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Setting the Record Straight
Reverse Mortgage Misconceptions You May Have Read or Heard
MISCONCEPTION #7 - MY SOCIAL SECURITY AND MEDICARE BENEFITS WILL BE AFFECTED
Reverse Mortgage proceeds are not taxable because they are not considered income but are, in fact, a loan. And since the United States Government sets Social Security, Medicare, and FHA Reverse Mortgage rules, all have been made compatible. The FHA has even set up the growth on a Reverse Mortgage line-of-credit to accumulate as non-taxable growth and not taxable income. Such Government entitlement programs as Social Security and Medicare are not affected by a reverse mortgage. However, it should be noted that Supplemental Security Income (SSI) and Medicaid may be affected if you exceed certain liquid asset amounts. To remain eligible for SSI and Medicaid, the homeowner needs to manage how much is withdrawn from the reverse mortgage in any month to ensure that it does not exceed the Medicaid limits. We recommend that if you receive these programs that you consult with a trusted financial advisor prior to applying for the reverse mortgage.
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