Reverse Mortgage Benefit Consequences: Other Major Benefits ............................................................................................................................................ Reverse mortgages are the most innovative products to come across the assembly line of the home loan market in quite awhile. It’s been a long time since a loan came along that could have such a positive effect on a person’s life and it will be a long time before another loan is envisioned that can do the same thing that reverse mortgages have the ability to do today. However, there are important considerations that people need to make when they are thinking about getting a reverse mortgage and depending on these considerations, they need to decide whether or not it is in their best interest to take out a reverse mortgage. The previous article discussed the consequences of reverse mortgages on regular social security and Medicare benefits, eventually coming to the point that there was none. This article discusses some of the other major benefits that might play a role in a person’s life at some point.
SSI
Reverse mortgages are sometimes cited as being a deterrent to SSI and indeed the reason that this is so is because it can be true at times. Unlike regular social security benefits, SSI is tied to liquid assets available rather than income. Liquid assets usually refers to the amount of cash on hand in a person’s bank account and therefore you can see how reverse mortgages immediately would be more relevant here than in a discussion about regular social security. However, one thing to consider is that a reverse mortgage loan advance is not going to be considered a liquid asset if you spend it in the same calendar month in which you receive it. This means that if you choose to receive a certain amount each month and spend that amount before the month is up, you are going to see no net change in your liquid assets (and therefore your SSI) because of reverse mortgages.
Medicaid
Medicaid is a program that is similar to Medicare, although it is a low-income public benefit, rather than an income-tested entitlement. Therefore, it is important to take a look at Medicaid in the same light as we just looked at SSI. Medicaid benefits are affected by liquid assets, rather than total income, so once again if you receive Medicaid you need to consider your spending habits as well as the rate in which the reverse mortgage is paid into your bank account. Rather than figuring this out, it is a good idea to ask the person that does your taxes to help you out in potentially budgeting a reverse mortgage into your life.
State and Local Assistance
In addition to the federal SSI and Medicaid programs, different state and local governments might also have programs designed at helping low-income people with public funding. Whether these benefits are tied to income or to liquid assets depend on the program and you should check with a representative from that program to find out exactly how they calculate their benefit amounts. You can even ask them if they know whether a reverse mortgage would affect benefit amounts and see what they say.
