Texas Medicaid Planning: What Families Need to Know About Long-Term Care Eligibility

If a parent or spouse in Texas needs nursing-home care, Texas Medicaid can pay for it once the person meets the state's rules. For 2026, those rules include countable assets of no more than $2,000 for one person and gross income of no more than $2,982 a month. Gifts made in the 60 months before applying are reviewed.

A nursing-home placement can come suddenly: a hospital discharge, a fall, or a dementia diagnosis that has moved past what the family can manage at home. The monthly cost of care is now real. Underneath it sit other worries: whether savings will run out, whether the house stays in the family, what a husband or wife at home will live on, and whether money given to children years ago will cause trouble. This page sets out how Texas's long-term-care Medicaid rules address each of those questions, as the Texas Health and Human Services Commission states them.

How Texas Medicaid Works for Long-Term Care

The Texas Health and Human Services Commission (HHSC) decides eligibility for long-term-care Medicaid. Its handbook covers two main routes. The first is the Nursing Facility Program. The second is the Home and Community-Based Services waiver programs, which pay for care outside an institution. Both routes fall under HHSC's Medicaid for the Elderly and People with Disabilities (MEPD) rules.

For nursing facility Medicaid, the person must:

• be a Texas resident and a U.S. citizen or an alien with approved status, and
• live in a Medicaid-contracted long-term care facility for at least 30 consecutive days.

For waiver services, the person must be 65 or older or meet the Social Security Administration's definition of disability. The person must also meet nursing facility medical criteria or the ICF/IID-RC level of care. Which waiver program fits a particular person depends on current HHSC rules.

Federal law sets the framework that every state follows, including the transfer rules in 42 U.S.C. § 1396p. Texas sets its own limits and procedures within that framework. This page covers Medicaid for long-term care only. It does not cover Medicare, private long-term-care insurance or veterans' benefits.

Texas Asset Limits: Countable and Exempt Property

A countable asset is a resource HHSC counts toward the eligibility limit. Effective January 1, 2026, HHSC's nursing facility and waiver chart sets that limit at $2,000 for an individual and $3,000 for a couple.

An exempt asset is property HHSC does not count, so it does not affect eligibility. HHSC's exclusions include:

• a homestead in Texas where the person plans to return,
• life insurance with a face value of $1,500 or less per insured person, and
• one vehicle, regardless of its value.

That list is partial; HHSC excludes other property in some circumstances.

The home has a ceiling. Federal law bars long-term-care coverage when home equity exceeds a limit, unless a spouse, a child under 21, or a blind or disabled child lives in the home. HHSC's substantial home equity policy sets the limit at $752,000 from January 1, 2026. The policy does not apply when the person's spouse, child, or adult child with a disability lives in the home.

When equity is above the limit, the consequences differ by setting. A nursing facility resident keeps other Medicaid benefits, but HHSC does not make vendor payments for the facility care. That holds with no end date until the equity falls to or below the limit. A waiver applicant in the same position is not eligible for waiver services. The handbook adds that a reverse mortgage or home equity loan may be used to reduce equity.

The Texas Look-Back Period and Transfer Penalties

The look-back period is the window before an application during which HHSC reviews gifts and other transfers. Under federal law, it is 60 months for any transfer made on or after February 8, 2006 (42 U.S.C. § 1396p(c)(1)(B)(i)). HHSC's look-back policy states the same rule: 60 months from the application file date or the program transfer request date.

A penalty period is a stretch of time during which Medicaid will not pay for long-term care because of a transfer for less than fair market value. Federally, the length is set by dividing the total uncompensated value transferred by the average private cost of nursing facility care. Texas expresses that cost as a daily divisor. Effective September 1, 2025, the divisor is $262.37 per day for case actions on or after that date. The result is the number of days of the penalty.

For transfers made on or after February 8, 2006, the penalty starts on the later of two dates (42 U.S.C. § 1396p(c)(1)(D)(ii)):

• the month of the transfer, or
• the date the person is eligible and would otherwise be receiving institutional-level care.

As a result, a gift made four years ago is penalized the same way as one made last month, as long as both fall inside the look-back.

Not every transfer is penalized. Federal law imposes no transfer penalty on a transfer to the person's spouse. The statute also lists other exceptions, including a home whose title is transferred to the person's spouse.

Many families reasonably wonder whether anything can be done once care is needed. The rules allow several approaches, including spending down at fair market value, converting countable assets into exempt ones, transfers to a spouse, and certain trusts and annuities. Whether any of these helps depends on the facts and the timing. Related topics include Medicaid crisis planning and planning after nursing home admission.

Spousal Protections Under Texas Medicaid

The community spouse is the husband or wife who stays at home while the other spouse receives institutional care. Under the federal spousal-impoverishment rules in 42 U.S.C. § 1396r-5, the couple's resources are counted together at application. The community spouse keeps a resource allowance from that combined total. Once eligibility is established, the community spouse's resources are no longer counted against the institutionalized spouse.

For 2026, HHSC's chart sets the protected resources amount for a community spouse at a minimum of $32,532 and a maximum of $162,660, effective January 1, 2026. That amount excludes the value of the homestead, household goods, personal goods, one car and burial funds.

Income is treated separately. Federally, while one spouse is in an institution, the community spouse's own income is generally not deemed available to the institutionalized spouse.

The minimum monthly maintenance needs allowance (MMMNA) is the minimum monthly income the community spouse is entitled to keep. Federally, the minimum MMMNA changes each July 1, while the maximum allowance and the resource figures change each January 1. When the community spouse's own income falls short, part of the institutionalized spouse's income can be diverted to the community spouse. In Texas, the monthly co-payment is figured from total gross couple income, less:

• $75 for personal needs,
• an amount up to $4,066.50 for the community spouse, and
• a certain amount for dependents living with the community spouse.

Spousal questions are often sharpest when a home and retirement savings are at stake; Medicaid and retirement accounts is covered separately.

Texas Estate Recovery Program (MERP) and the Family Home

Texas runs a Medicaid Estate Recovery Program (MERP). MERP is the process by which the state asks for repayment from a deceased recipient's estate for long-term services and supports Medicaid paid. HHSC's MERP guide describes who the program affects and how much the state may seek:

• MERP affects only long-term care services and supports received after age 55.
• It applies only if the person first applied for those services after March 1, 2005.
• The state will never ask for more than it paid.

Federal law generally defers recovery while a surviving spouse, a child under 21, or a blind or disabled child survives. The deferral does not cancel the claim. The Texas guide lists those same three circumstances: a spouse still alive, a child under 21, and a child of any age who is blind or permanently and totally disabled.

States must also have procedures to waive recovery when it would cause undue hardship. Texas says it will not ask for money when this would cause undue hardship for the heirs. One hardship applies only to the home. If the homestead is worth under $100,000 and one or more heirs have family income under a set amount, the state may not ask for money back. HHSC adjusts that income amount each year. Heirs must request the hardship and provide the requested proof.

A homestead that was exempt during the recipient's lifetime can still be reached by MERP after death. The outcome for a particular home turns on the MERP rules in effect and on who survives.

The Texas Medicaid Application Process

According to HHSC's long-term care page, applications start through Your Texas Benefits, and families can talk with an HHSC employee about Medicaid.

Part of the review covers the 60-month look-back, so transfers in that window are examined.

A denial can be appealed. HHSC's fair hearings guidance describes these time frames for filing an appeal:

• A fair hearing must be requested within 90 days of the date of the denial notice.
• If a managed care organization took the action, the deadline is 120 days after its internal appeal is completed.
• A later request requires showing good cause.

If the person disagrees with the hearings officer's decision, they can request an administrative review by an HHSC administrative law judge, who may sustain or reverse the decision.

What Texas Medicaid Planning Involves

Spend-down means bringing countable assets down to the eligibility limit. This can be done by paying for goods and services at fair market value or by converting countable assets into exempt ones, such as a vehicle or the homestead. Planning steps are made openly and reported in full on the application.

Income above $2,982 a month (effective January 1, 2026) is a separate issue. HHSC describes the qualified income trust, sometimes called a Miller Trust, which must be irrevocable. HHSC does not count income properly diverted through such a trust for institutional or waiver eligibility. The trust does not change the $2,000 resource limit.

Other trusts work differently. Under HHSC's look-back policy, payments from an irrevocable trust whose distributions are not available to the person, made to or for the benefit of someone other than the person, have a 60-month look-back period. Whether a trust protects anything turns on its terms and its timing. HHSC also notes that a special needs trust may be created for a person with a disability under 65.

Federally, buying an annuity is treated as a transfer for less than fair market value unless certain conditions are met, including naming the state as remainder beneficiary. The rules for annuities, promissory notes and life estates are covered in 42 U.S.C. § 1396p.

Families dealing with cognitive decline face added timing issues, discussed in Medicaid planning for dementia. This page does not cover Medicare, private long-term-care insurance, veterans' benefits or tax planning.

Discussing Medicaid Planning in Texas

Texas's figures change on different dates: January 1 for the asset, income and spousal amounts, and September 1 for the penalty divisor. MERP and the home add a further layer after death. This page does not cover other states' rules or the benefits named above.

To request a consultation about a family's Medicaid and long-term-care options in Texas, contact Medicaid Asset Protection Group.