Medicaid is a benefit that is available to senior citizens in the United States. Most people qualify for Medicaid when they reach age 65. Medicaid provides you with medical insurance with a minimal deduction so you can afford to handle most of your basic medical needs. At the same time, you may be looking to take some income from your home in the way of a reverse mortgage. Reverse mortgages have become popular in recent years, but you should know how they can impact your Medicaid benefits.
What is a Reverse Mortgage?
It is helpful to gain a basic understanding of what a reverse mortgage is. A reverse mortgage is a loan that you take out against the equity in your home. A reverse mortgage is available for those who are age 62 and older. The loan works in reverse of a typical mortgage. You will receive money in a lump sum or regular payments. The payments come from the equity that you have built up in your home. The total of the loan is the value of the home, regardless of how much equity you have in it. At the end of the loan, you or your heirs repay the money borrowed or sell the home and provide payment.
Is a Reverse Mortgage Considered Income?
In some states, the money you receive regularly from a reverse mortgage loan could be considered income. When it comes to determining income for benefit programs, Wisconsin law considers money you receive from a reverse mortgage as proceeds from a loan and not as income. Funds that are not dispersed are considered equity in your home. It is important to note that the law applies only to reverse mortgages obtained through qualified lenders. There are some other considerations you need to look at before you decide to obtain a reverse mortgage.
Medicaid Asset Limits
While reverse mortgage payments will not limit your ability to obtain Medicaid, they can still have an impact because of asset limits. Medicaid long-term care and home-based services are only available to those who qualify based on their income. For a single person, the asset cap is currently $2,523 and the cap for a married couple is $4,000. Remember that if you receive monthly payments from a reverse mortgage and do not immediately spend them, the money then counts toward your assets. Sometimes it does not make sense for a single person to obtain a reverse mortgage, but it can be beneficial to some married couples.
A reverse mortgage can be extremely helpful for those who need more money to live on every month. However, there are some potential pitfalls if you intend to seek some Medicaid services. It is best to discuss the matter with a qualified attorney before you make a final decision. To learn more about reverse mortgages and other matters that pertain to your estate, contact our legal team at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or by email.