If you are trying to qualify for Texas Medicaid by subtracting medical bills from your income the way some other states allow, stop: Texas does not work that way. Texas is an "income-cap" state, so there is no income spend-down. For long-term care in 2026, income at or below $2,982 a month qualifies; income above it routes through 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, which equals 300% of the individual SSI federal benefit rate. If gross income is even one dollar over that figure, there is no mechanism to subtract medical bills to get below it. 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 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.

Here is how it functions. An irrevocable trust is established, and only the applicant's own income may fund it; resources and savings cannot be added. 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. A single applicant must reduce countable assets to the $2,000 limit; a married couple with both spouses applying must reach $3,000.

Several resources are exempt and do not count toward that limit: the primary home (subject to the home-equity limit below), one automobile, household goods, and personal effects. The primary home is excluded as long as the applicant's equity interest is at or below the 2026 substantial-home-equity limit of $752,000, and the equity limit does not apply at all if a spouse, a child under 21, or a blind or disabled child lawfully lives in the home. Everything else counts, including bank accounts, investments, and additional real estate.

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. Some transfers are exempt, including a transfer of the home to an adult child who lived in the parent's home for at least two years and provided care that delayed institutionalization. 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 figures are federal standards Texas applies, so the at-home spouse's assets are not all counted against the applicant's $2,000 single-applicant limit.

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) for general health-and-human-services information and referral, or call the HHSC long-term services and supports interest-list line at 1-877-438-5658 to get on a waiver interest list. If your income is over the $2,982 monthly cap, set up the Miller 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 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: a single applicant can reduce countable assets to the $2,000 limit 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 most HCBS waivers is $2,982 per month for a single applicant in 2026, equal to 300% of the individual Supplemental Security Income (SSI) federal benefit rate. If you are over the cap, a Qualified Income Trust (Miller Trust) is the workaround, not a spend-down.

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

An irrevocable 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?

A single applicant must reduce countable assets to $2,000 ($3,000 for a couple when both apply). Exempt resources include the primary home (up to a $752,000 equity limit, waived if a spouse or a minor or disabled child lives there), one vehicle, household goods, and personal effects.

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 with no waitlist. See the 2026 income ($2,982) and asset ($2,000) limits and what the at-home spouse gets to keep. MedicaidTexas STAR+PLUS Waiver ProgramTexas STAR+PLUS covers Medicaid managed care for seniors 65+. The HCBS waiver income limit is $2,982/month, and Community First Choice has no waitlist. 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.