire money upfront and store it in your bank account. However, you may still be eligible if you go with a lump sum if you spend the entire amount on things such as home improvement or paying off other debt.
Additionally, if you choose the monthly payment option on a reverse mortgage (also referred to as a HECM), you may still be eligible for Medicaid as long as you still stay under the "access to liquid resources" rule, which is $2,000 figure for an individual and $3,000 for a couple.
We recommend contacting your local social security office and a reverse mortgage company to make sure you understand all your available options prior to deciding.