The money isn’t income, but money you keep can count against benefits. And a long stay in care can make the loan come due. Here is how each rule works.
Reverse mortgage money is a loan, not income, so it doesn’t count as income for Social Security, Medicare, SSI or Medicaid. But money you keep can count: if you hold on to it past the month you receive it, it can become a countable asset for SSI and Medicaid. And if you move into a nursing home or assisted living, the loan can be called due, with HUD’s approval, once you have been away for more than 12 months in a row, unless a co-borrower or an eligible non-borrowing spouse still lives there.
A reverse mortgage requires the home to be your principal residence. Every year the servicer asks you to certify that you still live there, and you should tell the servicer about any absence longer than two months. A move into care plays out like this:
Once the loan is due, the home is usually sold to repay it, and you or your estate keep whatever is left. If the house is worth less than the loan, nobody owes the difference. See selling a house with a reverse mortgage.
Some people use a reverse mortgage to pay for care at home so they can stay there longer. That fits the loan well, as long as you plan for what happens if you eventually need to move. Using one to pay for a nursing home is harder: once you’ve been out of the home for more than a year, the loan can be called due, unless a co-borrower or eligible non-borrowing spouse still lives there. Weigh that against selling the home, or a cheaper alternative.
For Medicaid recipients 55 and older, states must seek to recover what Medicaid paid for nursing-home care, home- and community-based care, and related hospital and prescription drug costs from the person’s estate after death. They can’t recover while a spouse, a child under 21, or a blind or disabled child survives, and they must offer hardship waivers. The reverse mortgage is the first lien on the house and is repaid from the sale before the estate receives anything, so recovery can only reach what is left. How it works beyond that depends on state probate and lien rules, so an elder-law attorney is worth consulting.
The loan money isn’t income, but money you keep past the month you receive it can count as an asset for Medicaid and SSI. Drawing only what you spend each month avoids that. Rules vary by state.
Typically no. Social Security and Medicare aren’t means-tested. But programs that help pay Medicare costs, such as Medicare Savings Programs and Extra Help, have asset limits, so money you keep can count there.
If you are away for more than 12 consecutive months because of illness and no co-borrower or eligible non-borrowing spouse lives in the home, the loan can be called due, usually repaid by selling the house. Shorter stays don’t end the loan.
You can, but once you have lived away from the home for more than 12 months in a row the loan can be called due, unless a co-borrower or eligible non-borrowing spouse still lives there. It works better for paying for care at home.
Educational, not individual financial advice. The Equity Ledger doesn’t originate loans. Reverse mortgages are complex and the right answer depends on your specific situation — confirm the details with a HUD-approved counselor before you decide.
Rules and figures are from U.S. government program materials current at publication; HECM limits and rates change — verify with HUD/FHA or a HUD-approved counselor.