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Title 8: Medicaid Page 25 Iowa Department of Health and Human Services Employees’ Manual Chapter E: Income Types of Non-MAGI-Related Income Revised April 11, 2025 Home Equity Conversion Plans Home Equity Conversion Plans If you need help to understand the contract or the correct income policy to apply, submit your questions, along with the contract, through the DHS, SPIRS Help Desk.

 Reverse Mortgage Reverse mortgages allow a homeowner to borrow some percentage of the appraised value of the home. The homeowner then receives regular periodic payments (or a line of credit), which commonly does not have to be repaid as long as the borrower lives in the home.

The payments the homeowner receives from the arrangement are considered as loan proceeds and are not considered income. However, if the loan proceeds are retained into the following month, they become a countable resource.

 Sale-Leaseback Under a sale-leaseback arrangement, the homeowner transfers the title of the home to a buyer in exchange for regular periodic payments. The buyer then allows the former homeowner to remain in the home for life (or some other agreed-upon time period) in exchange for rent. In some instances, the payment made to the former homeowner includes interest.

Consider the noninterest portion of the payments the former homeowner receives as a conversion of a resource, not as income. Consider any portion of the payment that is due to interest as unearned income. If the interest portion of the payment is retained into the following month, it becomes a countable resource.

 Time Sale Under a time sale arrangement, the homeowner signs a contract to sell the home at death but maintains the title and continues to live in the home. The buyer then pays a monthly cash payment to the homeowner.