Reverse Mortgage Benefit Consequences: Social
Security and Medicare .................................................................................................................................................................................................. One of the reasons that people are sometimes wary of taking on reverse mortgage loans is the perceived fear of what might happen to their social security and Medicare benefits if they decide to do so. This is quite a normal and understandable fear, since many people in their 60s or older often only have those two sources of benefit from which to live on. If you are a person that only has those two sources of income, then chances are that you are going to be very careful around anything that you think might potentially upset whatever financial balance you have achieved with those benefits. And that’s perfectly fine; it is how all people should operate. So let’s take a look at how reverse mortgages might end up affecting your benefits, starting with social security.
Social Security
Social security is a benefit that was brought up by the federal government and indeed to this day is still administered by them. What you are going to find is that the department responsible for administering those affairs differentiates between normal social security benefits and separate social security benefits. The latter are covered in another article, but the former are pertinent because they are what the majority of people in this situation are going to be receiving. In another article, we learned that reverse mortgages do not affect a person’s tax situation because according to the IRS code, they are not income but rather are considered a loan advance. This same reasoning can be applied to social security to infer (an inference supported by the social security website) that reverse mortgages do not affect your regular social security benefits.
Medicare
Medicare is another benefit that is important to people in their 60s or over simply because of the fact that it takes care of a lot of their medical expenses to the point where they can actually attempt to live on the money they receive from social security. Every little bit helps and that is a concept illustrated in great detail to people that receive Medicare so naturally they would be protective of that benefit. However, Medicare is judged much in the same way that regular social security benefits are; in other words, Medicare is income-tested. Because reverse mortgages are not considered income by the IRS, you are going to find that Medicare is not affected much in the same way that social security is not affected.
Conclusion
Looking back on the article, what did you learn? You were able to deduce through logic and reasoning that reverse mortgages do not affect the two benefits that most prospective borrowers are worried about. This is because you understand that the IRS does not consider a reverse mortgage to be income, therefore it can not have any impact on either regular social security or regular Medicare benefits. Other programs might be a different story, depending on their conditions and some of the other major programs are covered in another article.
