Bills Logo

Reverse Mortgage and Medicaid

Mark Cappel
UpdatedSep 22, 2011

How does Medicaid handle payments from a reverse mortgage? Are these considered income?

Regarding a reverse mortgage. What happens when one of the spouses goes into a long term care facility -- say, for custodial care the rest of his/her life? If the family income is insufficient to support both the person at home and the one in the nursing home -- How would the reverse mortgage be handled by Medicaid?

A reverse mortgage is a home loan that lets an elderly homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to the homeowner. Reverse mortgages are a type of Home Equity Conversion (HEC). In a HEC, the home is either mortgaged or sold to a financial institution or other buyer in exchange for a regular cash payment or line of credit. A HEC allows the homeowner to borrow equity out of their home with no repayment as long as they live in the home. The notes are due when the house ceases to be the borrower's main residence. Proceeds from a reverse mortgage are loan proceeds, which do not meet the definition of income for Medicaid.

See the following reverse mortgage resource for a much more extensive discussion of reverse mortgages:

• Reverse Mortgage Evaluation and Facts

• How a Reverse Mortgage Works

• Frequently Asked Reverse Mortgage Questions

• Reverse Mortgage Section assembled a network of the most reputable reverse mortgage lenders in the country. Access them through the quick reverse mortgage form.

I hope this information helps you Find. Learn & Save.