Reverse Mortgages, Financial Aid, and You
Depending on what type of government assistance a person receives, there is a possibility that an FHA reverse mortgage could affect that aid. Each type of government assistance is different and it is important to understand the implications of each category.
Social Security
Social Security is an entitlement program provided by the government based upon factors such as your age and job history. These benefits are not considered need based and, therefore, will never be affected by the proceeds from a Home Equity Conversion Mortgage.
Supplemental Security Income (SSI)
Supplemental Security Income (SSI) is a government program that was created to assist people with special needs. These individuals consist of those with low income, those with disabilities, and those aged 65 and over. The eligibility requirements for this program are similar to those for Medicaid. Social Security requires that a SSI recipient have under $2000 ($3000 for a couple) in available resources, such as bank accounts or bonds, at any time. If a person were to receive $120,000 from a reverse mortgage and spent only $2,000, they would have $118,000 that would carry over to the next month in countable assets. This would put that person well above the threshold of available assets and, therefore, disqualify them from receiving Supplemental Security Income (SSI).
Some states also have restrictions on the amount of income a person may bring in each month and still qualify. Presently, the federal maximum is $674 ($1,011 for couples). An FHA reverse mortgage itself is not considered income, so it does not directly affect this eligibility requirement.
For more information on this topic, please contact either your local Area Agency on Aging or visit the Department of Health and Human Services website at http://www.cms.hhs.gov/MedicaidEligibility/07_IncomeandResourceGuidelines.asp#.
Medicare
Medicare is an entitlement program provided by the government based upon factors such as your age and job history. These benefits are not considered need based and therefore will never be affected by the proceeds from an FHA reverse mortgage.
Medicaid
Medicaid is a need based program created by the government to help people with low income, people over the age of 65, and the disabled. The eligibility requirements for this program are similar to those of Supplemental Security Income or SSI. Medicaid requires that a Medicaid recipient have less than $2000 ($3000 for couples) in available resources, such as bank accounts or bonds, at any time. So, if a person were to receive $120,000 in a lump sum from a federally insured reverse mortgage and only spend $2,000 in one month, they would have $118,000 in available resources that would carry over to the next month. This would put that person well above the threshold for assets and thus disqualify them from receiving Medicaid.
The maximum income that one can receive each month and still qualify for this program varies by state. At this time, the federal maximum is $674 ($1,011 for couples). An FHA reverse mortgage itself is not considered income, so it does not directly affect this eligibility requirement.
For more information on this topic, please contact either your local Area Agency on Aging or visit the Department of Health and Human Services website at http://www.cms.hhs.gov/MedicaidEligibility/07_IncomeandResourceGuidelines.asp#.
