HOUSTON, TX - Understanding Medicaid eligibility in Texas can be challenging, especially when navigating spend-down rules and income limits. Houston Medicaid planning lawyer Whitney L. Thompson of The Law Office of Whitney L. Thompson (https://www.wthompsonlaw.com/does-texas-have-spend-down-medicaid/) is helping families across Texas make sense of complicated Medicaid requirements, whether they’re applying under the Medically Needy program or preparing for long-term-care Medicaid.
For families seeking coverage under the Medically Needy program, income spend-down is sometimes an option. Houston Medicaid planning lawyer Whitney L. Thompson explains that this path is generally limited to pregnant women and children under 19. “Spend-down is like a monthly deductible,” Thompson says. “If the income is too high, a person can qualify by showing they incurred enough unpaid medical bills to meet the monthly threshold.”
However, when it comes to long-term-care Medicaid, including nursing home coverage, the rules are different. Texas does not use the income spend-down method for this type of care. Instead, applicants must meet an income cap. Houston Medicaid planning lawyer Whitney L. Thompson notes that if an applicant’s income exceeds the cap, which is $2,901 per month in 2025, they may still qualify by using a Qualified Income Trust, often referred to as a Miller Trust. This legal arrangement allows individuals to funnel the excess income into a trust so they remain eligible under state rules.
“People are often confused by the term ‘spend-down’ because it means different things depending on the type of Medicaid program,” says Thompson. “Our job is to help families understand whether they fall under the Medically Needy category or if they need to use a trust and manage assets carefully for long-term care eligibility.”
Under the Medically Needy program, those eligible, such as a pregnant applicant, can submit unpaid medical bills to show that their income, after medical expenses, falls below the monthly limit. Approved expenses may include doctor visits, prescriptions, lab work, and other healthcare-related charges. Documentation must be clear and well-organized, using forms like the Medical Bills Transmittal Form (Form H1120) to send bills to the Texas Medicaid and Healthcare Partnership’s Medically Needy Clearinghouse.
When long-term-care Medicaid is the goal, spend-down takes a different form. Rather than offsetting income with medical bills, applicants may need to reduce their countable assets to meet the asset limit, typically $2,000 for individuals. According to Whitney L. Thompson, this process, known as asset spend-down, must follow specific guidelines to avoid penalties. “It’s not about giving assets away,” she says. “It’s about using those resources for allowable expenses, like home repairs, medical equipment, or setting up a prepaid burial plan that complies with Medicaid rules.”
Texas also applies a five-year look-back period when someone applies for long-term-care Medicaid. If an applicant gave away or transferred assets for less than fair market value in the previous 60 months, a penalty period may apply. The state calculates this penalty based on a set divisor, $262.37 per day in 2025, which can delay Medicaid coverage even if all other requirements are met.
Married couples face additional considerations. Under Texas’s spousal impoverishment rules, the spouse who remains at home (the community spouse) may retain a portion of the couple’s assets and income. For 2025, the Community Spouse Resource Allowance (CSRA) ranges from a minimum of $31,584 to a maximum of $157,920, and the income allowance can go up to $3,948 per month. These protections are designed to ensure that the healthy spouse can maintain a reasonable standard of living.
Whitney L. Thompson stresses that navigating these rules requires careful planning. “Even if research was done, Texas Medicaid is full of technical rules that can trip people up,” she explains. “We work with families to prepare documentation, structure income properly, and avoid mistakes that can delay approval or trigger penalties.”
Her firm also helps local families identify community resources and coordinate with facilities that accept Medicaid, particularly in the Houston area. With knowledge of local HHSC offices and health care providers, The Law Office of Whitney L. Thompson ensures that applications are filed properly and reviewed without unnecessary delays.
Understanding the difference between income and asset spend-down, and knowing which rules apply to a specific case, can mean the difference between qualifying for Medicaid and facing major out-of-pocket costs. Whether applying under the Medically Needy program or planning ahead for nursing home care, Whitney L. Thompson offers clear legal guidance.
For Texas residents unsure about Medicaid rules, it's important to act early. The right steps now can protect income, home, and financial stability in the years ahead.
About The Law Office of Whitney L. Thompson:
The Law Office of Whitney L. Thompson helps families in Houston and throughout Texas understand estate planning, Medicaid eligibility, and elder care legal matters. Whitney L. Thompson provides tailored legal guidance for Medicaid planning, ensuring clients meet program rules while preserving financial security.
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