8190 / Will proceeds received from a reverse mortgage affect Social Security, Medicare, other government benefits, or pension benefits?

It is often suggested that funds received from a reverse mortgage do not affect either government or private retirement benefits; however, there have been cases where the government considered those funds as assets, which resulted in disqualification for Medicaid.

The following are three examples when funds from a reverse mortgage can affect government benefits:

(1) If a borrower is on Medicaid, any reverse mortgage proceeds he or she receives must be used immediately to stay within state and/or federal government guidelines for Medicaid recipients.

(2) Any funds that are retained by a borrower count as an asset and must be included when calculating Medicaid eligibility.