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Avoiding Costly Mistakes
If you receive Medicare or Social Security Insurance (SSI) benefits:
Income received from a reverse mortgage is not taxed and does not affect most Social Security or Medicare benefits. However, your Medicare and SSI benefits may be affected if you don’t use your income from the reverse mortgage immediately. The money you keep in the bank is counted as an asset. As such, if you receive income from your reverse mortgage and it’s not used, you may exceed the maximum assets allowable. At that point you would be ineligible to receive these benefits. This is why seniors tend to choose to receive the reverse mortgage proceeds as a line of credit, because they can take money out on an “as needed” basis. Clearly, if money is taken out “as needed”, it would be spent immediately and not counted as an asset. You should consult with you financial advisor or your local Social Security/Medicare office for further information and guidance.
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