Does a reverse mortgage affect Social Security or Medicare?
THE SHORT ANSWER
No. Reverse mortgage money is a loan, not income, so it doesn't affect Social Security retirement benefits or Medicare. Means-tested programs like Medicaid and SSI are different: money you've drawn and kept past the month you received it can count as an asset.
What this means for you
Your Social Security and Medicare stay the same.
- Loan proceeds generally aren't taxable income.
- If you receive Medicaid or SSI, ask before drawing large amounts.
Plan draws around benefit rules.
- For a parent on Medicaid, drawing only what's spent that month can help.
- An elder law attorney can review benefit eligibility.
Proceeds don't raise AGI.
- Draws aren't reported as income, which can help with bracket and IRMAA planning.
- Coordinate timing with means-tested benefit rules.
The difference between income and assets
Because it's a loan, what you draw isn't counted as income. But for means-tested programs, money that sits in your bank account into the next month can count as an asset. Leaving funds in an unused line of credit generally does not.
SOURCES
- Social Security Administration: SSI resources
- Consumer Financial Protection Bureau: Reverse mortgages
- IRS: loan proceeds are not income
Rules change. This page is general education, not advice for your situation. Talk with a licensed professional before deciding.