Each year, many families are faced with having to coordinate and plan for the long-term care of a loved one.  Such a plan includes not only the medical needs of the patient, but also raises financial concerns.  With the astronomical costs associated with long-term care many people fear that their life savings, home and other assets will be lost.

Medicare, which most seniors rely on to provide health care coverage, provides limited coverage for long-term care.  Once Medicare no longer covers nursing home or home-based care, families look to either privately cover the costs or to a public benefit program, such as Medicaid.  However, eligibility for Medicaid can be confusing and there is a multitude of incorrect and misleading information from the Internet, friends and family.

The Texas Medicaid programs provides both home-based and institutional long-term care.  Nursing home care is the most common; however, there may be coverage for assisted living and other community services.  For most community-based programs, there is an interest list that an individual must be placed on before applying for services.  Due to substantial wait times, it is advisable to consult with an attorney before the need for long-term care arises, if possible.

Eligibility for most long-term care programs differs for single and married individuals.  All Medicaid programs have strict income and resource limitations; however, for married individuals, the resource limits are higher and in some circumstances the community spouse (i.e. the healthy spouse) may retain most or all of the institutionalized spouse’s monthly income.


This is a common question; however, Medicaid imposes a transfer of assets penalty for all transfers, including those to children and charities.  This transfer penalty begins when an individual applies for Medicaid and would be eligible but for the transfer.  Medicaid looks back five years for transfers.   Some transfers do not impose a transfer of asset penalty, including, but not limited to, transfers between spouses and to children with disabilities.

Prior to transferring any property, it is advisable to consult with an elder law attorney.  An elder law attorney can devise a transfer strategy and advise on transfers that will not cause a loss of eligibility.


A Miller Trust, also known as a Qualified Income Trust, is an income only trust used to achieve Medicaid eligibility for individuals with monthly income over the income cap.  A Miller Trust does not hold the resources (i.e. non-income assets) of an individual and is only used to lower the countable income for Medicaid eligibility purposes.


For Medicaid eligibility purposes, the homestead is not considered a countable resource for Medicaid eligibility purposes.  However, upon the death of the Medicaid recipient, the Medicaid Estate Recovery Program (MERP) will attempt to recover from the estate the costs associated with the long-term care.  Moreover, neither the nursing home nor the State of Texas will require an individual to transfer his or her home to the State prior to receiving Medicaid benefits.

Steps can be taken to preserve the homestead from a MERP claim.  The most common solution is a Lady Bird Deed or Transfer on Death deed which acts as a pay on death designation for the homestead, thereby removing the house from the probate estate.  Such an action avoids estate recovery.  There are also other options to protect the house from a potential MERP claim upon the death of the Medicaid recipient.


Steps can be taken within the law to achieve Medicaid eligibility.  The development of certain trusts and other spend down techniques can achieve Medicaid eligibility without the complete loss of assets.  Each case is unique, so it is important to consult with an elder law attorney who specializes in Medicaid planning either before the need for long-term care arises or before transferring or otherwise disposing of assets.