A Reverse Mortgage Could Limit Entitlement Benefits

8/02/2009

posted by N. Sioris

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Generally speaking, if you get a reverse mortgage your benefits from Social Security and Medicare are not affected or reduced in any way. In fact, one of the most prominent statements included in educational reverse mortgage guides and promotional ads, routinely say: "Social Security and Medicare benefits are not affected when you get a reverse mortgage on your home."


True - But With Conditions

This is absolutely true as long as you are speaking strictly about regular Social Security retirement income and federally funded Medicare. However, if you are a recipient of any local government or state backed programs, such as Medicaid, food stamps or other need-based assistance programs, you must be very careful when you get a reverse mortgage.

Most of the need-based programs require that your income and or assets remain below a certain level in order for you to continue to be eligible. Most of these programs have a monthly income threshold. If your income exceeds the threshold you will be disqualified from receiving the benefits. If you are considering whether to get a reverse mortgage or not, you will want to make certain before-hand what the income limitations are in order to maintain your current level of benefits.


Plan Ahead - Proceed With Caution

You can then structure your reverse mortgage loan proceeds to be disbursed in monthly increments that will keep you under the threshold for your entitlements. Just be careful, and make sure you do your research FIRST so that you do not find yourself in a perilous financial situation that possibly cannot be undone later.

If you are currently on Medicaid or you are receiving food stamps, you may wish to check with your local Medicaid office here. You can also call Medicare at 1-800-Medicare.

The American Bar Association has also rendered advice on this topic. You may wish to review what they have to say as well.