I work with long-term Medicaid all the time and am very familiar with how long-term Medicaid (which pays for nursing homes) works.

Medicaid has a 5 year look back period to ensure that the persons applying didn't just give away assets so that they can qualify for Medicaid to cover the costs of a nursing home. The way that long-term Medicaid works for most persons, is that when they go into a nursing home, Medicaid agrees to pay the costs as long as they the person or their spouse is alive. When both the person and their spouse pass away, Medicaid puts a lean on the couple's house to recoup some or all of the money they paid for the nursing home.

Medicaid can't do this if the couple has taken out a reverse mortgage on the home. So if they have taken this reverse mortgage out within 5 years of applying, then they will have a waiting period to qualify. Several Medicaid workers have confirmed this with me. So unless something has changed in the last year since I last talked with them, then this is the case.

The reverse mortgage doesn't count as income by Medicaid, but it is considered the dispersement of assests that could be used to pay for a long-term nursing home. So essentially, depending upon how much money they received from the RM, Medicaid would establish a waiting period that would be the equivilent of the amount of money received and used from the RM. They would not be eligible for Medicaid until this waiting period is over. So the larger the amount of money they used, the longer the waiting period to qualify.

I have known families who can't qualify for Medicaid because of this very reason. A large part of my daily job is helping people get into nursing homes.