Our Dedicated Elder Law Attorney Discusses Reverse Mortgages and Medicaid Eligibility
If you’re a senior having trouble making your mortgage payments on a fixed income, you may be considering a reverse mortgage. A reverse mortgage is like a loan the bank takes against the value of your house and will pay you in monthly installments (or a lump sum) for the rest of your life. However, there are numerous drawbacks and pitfalls to a reverse mortgage, and it can negatively affect your ability to receive Medicaid to pay for long-term care. Consult with our experienced elder law attorney before going forward with a reverse mortgage. We can help you evaluate this option to determine if it's right for your financial future. .jpeg)
Understanding a Reverse Mortgage
The basic definition of a reverse mortgage is that pays you to continue living in your home. This type of mortgage is often called a “deferred payment loan,” which allows you to extend your home loan for an agreed-upon period of time. Instead of paying off your home loan, your payments are deferred. In essence, it’s a home loan that you never have to pay back for as long as you live in your home. The loan and interest get repaid only if you die, move away, or sell your home.
Reverse mortgages can serve as financial support for seniors who live on fixed incomes and need extra money in their retirement. It allows people 62 and older to access the equity in their homes and turn it into cash. These funds can be used to help seniors pay for home improvements and daily expenses or to supplement their financial situation. Additionally, a reverse mortgage allows homeowners to remain in their homes and maintain ownership for as long as they adhere to the loan agreement.
How a Reverse Mortgage Affects Medicaid Eligibility
As with any loan, there are risks with a reverse mortgage, particularly if there is a chance that you or your spouse will have to move to a care facility in the future. Although you may be healthy now, you may find you need more care after a sudden fall or medical event. Because taking out a reverse mortgage could have negative implications for your Medicaid eligibility, it’s important to understand the impact of a reverse mortgage and your ability to receive Medicaid benefits.
As a government program, Medicaid provides health care coverage for people and families with lower incomes. To qualify for Medicaid, you must meet very strict income and asset limits, and the proceeds from a reverse mortgage could negatively impact those limits.
Typically, Medicaid does not consider the proceeds from a reverse mortgage as income, so they may not have a direct impact on your eligibility for this government benefit. However, if you don’t spend the money you receive from the reverse mortgage and, instead, put it in a bank or checking account, Medicaid might view that money as an available asset that increases your financial statement. This has the potential to disqualify you from obtaining Medicaid benefits because those funds may put you over the allowable asset limit.
New York Elder Law Attorney
It is important to think about the pros and cons of a reverse mortgage, especially if you think you might need Medicaid in the future or rely on this government benefit now for health care coverage. That’s why it’s critical to discuss your financial situation with a skilled, knowledgeable New York elder law attorney who can discuss whether a reverse mortgage is right for you. The legal team at Alatsas Law Firm understands Medicaid’s strict financial rules and requirements and can help you determine if choosing a reverse mortgage would negatively impact your eligibility for Medicaid—either now or down the road. We can explain the complexities of a reverse mortgage, help you make plans to protect your assets, and help you make an informed decision about your financial future.