Does Texas Have a Medicaid Spend Down?

Worried senior citizen's hands | Does TX have Medicaid spend downMost of us will require nursing home care at some point in our lives. What’s worrying is how expensive it is. Perhaps you’ve heard of the possibility to reduce your assets before this time comes. You may wonder if it is possible to do a Medicaid spend down in Texas.

On average, private and semi-private accommodations in a nursing home cost $8,365 and $7,441 respectively. While overall costs vary based on location, support required, and length of stay, anyone needing nursing care will quickly find their financial resources depleted unless they qualify for Medicaid.

Herein lies the challenge. When you apply for Medicaid long-term care coverage in Texas as a single person, your non-exempt assets cannot exceed $2,000. (For couples, the limit is $3,000.) Medicaid is a means-tested benefit and only those with a low income and limited financial resources will qualify for coverage.

There Can Be Penalties for Asset Transfers

Consequently, seniors who know that they will soon need care often divest themselves of cash, stocks, bonds, and real estate holdings, unaware that all asset transfers that take place within five years before applying (also known as the look back period) will be reviewed. If it is determined that you transferred assets or sold them for less than fair market value in order to meet Medicaid’s asset limit, you could be penalized.

Fortunately, there are ways that you can protect your income and assets so that you receive the Medicaid coverage you need when the time comes, and an elder law attorney can help you with all of them.

Who Qualifies for Medicaid Spend Down in Texas?

To qualify for a Medicaid spend down in Texas, your monthly income limit for long-term care coverage is currently $2,382 for singles and $4,764 for married couples. If you are over 65 and make more money but spend the excess on medical bills, your eligibility may be preserved, provided you can prove that the extra funds went towards medical care.

What concerns many seniors is the idea of selling assets and using their life savings to pay for a nursing home until they finally qualify for Medicaid coverage, which leaves their loved ones without an inheritance. A Texas estate planning attorney can help you prevent that outcome by using appropriate Medicaid planning strategies such as:

  • Qualifying Income Trust: Also known as a Miller Trust, it diverts any income over the monthly limit into the trust to preserve your Medicaid eligibility.
  • Gifting: You can gift up to $15,000 a year per heir without involving gift taxes. If you want to gradually transfer your wealth to loved ones, gifting prior to the look-back period is an effective way to do it without affecting your Medicaid eligibility. 

Speak With a Texas Estate Planning Attorney About a Medicaid Spend Down Today

Estate planning law frequently changes, but working with an attorney will ensure that the Medicaid preparation strategies you use are legally valid while meeting your wealth protection and distribution goals. Our team at the Amsberry Law Firm can help you ensure that your assets are properly spent down or transferred in ways that don’t harm your future eligibility for long-term care. To speak with our estate planning attorney, contact us today.

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