How does Medicaid work in Texas?

What does Texas Medicaid pay for in long-term care?

Most people associate Medicaid with low-income health coverage, but it plays a different role for seniors. Texas Medicaid is the primary payer for long-term nursing facility care for eligible individuals. It also funds home and community-based services through several waiver programs, which can help seniors receive care at home or in an assisted living setting rather than in a nursing facility.

Medicare, the federal program most working adults are familiar with, does not pay for long-term custodial care. Medicare covers short-term skilled nursing facility stays after a qualifying hospital admission, typically for a limited number of days, and stops when the patient no longer needs skilled care. Once a senior needs ongoing custodial care, Medicaid, long-term care insurance, or private funds cover the cost.

Who administers Medicaid in Texas?

The Texas Health and Human Services Commission (HHSC) administers the state's Medicaid program under federal guidelines. HHSC evaluates applications, determines eligibility, and manages ongoing enrollment.

Federal Medicaid rules set the framework, but states have flexibility in setting income limits, defining exempt assets, and structuring their programs. Texas-specific rules govern how applications are reviewed and what planning strategies the state will accept.

What are the financial eligibility requirements for Texas Medicaid?

Texas Medicaid has both an income test and an asset test. Both must be met for a nursing facility applicant to qualify.

Eligibility factor: General rule (verify current figures with an attorney) Income limit (single applicant): Monthly income must fall below the applicable threshold; income above that limit may need to flow through a Qualified Income Trust (Miller Trust) to qualify Countable asset limit (single applicant): Generally $2,000 in countable assets Countable asset limit (married, institutional spouse): The applicant may retain $2,000; the community spouse may retain assets up to the Community Spouse Resource Allowance (CSRA), which is set by federal formula and adjusted periodically Primary residence: Exempt if the applicant intends to return home or a spouse remains in the home; subject to Medicaid estate recovery at death One vehicle: Generally exempt regardless of value Personal property and household goods: Generally exempt Burial arrangements and life insurance (limited): May be exempt up to specified limits Retirement accounts (IRA, 401k): Countability varies; confirm current Texas treatment with an attorney

What is the Medicaid look-back period in Texas?

Federal Medicaid law requires states to review five years of financial history before an applicant can qualify for nursing facility Medicaid. This is called the look-back period.

If HHSC finds that the applicant transferred assets for less than fair market value during those five years, it will impose a penalty period during which Medicaid will not pay for care. The penalty is calculated by dividing the value of the transferred assets by the average daily cost of nursing home care in Texas.

The look-back period is why planning well in advance is far more effective than planning during a crisis. Transfers made more than five years before applying carry no penalty. Transfers made close to or during the application process trigger penalties that can be significant.

How does Medicaid affect a married couple in Texas?

Federal law includes protections for the spouse who remains at home, called the community spouse. Without those protections, a married couple would be required to spend down to $2,000 in combined assets before the ill spouse could qualify, which could leave the healthy spouse with nothing.

The Community Spouse Resource Allowance allows the community spouse to keep a portion of the couple's countable assets. The exact amount is calculated at the time of application using a federal formula and is subject to periodic adjustment. The community spouse may also be entitled to a minimum monthly maintenance needs allowance from the ill spouse's income.

Texas Medicaid planning for married couples often focuses on restructuring assets to maximize what the community spouse can retain while bringing the applicant's assets below the eligibility threshold.

What is the difference between Medicaid and Medicare in Texas?

The two programs are frequently confused, and the difference is significant for seniors planning for long-term care.

Medicare is federal health insurance. Most Americans 65 and older receive it automatically based on their work history. It covers hospital stays, doctor visits, and a limited amount of skilled nursing facility care after a qualifying hospitalization. It does not pay for ongoing custodial care in a nursing home.

Medicaid is a joint federal-state program that provides health coverage to people with limited income and assets. For seniors, its most significant function is paying for long-term nursing facility care. Unlike Medicare, Medicaid requires the applicant to meet financial eligibility criteria.

Some seniors qualify for both programs simultaneously. This is called being dual-eligible. Medicaid may cover costs that Medicare does not, including nursing home costs beyond Medicare's limited coverage period.

When to speak with a Houston elder law attorney

This article provides general legal information, not legal advice. Texas Medicaid rules are detailed and change periodically. Whether a particular planning approach will be effective depends on the applicant's specific assets, income, family situation, and the timing of any prior transfers.

The attorneys at Edison Legal work with Houston-area families on Medicaid planning, both proactively before a care need arises and in crisis situations when care is already underway. If you are trying to understand your options, request a planning consultation to talk through the specifics.