Medicaid & Reverse Mortgages

by Peter G. Miller
January 28th, 2008

The Pittsburgh Post-Gazette had an excellent story over the weekend regarding reverse mortgages and Medicaid.

Quoting Zoran Basich, an elder law attorney and operator of Nursing Home Solutions, the article offered the following comment:

“Depending on where you live, Mr. Basich says the proceeds from a reverse loan could prove a barrier to qualifying for Medicaid, which counts loan proceeds as an asset.

“Although each state differs in the fine print, untapped equity in the home is not considered an asset in determining Medicaid eligibility, as long as it’s owner-occupied. Recent federal legislation placed the home exemption ceiling at $500,000.

“For a homeowner with property worth more, there’s definitely an argument for obtaining a reverse mortgage and then spending down the cash. But that cash is also subject to Medicaid’s new time limitations on asset reduction. Talk to an eligibility specialist early in the process to see where you stand.”

Somewhere in here, I suspect, is the idea of placing a home in a trust to avoid Medicaid’s 5-year “look-back” period under the Deficit Reduction Act of 2005. In other words, Medicaid can take from your estate unless you have planned in advance.

For the full article, see: The pros and cons of reverse mortgages as a source for ready cash

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