From 24/7 Wall St. · Gerelyn Terzo · · 1m 30s
Elderly Man Uses Reverse Mortgage to Access $80,000
71-year-old widower takes $80,000 from house equity via reverse mortgage to avoid monthly payments, but Medicaid counts it as income after nursing home stay.
In brief
71-year-old widower takes $80,000 from house equity via reverse mortgage to avoid monthly payments, but Medicaid counts it as income after nursing home stay. A 71-year-old widower accessed $80,000 from his house equity using a reverse mortgage to avoid monthly payments, but Medicaid later counted the funds as income…
Elderly Man Uses Reverse Mortgage
A 71-year-old widower takes $80,000 from his house equity via reverse mortgage to avoid monthly payments.
Medicaid Rules Change After Withdrawal
Medicaid ignored the house equity for years but counts it as income once moved to a bank account.
How Medicaid Counts Assets
Medicaid treats home equity as exempt until cashed out, then counts it as a resource within 24 hours.
State-Specific Equity Limits
Most states cap home equity at $752,000-$1,130,000, but California has no limit.
Reverse Mortgage Timing Rules
A reverse mortgage becomes due if the borrower doesn’t live in the home for 12 months due to illness or disability.
Medicaid Application Impact
If $60,000 remains in bank account when applying, he exceeds Medicaid’s $2,000 limit and must spend down.
Spending vs. Holding Funds
Spending on needs like medical bills keeps funds out of Medicaid’s count, but holding them triggers penalties.
Consequence for Nursing Home Stay
The $80,000 becomes countable after nursing home stay exceeds 12 months, risking home sale or loan repayment.
The essence
A 71-year-old widower accessed $80,000 from his house equity using a reverse mortgage to avoid monthly payments, but Medicaid later counted the funds as income when he moved to a nursing home.
