A reverse mortgage, sell the house, or Medicaid? - HECMWorld.com Skip to content

A reverse mortgage, sell the house, or Medicaid?



With life expectancies increasing more adult children are forced to confront how their parents’ long-term care will be paid for. That’s the dilemma one MarketWatch reader faces who writes, “Both of my parents will need long-term care soon, and my family is wondering what the best way is for them to pay for it. We’re concerned their cash will be drained in the next six to 12 months. They’re not on Medicaid at the moment, but they have a house that has been in trust for only three years, and their children are named as beneficiaries. Will we need to sell the house, or can they get a reverse mortgage to pay for their long-term care? Will they need to go on Medicaid?”.


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Editor in Chief: HECMWorld.com
As a prominent commentator and Editor in Chief at HECMWorld.com, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.
Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.
Readers wishing to submit stories or interview requests can reach our team at: info@hecmworld.com.

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  1. Shannon,

    Very good honest advise, I hope many originators listened carefully in what you stated and advised!

    I liked your broadcast very much my friend,

    John A. Smaldone

    • Thank you, John!

  2. A Reverse Mortgage and Medicaid? With proper planning, you can have both

    Although this piece makes many good points, it overlooks an ideal path to keep a person in their home: Allow a Reverse Mortgage and Medicaid to work together. As your article points out, Medicaid’s complex rules vary depending on location. In Colorado, I have helped several borrowers on Medicaid stay in their homes using reverse mortgages. I’ll let the numbers tell their stories.

    • One client owned a home that had no mortgage. This person collected $850/month in Social Security income. The Reverse Mortgage we set up provided a tenure payment of about $890/month and kept the borrower under the Medicaid income threshold at the time.

    • A client came to me making mortgage payments while on Medicaid. A Reverse Mortgage eliminated the mortgage payment and provided a tenure payment of about $160/month, keeping the borrower under the Medicaid income threshold.

    • A borrower we are working with has an income of $1,200/month and a disabled adult son living with him who receives $600/month of disability income. When he came to us, he was three years behind on taxes, and the home was uninsured and uninsurable. His Reverse Mortgage will pay for repairs to make the home insurable, bring the taxes current, and pay for insurance. A Life-Expectancy Set-Aside will then pay future taxes and insurance. An $800/month tenure payment will provide additional income while staying below the Medicaid income limit.

    In each case, it’s vital for the borrower to understand the Medicaid rules for their situation in their state. It is too easy for a borrower to take a lump sum distribution from the Reverse Mortgage instead of a tenure payment, rendering them ineligible even long after the Reverse Mortgage closes.

    I don’t claim to be a Medicaid expert, but I know many people who are. With their counsel, I’ve learned that it is possible to keep the house, get a Reverse Mortgage, and receive Medicaid benefits. So, now I offer that option to my clients. In every case, it has changed their lives for the better.

  3. What is the income limit and restrictions for Medicaid ! Thank you!

    • Joyce- it may vary by state. I would consult with a senior benefits specialist to be safe.

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