Medicare beneficiaries increasingly rely on long-term care, and the portion of seniors needing these services will keep rising as the population ages. However, long-term care is mostly not covered by Medicare. While Medicaid fills the gap in Medicare coverage for long-term care, its complex eligibility rules can make qualifying for benefits difficult. What’s more – eligibility rules vary significantly from state to state.
Medicaid nursing home coverage
Income limits: The income limit is $2,742 a month if single and $5,484 a month if married (and both spouses are applying).
When only one spouse needs Medicaid, the income limit for single applicants is used – and only income from the applying spouse is counted.
However, nursing home enrollees are not allowed to keep all of their income up to this limit. Enrollees must pay nearly their entire income toward their care, other than a small personal needs allowance of $60/month and money for health insurance premiums (such as Medicare Part B and Medigap).
Assets limits: The asset limit is $2,000 if single and $3,000 if married (and both spouses are applying). If only one spouse needs Medicaid, spousal impoverishment rules allow the other spouse to keep up to $148,620.
Certain assets are never counted, including many household effects, family heirlooms, certain prepaid burial arrangements, and one car. Enrollees can’t have more than $688,000 in home equity.
Home and Community Based Services (HCBS) waivers
Every state’s Medicaid program covers community-based long-term care services, which are provided at home, or in an adult day care center, assisted living facility, or other “community” setting. Programs that offer this type of care are called Home and Community Based Services (HCBS) waivers because recipients continue living in the community, rather than entering a nursing home. In Texas, HCBS enrollees must need a nursing home level of care.
Income limits: The income limit is $2,742 a month if single and $5,484 a month if married (and both spouses are applying).
When only one spouse needs Medicaid, the income limit for single applicants is used – and only income from the applying spouse is counted.
Some states require HCBS recipients to pay a portion of their income toward their care, but Texas allows these enrollees to keep all of their income up to the eligibility limit as a personal needs allowance.
Assets limits: The asset limit is $2,000 if single and $3,000 if married (and both spouses are applying). If only one spouse needs Medicaid, spousal impoverishment rules allow the other spouse to keep up to $148,620.
HCBS recipients can’t have more than $688,000 in home equity.
Qualifying for Medicaid LTSS with income above the eligibility limit in Texas
The income limit for Medicaid LTSS programs in Texas is $2,742 a month (for single applicants). Applicants with higher incomes can become eligible for nursing home or HCBS benefits by depositing income into a Qualified Income Trust, which is also called a “Miller Trust.”
After it is placed in the Miller Trust, almost all of this income must be paid toward an enrollee’s care if they are in a nursing home. However, Texas allows HCBS recipients to all their income up to the Medicaid eligibility limit as a personal needs allowance, which can be used for health and living expenses.
Spousal impoverishment protections in Texas
Eligibility rules for Medicaid LTSS programs differ from other Medicaid benefits when only one spouse is applying. When this occurs, only the applying spouse’s income is counted. With other Medicaid benefits, the income of both spouses is counted – regardless of who is applying.
Spousal impoverishment rules allow community spouses of Medicaid LTSS recipients to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s monthly income.
In Texas in 2022, these spousal impoverishment rules allowed community spouses to keep:
Medicaid home equity limit in Texas
Federal law requires states to limit eligibility for Medicaid nursing home and HCBS to applicants with a home equity interest below a specific dollar amount. States set these home equity levels based on a federal minimum of $688,000 and maximum of $1,033,000 in 2023.
Texas uses the federal minimum home equity limit – meaning applicants with more than $688,000 in home equity are ineligible for LTSS programs.
Penalties for transferring assets in Texas
Because long-term care is expensive, individuals can have an incentive to give away or transfer assets to qualify for Medicaid LTSS. To curb these asset transfers, federal law requires states to institute a penalty period for Medicaid nursing home applicants who give away or transfer assets for less than their value. Most states also have a penalty period for community-based LTSS.
Texas has an asset transfer penalty for both nursing home care and HCBS. The state uses a 60-month lookback period to calculate this asset transfer penalty – and asset transfers or gifts made during this period may result in ineligibility. This penalty is calculated by dividing the value of asset transfers and gifts by the monthly cost of nursing home care (which is $7,212 in 2023).
Estate recovery in Texas
A state’s Medicaid agency is required to recover what it paid for LTSS and related medical costs while an enrollee was 55 or older. The law allows states to also pursue estate recovery against beneficiaries age 55+ who did not receive LTSS, and younger enrollees who were permanently institutionalized.
Texas has chosen to only recover from the estates of Medicaid enrollees who received LTSS benefits while 55 or older, and who applied for those services after March 1, 2005.
When a deceased enrollee’s Medicaid coverage was administered by a Medicaid managed care insurer (which is the case for most Medicaid enrollees in Texas), the state will attempt to recover what it paid the insurer. That means the estate recovery amount could be more (or less) than the actual cost of Medicaid services received.
Texas may grant an exemption to estate recovery in cases where recovering from an estate would cause undue hardship.
