Medicaid Planning

Nursing home care in Texas generally runs $4,000 to $8,000 per month depending on the facility and level of care, and private rooms in the DFW metroplex regularly exceed $10,000 per month. That number is why Medicaid planning exists, but it is also the number that drives the penalty math, because Texas measures a transfer penalty in days of private-pay care rather than in dollars. HHSC's daily private-pay penalty divisor is $262.37 for 2026, which works out to roughly $7,980 per month — the state's own estimate of what a month of care costs. Every uncompensated dollar transferred during the look-back window is divided by that figure to produce days of ineligibility. The facility rate and the penalty divisor are two views of the same problem: the cost of care is what makes Medicaid necessary, and it is also the exchange rate the state uses when a gift goes wrong.

Not without consequences. Under 42 U.S.C. § 1396p(c)(1)(B)(i) the state reviews every transfer made for less than fair market value in the 60 months before the application, and a transfer inside that window creates a penalty period. The arithmetic surprises families: the uncompensated value is divided by the HHSC daily penalty divisor ($262.37 for 2026), so a $120,000 gift to a child produces roughly 457 days — about 15 months — with no Medicaid. Worse, the penalty clock does not start on the date of the gift. It starts when the applicant is otherwise eligible and receiving institutional care, meaning the ineligibility lands exactly when the money is already gone and the nursing home bill is due. The federal annual gift tax exclusion is irrelevant here; it is a tax rule, not a Medicaid rule. Congress did carve out exempt transfers in 42 U.S.C. § 1396p(c)(2): transfers to a spouse, to a blind or disabled child, to a son or daughter who resided in the home for at least two years immediately before institutionalization and provided care that permitted the parent to stay home, and to a sibling who holds an equity interest in the home and resided there for at least one year before institutionalization. Those exemptions are narrow and fact-specific — they are proved with records, not with family agreement — so have any transfer evaluated before it happens, not after.

A Miller Trust — a qualified income trust — is the fix for an applicant whose monthly income exceeds the Texas institutional income cap ($2,982 per month for 2026) but is nowhere near enough to pay a nursing home bill. Without it, being $200 over the cap disqualifies someone who cannot possibly self-fund care. Federal law authorizes the trust at 42 U.S.C. § 1396p(d)(4)(B): it must be composed only of pension, Social Security, and other income of the individual plus income accumulated in the trust, and the State must receive all amounts remaining in the trust on the individual's death, up to the total medical assistance paid on that person's behalf. Income is deposited each month and paid out for the cost of care, a small personal needs allowance, and any spousal allowance. Two practical points decide whether it works: the trust holds income only — never a bank balance, a CD, or the proceeds of a sale — and the deposit must actually be made every month it is needed. A properly drafted trust that is never funded produces the same denial as no trust at all.

Not during your lifetime — the homestead is generally an exempt resource while you are living. The exposure comes afterward, through the Medicaid Estate Recovery Program, Texas's implementation of the federal mandate at 42 U.S.C. § 1396p(b). Recovery reaches the estate of a recipient who was 55 or older when the services were furnished, and it is limited to medical assistance consisting of nursing facility services, home and community-based services, and related hospital and prescription drug services. Federal law also blocks recovery outright in three situations that matter enormously in practice: while a surviving spouse is living, while a child under 21 survives, and while a blind or disabled child survives (42 U.S.C. § 1396p(b)(2)). Texas asserts its claim against the probate estate, which is why the planning answer is usually to keep the homestead out of probate. A Lady Bird deed (an enhanced life estate deed) or a transfer on death deed under Chapter 114 of the Texas Estates Code passes the house at death without probate while leaving you in full control during life. Texas Estates Code § 114.101 confirms that during the transferor's life a transfer on death deed does not affect homestead rights, the over-65 or disability ad valorem exemptions, or eligibility for any form of public assistance, subject to applicable federal law. That is why a deed works where an outright gift to a child does not — the gift is a transfer for less than fair market value and starts a penalty period.

The federal timeliness standard at 42 C.F.R. § 435.912(c)(3) requires the agency to determine eligibility within 90 days for applicants who apply on the basis of disability and 45 days for all other applicants. Those are ceilings, not promises, and the regulation allows exceptions for unusual circumstances, including delays caused by the applicant. In practice the clock is almost always driven by documentation: five years of statements for every account, deed and title records, insurance policies, trust instruments, annuity contracts, and proof of every unexplained withdrawal. A gap in that record reads to HHSC as a possible uncompensated transfer, and the request for more information restarts the practical timeline even when it does not restart the legal one. Applications that arrive complete and documented on the first submission are the ones that finish inside the standard.

Yes, and the protection is substantial. The federal spousal impoverishment rules at 42 U.S.C. § 1396r-5 exist specifically so the spouse who remains at home is not required to spend down to nothing. For 2026 the Community Spouse Resource Allowance is $162,660 in countable resources, and that is on top of exempt assets — the homestead, one vehicle, personal effects, and certain other resources — while the applicant spouse spends down to $2,000. The community spouse may also receive a Monthly Maintenance Needs Allowance drawn from the institutionalized spouse's income, and where the standard figures leave the at-home spouse short, that allowance can be increased through a fair hearing or a court order. These are 2026 figures and they re-index annually. The plan is built by characterizing and repositioning resources before the application is filed, so what the community spouse keeps is decided by the structure of the application rather than by whatever the balances happened to be on the filing date.

No. Advance planning offers the widest range of tools because transfers made more than 60 months before the application fall outside the look-back window entirely (42 U.S.C. § 1396p(c)(1)(B)(i)). But crisis planning — starting after a parent is already in a facility — routinely protects a substantial share of the family's resources, because the work shifts from gifting to a constructive spend-down that uses exemptions instead of transfers. The recurring tools are converting countable resources into exempt ones (paying off the mortgage, repairing the homestead, buying an appropriate vehicle, prepaying funeral expenses), Medicaid-compliant annuities that turn a resource into an income stream for the community spouse, a qualified income trust where income exceeds the cap, a written and documented caregiver agreement in place of an informal one, and the § 1396p(c)(2) exempt transfers where the facts genuinely support them. What almost never works is the move families make on their own: a well-meaning gift to a child shortly before applying. If a transfer has already happened, do not assume the situation is hopeless — returning the asset or restructuring around it can shorten or eliminate the penalty, but it has to be evaluated before the application is filed.

Yes. We serve families throughout North Texas, including McKinney, Frisco, Plano, Allen, Prosper, Celina, Anna, and the greater Dallas-Fort Worth metroplex, and we offer both in-office and virtual consultations for Medicaid planning matters. Medicaid planning at WG Law is led by founding attorney Taylor Willingham, author of five books on estate planning and elder law. Medicaid planning is a flat-fee engagement quoted after a consultation, and that consultation is a paid consultation — the free case review we offer is for probate matters only. We will tell you the fee before you book.