From 24/7 Wall St. · Gerelyn Terzo · · 1m 10s
67% Older Homeowners Fear Inflation, Reverse Mortgage Avoids Medicare Surcharge
Reverse mortgage cash won't raise Medicare premiums for 67% of older homeowners worried about inflation.
In brief
Reverse mortgage cash won't raise Medicare premiums for 67% of older homeowners worried about inflation. Linda's $80,000 reverse mortgage draw won't automatically increase Medicare premiums two years later. Originally reported by 24/7 Wall St..
Inflation Worries Older Homeowners
67% of older homeowners named inflation as their top financial concern in a 2026 survey.
“67% named inflation and the rising cost of living as a major financial concern”
Linda's Reverse Mortgage Plan
Linda, 68, plans to draw $80,000 from her home equity to cover rising bills.
“She plans to draw $80,000 of home equity through a reverse mortgage”
Medicare Premium Misconception
Linda assumes reverse mortgage cash will increase her Medicare premiums two years later.
“She assumes Medicare will treat that cash like an IRA withdrawal and raise her premiums two years from now”
Reverse Mortgage Avoids Medicare Surcharge
Reverse mortgage proceeds stay off Medicare's adjusted gross income, so premiums won't rise.
“The amount you receive isn't taxable. The draw never shows up in adjusted gross income”
Traditional IRA Withdrawals Raise Premiums
Traditional IRA withdrawals increase Medicare premiums two years later by adding to adjusted gross income.
“Withdraw the same amount from a traditional IRA funded entirely with pretax dollars and every dollar lands in AGI”
Two-Year Premium Calculation
Medicare uses income from two years prior to calculate premiums, so recent withdrawals affect future costs.
“For Medicare surcharges, Social Security uses adjusted gross income plus tax-exempt interest, generally from the return two years before the premium year”
Reverse Mortgage Costs Still Apply
Reverse mortgages add debt with interest, fees, and potential property tax consequences.
“A reverse mortgage adds debt against the house. The U.S. Department of Housing and Urban Development's housing counseling handbook says interest accrues on the money she receives”
The bottom line
Linda's $80,000 reverse mortgage draw won't automatically increase Medicare premiums two years later.
