If you are trying to qualify for Texas Medicaid long-term care by subtracting medical bills from your income the way some other states allow, stop: Texas does not work that way. For nursing-facility and waiver Medicaid, Texas is an "income-cap" state, so there is no income spend-down. In 2026, countable income at or below $2,982 a month meets the income test; if countable income is above it, the route Texas provides is a Qualified Income (Miller) Trust, not a spend-down.

In This Guide

Why the Texas Medicaid Spend Down Works Differently

A traditional Medicaid spend-down lets an applicant whose income is over the limit subtract incurred medical expenses from that income until it falls below the threshold, the way a deductible works. The federal "medically needy" pathway under 42 CFR 435.831 allows it, but the pathway is optional, so each state decides whether to offer it. For a fuller explanation of the national concept, see What Is a Medicaid Spend-Down?.

Texas uses an income cap instead. For nursing-facility Medicaid and Home and Community-Based Services (HCBS) waiver programs like STAR+PLUS, the 2026 special income limit is $2,982 per month for an individual and $5,964 for a couple, which equals 300% of the $994 individual SSI federal benefit rate.

One nuance matters before you measure yourself against that number: the test is countable income, not simply everything that lands in the bank. HHSC works out whether a trust is needed by first determining what income counts, and some income does not, including certain Veterans Affairs benefits. But once countable income is over the limit, there is no mechanism to subtract medical bills to get below it. HHSC's rule is blunt: if countable income exceeds the institutional income limit, the person is income-ineligible for that month. Families who read about spend-down online and assume it applies everywhere are tripped up by this.

The Miller Trust: Texas's Income Workaround

If countable income exceeds the cap, federal law authorizes a Qualified Income Trust (QIT), commonly called a Miller Trust, under 42 U.S.C. 1396p(d)(4)(B). It is the income workaround for income-cap states like Texas, not a spend-down. Texas HHSC uses the same "Miller Trust" alias and frames the QIT as something that can overcome the special income limit rather than the only conceivable route, and it notes one place the QIT does not reach: it is not available to people in Community Attendant Services (CAS) who are income ineligible.

Here is how it functions. A trust is established to meet the statute's requirements, and only the applicant's own income may be deposited into it; resources and savings cannot be added or used to fund it. Each month, the income that exceeds the Medicaid limit is deposited into the trust, where it no longer counts toward eligibility. That money does not disappear: it is still counted toward the applicant's share of cost (patient liability) and is paid toward care. On the applicant's death, the state Medicaid agency, which must be named as a remainder beneficiary, recovers the funds remaining in the trust, up to the total Medicaid paid on the applicant's behalf.

A Miller Trust does not shelter money or let the applicant keep extra income. It simply lets a resident of an income-cap state qualify when income is above the limit. Because the trust must be drafted to meet specific statutory requirements, families typically work with an elder law attorney to set one up, and the completed trust is submitted with the Medicaid application.

The Texas Medicaid Asset Spend Down Does Apply

While Texas does not allow an income spend-down, the Texas Medicaid asset spend-down does apply. Texas MEPD policy sets the countable-resource limit at $2,000 for an individual and $3,000 for a couple. Which limit applies is a question of household, not of how many people are applying: the $3,000 couple limit is for married adults who live in the same household with their spouses, while the $2,000 individual limit applies to a person who is single, to a person whose spouse lives in a different household, and, under spousal-impoverishment policy, to the institutional spouse. So if both spouses enter a nursing facility, each is measured against $2,000, not $3,000 between them. Do not plan around the couple figure without checking which limit your household falls under.

Several resources are exempt and do not count toward that limit: the home that is the applicant's or the spouse's principal place of residence, one automobile regardless of value, and household goods and personal effects meeting the MEPD definitions. Everything else counts, including bank accounts, investments, and additional real estate.

Substantial home equity is a separate test, not a resource test. The homestead stays excluded as a resource. But if the applicant's equity interest in the home exceeds the 2026 substantial-home-equity limit of $752,000, Texas finds the person ineligible for Medicaid for services in an institutional setting and denies HCBS waiver services. A person already receiving Medicaid-certified long-term care facility services stays eligible for all other Medicaid benefits, and a denial on this basis does not disqualify anyone from Qualified Medicare Beneficiary (QMB) or Specified Low-Income Medicare Beneficiary (SLMB) benefits. The policy does not apply at all if the applicant's spouse, or the applicant's child who is under 21 or is blind or permanently and totally disabled, lawfully resides in the home, and it does not prevent using a reverse mortgage or home equity loan to reduce the equity interest.

Legitimate ways to reduce countable assets include paying off debt such as a mortgage or credit cards, making home repairs or modifications, prepaying funeral and burial arrangements, replacing a vehicle, and paying for medical or dental care. Keep records of every expenditure.

The Look-Back Period and Transfer Penalty

Be careful with gifts and transfers. Texas applies a 60-month (5-year) look-back period to asset transfers when determining long-term-care eligibility. If you gave away money or sold property for less than fair market value in the five years before applying, the Texas Health and Human Services Commission (HHSC) imposes a penalty period during which Medicaid will not pay for long-term care.

The penalty is calculated by dividing the total uncompensated transfer value by a daily penalty divisor, which is the average daily private-pay cost of nursing-facility care. For case actions disposed on or after September 1, 2025, the Texas divisor is $262.37 per day, and partial amounts are rounded down to whole days. In Texas the penalty start date is the first day of the month of the medical effective date, if the person meets all other eligibility criteria. Some transfers of the home are exempt, including a transfer to a son or daughter (other than one who is under 21, blind, or disabled) who resided in the home for at least the two years immediately before the parent became institutionalized and provided care that permitted the parent to remain at home instead, and a transfer to a child who is blind or permanently and totally disabled. Document any large transfer and consult an elder law attorney before making one.

After You Qualify: Patient Liability and the Personal Needs Allowance

Qualifying does not mean Medicaid pays everything while you keep all of your income. A nursing-facility resident on Medicaid keeps a personal needs allowance (PNA) of $75 per month (effective January 1, 2024) for personal expenses; the rest of the resident's income, after allowed deductions, is applied to the cost of care as patient liability. If a Miller Trust is in place, the income routed through it is what funds that patient-liability payment to the facility.

If One Spouse Needs Care: The Community Spouse

When one spouse enters a nursing facility and the other stays home, federal spousal-impoverishment rules protect the at-home spouse, called the community spouse. For 2026, the community spouse may keep a Community Spouse Resource Allowance (CSRA) of half the couple's combined countable assets, subject to a minimum of $32,532 and a maximum of $162,660. These are the federal spousal-impoverishment standards Texas applies. Under that same policy, it is the institutional spouse, the one entering the facility, who is tested against the $2,000 individual resource limit, not the $3,000 couple figure.

How to Apply

To apply for long-term-care Medicaid in Texas, contact the Texas Health and Human Services Commission (HHSC). You can dial 2-1-1 (2-1-1 Texas, or 877-541-7905 if 2-1-1 will not connect) for general health-and-human-services information and referral, or call 1-877-438-5658 to be added to a Medicaid waiver interest list; for the HCS and Texas Home Living (TxHmL) waivers, contact your Local Intellectual and Developmental Disability Authority instead. If your countable income is over the $2,982 monthly cap, set up the Qualified Income Trust first, because the completed trust is filed together with the Medicaid application.

Your next step Have questions about your family's situation? Chat with Brevy to check your Texas Medicaid eligibility. It is free and takes just a few minutes.

Frequently Asked Questions

Does Texas allow a Medicaid spend down?

Not for income. Texas is an income-cap state, so if your countable monthly income is over the long-term-care Medicaid limit of $2,982 in 2026, you cannot subtract medical bills to qualify. Texas does allow an asset spend-down: an applicant tested at the individual limit can reduce countable assets to $2,000 by paying off debt, prepaying funeral arrangements, or making home repairs.

What is the Texas Medicaid income limit in 2026?

The special income limit for nursing-facility Medicaid and home and community-based waiver services is $2,982 per month for an individual in 2026 and $5,964 for a couple, equal to 300% of the individual Supplemental Security Income (SSI) federal benefit rate of $994. It is measured against countable income, not gross. If your countable income is over the cap, a Qualified Income Trust (Miller Trust) is the route Texas provides, not a spend-down.

How does a Miller Trust (Qualified Income Trust) work?

A trust is set up, funded only by the applicant's own income. Each month the income that exceeds the Medicaid limit is deposited into the trust, where it no longer counts toward eligibility, though it still counts toward the applicant's share of cost and is paid toward care. On death, the state recovers funds remaining in the trust up to the total Medicaid it paid.

What is the Texas Medicaid asset limit, and what is exempt?

The Texas MEPD countable-resource limit is $2,000 for an individual and $3,000 for a couple, with the couple limit applying to married adults who live in the same household; under spousal-impoverishment policy the spouse who enters the facility is tested at the $2,000 individual limit. Exempt resources include the principal home, one automobile regardless of value, household goods, and personal effects. Home equity above $752,000 does not turn the home into a countable asset; it triggers denial of institutional and HCBS waiver Medicaid, and that policy does not apply at all if a spouse, or a child under 21 or blind or permanently and totally disabled, lawfully lives in the home.

What is the Medicaid look-back period in Texas?

Texas uses a 60-month (5-year) look-back period. Transfers for less than fair market value in the five years before applying create a penalty period, calculated by dividing the transferred value by the $262.37-per-day divisor (for case actions on or after September 1, 2025). Document any large transfers and consult an elder law attorney before making them.

How much of my income do I keep once I am on Medicaid in a nursing facility?

A Medicaid nursing-facility resident keeps a personal needs allowance of $75 per month (effective January 1, 2024); the remaining income, after allowed deductions, is applied to the cost of care.

Learn More

MedicaidWhat Is a Medicaid Spend-Down?Medicaid spend-down lets people whose income is over the limit qualify by applying medical bills to the excess. Here is how the medically needy path works. MedicaidHow to Apply for Texas MedicaidHow to apply for Medicaid in Texas in 2026: the four ways to apply, the documents seniors need, the income-cap trap, timelines, and where to get free help. MedicaidTexas Medicaid Programs for SeniorsTexas Medicaid programs for seniors 65+ include STAR+PLUS, CAS, HCBS waivers, and PACE. Find out what each one covers, who qualifies, and how to enroll. MedicaidTexas Medicaid Long-Term Care & Nursing HomesTexas Medicaid pays for nursing home care under regular Medicaid, not a capped waiver. See the 2026 income and asset limits and what the at-home spouse keeps. MedicaidTexas STAR+PLUS Waiver ProgramTexas STAR+PLUS covers Medicaid managed care for seniors 65+. The HCBS income limit is $2,982/month, and 13,519 people sat on its interest list in July 2026. MedicaidWhat Texas Medicaid CoversTexas Medicaid covered services for seniors 65+: doctor visits, hospital care, drugs, vision, limited dental. See what STAR+PLUS covers and what it won't.

Find personalized help with the Texas Medicaid spend-down at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.

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Brevy Care Team

Expert eldercare guidance from Brevy's team of healthcare professionals and researchers.