Texas Medicaid Resource Requirement

Texas Medicaid Resource Requirement

As you are aware, if your mother has too many resources, she is ineligible for Medicaid benefits. Resources are defined as “Cash, other liquid assets, or any real or personal property or other non-liquid assets owned by a client, his spouse, or parent that could be converted to cash.”[1] Resources are counted at 12:01 a.m. on the first day of the month. During the month, your mother is permitted to have more than the resource limit (which I have listed below). However, by the end of the month, her assets must be spent-down so that they fall under the countable resource limit. Here are the resource limits, based upon family structure:

  1. If your mother is unmarried, the countable resource limit is $2,000.
  2. If your mother is married with a spouse who is also eligible for Medicaid, the countable resource limit is $3,000.
  3. If your mother is married with a Medicaid-ineligible spouse, the countable resource limit, or spousal protected resource amount (SPRA), is half of the couple’s combined resources, with a minimum of $25,728 and a maximum of $128,640 (both as of 2020). The date and time when the couple’s resources are measured is called the “snapshot”, and it depends on whether the application is for Institutional Medicaid or a waiver program. The SPRA can be expanded with certain strategies that will be discussed in the next chapter.
  4. If your mother and her spouse both reside in a nursing facility and only one of them applies for Medicaid, then the countable resource limit is $2,000. The resources of the spouse who did not apply are not resources of the spouse who applied because they are not in the same household.

Here are a few other details about resource requirements:

  • A resource is only considered countable for your mother if it is:
    • Owned by your mother, and
    • Your mother has the “right, authority, or power to liquidate the property or her share of it.”[2]
  • Sometimes, two people share a joint bank account, with the assets in the said account belonging to one or the other. In this situation, you can file a “Medicaid Form H1299, Request for Joint Bank Account Information”, which will allow you to prove true ownership of the funds. If both parties have used the account over time, it may be necessary to calculate the percentage ownership for each owner. Given that this is not often practical, the Medicaid applicant, in practice, is often considered the owner of the entire account.
  • An irrevocable trust is another way that resources could be transferred out of your estate. The trust cannot distribute any money to your mother in any way. Transfers to this trust will be subject to the penalty period.
  • It is possible your mother is unaware of the property that she owns. When mental capacity issues are involved, finding a previously unknown property is not unheard of. If your mother’s undisclosed property is discovered, it will be considered income in the month that it is discovered and converted to a resource on the first day of the next month. Certain assets can go un-spent for a longer period of time before they are counted as a resource. For example, burial expenses must be spent within two months, but proceeds from property and casualty insurance must be spent within nine months.

Annuity Income Strategy

If your mother is married and has assets over the SPRA, she can convert them to income. This strategy requires purchasing an irrevocable single-premium annuity for no greater than the life expectancy of the non-institutionalized spouse. For example, let’s say your mother and her spouse have assets that exceed the SPRA by $250,000, and they purchase an irrevocable single-premium annuity, for the proper time frame, in the name of the non-institutionalized spouse (who does not need care in the foreseeable future). Income from the annuity would then be paid to the non-institutionalized spouse, and the $250,000 would no longer be considered an asset. The income would not be counted by Medicaid either because the name on the check would be the non-institutionalized spouse, and it would be considered his or her money. Furthermore, since this turns an asset into income, it avoids the transfer penalty that someone would face by simply transferring an asset to their non-institutionalized spouse.

[1] MEPD section E-3310

[2] MEPD section F-1311