How to Structure Public Assistance (Medicaid, Medi-Cal and SSI) with Reverse Mortgages

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If you are looking into supplementing your retirement income through a reverse mortgage and you are on Medicaid (Medi-cal) or Supplemental Security Income (SSI) or want to maintain eligibility for these programs in the future, it is important to understand these service’s asset limitations.  The reverse mortgage must be structured properly so you can receive the benefits of these need’s based programs and at the same time, receive the benefits of the reverse mortgage.


Reverse Mortgage proceeds can be received in various ways, through a lump sum, line of credit, monthly payment or a combination.  Since the reverse mortgage is a loan and not income, the proceeds do not affect eligibility for these programs.  Where you need to be careful is holding the reverse mortgage proceeds in your bank account.  If you draw from reverse mortgage funds and put it in your bank account, it then is considered your asset which has strict limitation on these needs based programs.


In California and Nevada in 2011, asset limits for Medicaid and SSI benefits were $2,000 for an individual and $3,000 for a couple.  So if you took a lump sum draw and put it in the bank, you would be ineligible for public assistance benefits. Social security currently does not have asset limits and is not affected by the amount of assets in you bank account.


Let’s look at other ways of taking the reverse mortgage proceeds.  With a reverse mortgage line of credit, you take draws as needed.  By spending the money and not keeping it in the bank, you would not affect your eligibility.  The same holds true for monthly payment draws. If you draw money that will be spent and not put in reserve, you will not be going over your maximum asset requirement.


A reverse mortgage is great for increasing cash flow, but it is very important to make informed decisions about how you want to receive the loan proceeds. Look into your state’s requirements and determine how a reverse mortgage can affect your eligibility before deciding on the right payment plan for you.

I'll be happy to calculate how the reverse mortgage can be structured to best provide for your needs.



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Maggie O'Connell

Reverse Mortgage Purchase Specialist
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