When you apply for Medicaid long-term care benefits in Texas, most of what you own counts against a strict eligibility limit, which is $2,000 for a single applicant and $3,000 for a couple. Some assets are exempt, like your home and vehicle, and the rest must be spent before Medicaid pays for care.
At The Law Office of Whitney L. Thompson, we help families in Houston and Bay City, Texas, work through exactly these questions, so they can move forward with a clear plan and confidence that their assets and their loved ones are protected.
Every family's asset picture is different, and small details, like how a home is titled, when a gift was made, and whether a spouse is still living independently, can significantly change the outcome. If you're weighing an application or planning ahead, we're happy to sit down and walk through your specific situation. Call now to schedule a consultation.
Most Assets Must Be Spent Down First
Medicaid long-term care is a needs-based program, so your assets are reviewed as part of the application. In Texas, a single applicant must reduce countable assets to $2,000 or less, and a couple applying together to $3,000, before benefits are approved. Most of what you own counts toward that limit, though a handful of key assets, like your home and one vehicle, are exempt.
Married couples also get extra protection. A healthy spouse who isn't applying is allowed to keep a larger share of the couple's combined assets, and past asset transfers are reviewed as part of the process. The sections below walk through each of these rules in detail.
These numbers catch many families off guard. A couple with a modest retirement account, a paid-off car, and some savings can easily exceed $2,000 in countable resources, even if they don't feel "wealthy." Understanding which assets count and which don't is the first step in successful planning.
Countable vs. Exempt Assets
Not everything you own counts against the Medicaid asset limit. Texas Medicaid divides assets into two categories:
Countable Assets
These include bank accounts, certificates of deposit, stocks, bonds, retirement accounts, and any other cash or asset that could reasonably be converted to cash. These must be spent down to the applicable limit before Medicaid approves an application.
Exempt (Non-Countable) Assets
These are excluded from the calculation. Common examples include:
Your primary home, as long as your equity interest is below $752,000 (in 2026) and you, your spouse, or a minor or disabled child lives there — or you intend to return to it
One vehicle, regardless of value
Personal belongings and household goods
Prepaid burial plots and certain irrevocable funeral trusts
Term life insurance, and whole life insurance with a small face value
If a married couple has assets that exceed these limits, the situation isn't necessarily hopeless, but it does require careful planning, which is where the Community Spouse Resource Allowance (CSRA) comes in.
Protecting the Spouse Who Stays Home
One of the most important protections in Medicaid law exists for married couples when only one spouse needs nursing home care. Without it, a healthy spouse could be forced to spend nearly everything before their partner qualifies for benefits. The CSRA prevents that.
In 2026, the community spouse (the one not applying for Medicaid) can generally keep half of the couple's combined countable assets, up to a maximum of $162,660. If the couple's total countable assets are modest, the community spouse is guaranteed to keep at least $32,532, even if that's more than half.
There are also rules that can allow a community spouse with low income to retain additional assets to generate enough income to live on. Because these calculations depend heavily on a couple's specific financial picture, we can review your situation with you before any assets are spent or transferred.
The Five-Year Look-Back Period
Many people assume they can simply give away or transfer assets to a family member shortly before applying for Medicaid to get under the asset limit. Texas Medicaid, like every state, prevents this through a five-year look-back period.
When you apply, the Texas Health and Human Services Commission (HHSC) reviews all asset transfers made in the 60 months immediately preceding your application date. This includes transfers such as gifts to children, transfers into certain trusts, or forgiven loans. If you sold, gifted, or transferred assets for less than fair market value during that window, you may be assessed a penalty.
During that penalty period, Medicaid won't pay for your care, even though you otherwise qualify. HHSC calculates the length of the penalty by dividing the value of the transferred assets by an official daily divisor rate. That rate represents the average private-pay cost of nursing facility care in Texas and is updated periodically.
This is why last-minute "spend-down" decisions made in a panic, without legal guidance, often backfire. Legitimate Medicaid planning looks very different from simply giving assets away. It's typically done well in advance, or it uses strategies that stay compliant when needed.
Spending Down the Right Way
If your countable assets exceed the Medicaid limit, you generally have to reduce them before you can qualify. The key is doing so in ways that don't trigger a look-back penalty, and that still serves your family's interests. Common, compliant strategies include:
Paying off debt, including mortgages or medical bills
Making home modifications or repairs
Prepaying funeral and burial expenses through an irrevocable funeral trust
Purchasing a Medicaid-compliant annuity that converts excess assets into an income stream for a community spouse
Paying for care privately for a period of time while other planning is put in place
The right approach depends on marital status, the types of assets involved, and how soon care is needed. Our compassionate elder law attorney can help determine which combination of these tools fits your circumstances and timeline.
Talk to an Elder Law Attorney Before You Apply
The rules governing Medicaid eligibility and asset protection are technical, and small missteps can lead to real financial harm. These can include a denied application, a lengthy penalty period, or assets that could have been protected but weren't. Whether you're planning ahead for a spouse or parent who may need care in the future, or facing an immediate need for nursing home placement, getting the right guidance before you apply can make the difference between losing what you've saved and protecting it for your family.
From our offices in Houston and Bay City, we serve families across Brazoria, Fort Bend, Harris, Matagorda, Montgomery, and Wharton counties with estate planning, probate, guardianship, and elder law matters, including Medicaid planning and long-term care asset protection. If you have questions about your own situation, contact The Law Office of Whitney L. Thompson to schedule a consultation.
