Medi-Cal Treatment of Reverse Mortgages
Reverse mortgage loans are designed for homeowners who are 62 years of age or older, and who have a substantial amount of equity in their homes. The amount of equity is usually the difference between the fair market appraised value of your property, and the amount due on existing mortgages.
As the borrower under a reverse mortgage, you can receive monthly or other periodic payments. You can also have access to the funds, like a line of credit, that you can draw on when needed. You make no payments until the loan is paid off, when you pass away and the property is sold, or when you go into a long term care facility for an extended period of time.
For Medi-Cal qualification purposes, the State does not treat the amount of the loan as an asset. However, when you receive money from the reverse mortgage lender, Medi-Cal will treat that receipt of money as an asset in the month you receive it. As a result, you will need to spend that money down before the end of the month to meet the Medi-Cal qualification limits.
A caveat on a reverse mortgage is that if you as the borrower go into a nursing home for an extended period of time, the loan may be called due, and the secured home will have to be sold. The proceeds of sale, which become a cash asset, could make you ineligible for Medi-Cal.