Medicaid Spend Down Texas: Asset Limits, Income Caps, and Spousal Protections for 2026

Your parent has $47,000 in savings, a house, and a car. Texas Medicaid says they can keep $2,000. The math looks brutal — but the rules are more nuanced than the headline number suggests, especially if your parent is married. Here's how the spend-down actually works and what's exempt.

The 2026 Financial Limits

Texas Medicaid long-term care eligibility (including STAR+PLUS HCBS waiver, Community Attendant Services, and nursing facility coverage) requires:

• Income cap: $2,982 per month gross. Texas is a strict income-cap state — no "medically needy" pathway. If income exceeds this threshold, a Miller Trust is required.
• Asset limit (single applicant): $2,000 in countable resources.
• Asset limit (married couple, both applying): $3,000 combined.

These are hard limits. Exceeding them by any amount means ineligibility.

What Counts as a Countable Asset

Not everything your parent owns counts against the $2,000 limit. Exempt assets include:

• The primary residence — as long as your parent (or their spouse) intends to return home, or the home equity interest is $752,000 or less
• One vehicle of any value
• Personal effects and household furnishings — clothing, furniture, appliances
• An irrevocable pre-need burial contract and a designated burial plot
• Term life insurance of any value, and whole life insurance with a combined face value of $1,500 or less

Everything else — checking accounts, savings accounts, CDs, stocks, bonds, non-primary real estate, cash value of life insurance above $1,500 — is countable.

How to Spend Down Legally

Spending down doesn't mean throwing money away. It means converting countable assets into exempt assets or paying legitimate expenses. Permitted spend-down strategies:

• Pay off the mortgage, credit cards, or other secured debts. Eliminating debt is a dollar-for-dollar reduction in countable assets.
• Fund home modifications — wheelchair ramps, grab bars, roll-in showers, widened doorways. These improve the exempt homestead and reduce fall risk.
• Purchase an irrevocable pre-need burial contract. This removes the funds from countable assets permanently. The contract must be irrevocable — a revocable burial fund counts as an asset.
• Buy a replacement vehicle if the current one is unreliable. One vehicle of any value is exempt.
• Prepay property taxes, homeowner's insurance, or home maintenance.

What you cannot do: give assets away. Texas Medicaid enforces a 60-month (5-year) look-back period on all asset transfers made for less than fair market value. A gift to a child — even one under the IRS's $19,000 annual gift tax exclusion — triggers a penalty period of Medicaid ineligibility. The penalty is calculated by dividing the transfer amount by $262.37 (the 2026 daily penalty divisor). A $52,474 gift creates a 200-day ineligibility window.

Spousal Impoverishment Protections

When only one spouse applies for Medicaid long-term care, federal spousal impoverishment rules prevent the healthy "community spouse" from being financially wiped out. Texas implements these protections through two mechanisms:

Community Spouse Resource Allowance (CSRA): The community spouse keeps 50% of the couple's combined countable assets, subject to a floor and ceiling:

• Minimum (floor): $32,532 — if total countable assets are below this, the community spouse keeps everything
• Maximum (ceiling): $162,660 — combined assets above this must be spent down to the applicant's $2,000 limit

Monthly Maintenance Needs Allowance (MMMNA): The community spouse is entitled to $4,066.50 per month in income. If their personal income (Social Security, pension) is below this, a portion of the applicant spouse's income can be diverted to close the gap. Texas uses the "name on the check" rule — only the applicant's own income counts for eligibility; the community spouse's income is completely disregarded.

If the CSRA and diverted income still aren't enough to reach the MMMNA, the community spouse can petition for a CSRA expansion through an administrative appeal or probate court action, retaining additional assets above the $162,660 ceiling to generate investment income.

The Homestead During and After Medicaid

The primary residence stays exempt during the applicant's lifetime as long as the community spouse lives there or the applicant intends to return. After the Medicaid recipient's death, the home enters the Medicaid Estate Recovery Program (MERP) — but only through probate. Assets that bypass probate (Lady Bird Deed, Transfer on Death Deed, joint tenancy with right of survivorship) are outside MERP's reach.

The Aging in Place in Texas guide includes the complete spend-down worksheet, spousal CSRA calculation template, and a step-by-step asset inventory checklist designed to document everything HHSC will ask for during the eligibility determination.

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