Medicaid planning for seniors, image of senior woman reading a book indoors

Medicaid Planning for Seniors: What About the Healthy Spouse?

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Medicaid planning for seniors, image of senior woman reading a book indoorsAccording to the U.S. Department of Health and Human Services, over half of elders will need paid long-term care. About 35 percent will spend time in nursing homes, which are exorbitantly expensive.

If you aren’t too concerned because you will have Medicare, here’s a news flash: Medicare doesn’t extend to the custodial care you would receive in a nursing home. Fortunately, there is a widely embraced solution.

Medicaid to the Rescue

Medicaid will cover long-term nursing home care, but there are strict financial limits. To qualify in Texas in 2025, the applicant must have no more than $2,000 in countable assets.

Income is also subject to a cap, which is $2,901 per month in 2025, although a properly drafted Miller trust can solve the income issue.

Asset limits are based on the applicant’s ownership of countable resources. However, not everything is counted. Certain assets are excluded, as long as they meet Medicaid requirements.

Non-Countable Assets

Medicaid rules exempt several categories of assets, allowing the applicant to qualify without needing to liquidate or spend them down. Common examples include:

  • One vehicle of any value
  • Household furniture and personal effects
  • A burial space for each family member
  • Wedding and engagement rings and heirloom jewelry
  • An irrevocable prepaid funeral contract
  • Burial fund up to $1,500
  • Unlimited term life insurance

These exclusions allow applicants to preserve items of basic necessity or items that have no bearing on their ability to pay for care.

One major asset is also excluded, but with a significant condition attached.

Home Ownership

Your home is not counted either, but there is a caveat in the form of Medicaid estate recovery. In Texas, the state will seek reimbursement for the cost of long-term care services after the recipient dies. The most common target of estate recovery is the home.

So, while your home can be excluded from the eligibility calculation, it is not truly protected unless further steps are taken.

If no planning is done, the state may place a claim against the home’s value during probate. That could force a sale or reduce the inheritance you intended to leave.

Placing the home into a Medicaid-compliant trust can prevent this outcome, but timing is crucial. Any transfer made within five years of applying for Medicaid will trigger a penalty period.

Spousal Considerations

When only one spouse needs care, the issue becomes more complex. To avoid impoverishing the healthy spouse, federal law provides a couple of allowances.

Community Spouse Resource Allowance (CSRA)

In 2025, the spouse not applying for Medicaid may retain half of the couple’s assets up to $157,920. There is also a minimum allowance of $31,584, so the healthy spouse can keep this amount, even if it exceeds half of the total.

Minimum Monthly Maintenance Needs Allowance (MMMNA)

If the healthy spouse has limited income, they may receive a portion of the institutionalized spouse’s income to meet a minimum threshold. This is called the Monthly Maintenance Needs Allowance, and there is a maximum of $3,948 this year.

Irrevocable, Income-Only Medicaid Trust

Many seniors rely on income from their savings, and they have no intention of spending the principal. These folks can simply transfer those assets into a Medicaid trust as a planning strategy.

Key features of this trust include:

  • You still receive income that the trust generates.
  • You cannot access the principal or revoke the trust.
  • The trust assets eventually pass to your beneficiaries outside of probate.
  • The assets are shielded from estate recovery, provided the trust is properly structured.

You can also convey your home to the trust and live in it as usual. As long as all the transfers take place at least five years before you apply, the assets held by the trust won’t count if you apply for Medicaid. Moreover, they will be protected from Medicaid estate recovery.

Advance Planning Is Key

Waiting until care is needed can result in a complete loss of strategic options. You may be forced to spend down assets, forfeit property, or rely on emergency legal strategies that leave the healthy spouse exposed.

By planning ahead, you retain control. You have time to legally reposition assets, fund a trust, request spousal allowances, and avoid unnecessary hardships. You also reduce the chance that your home will be lost to estate recovery.

No one wants to think about long-term care until it becomes necessary. But the families who plan early are the ones who maintain the greatest stability and peace of mind.

We Are Here to Help!

This is an aspect of the estate planning process that is often overlooked. To put it bluntly, your plan won’t do much good if all of your assets are in the coffers of a nursing home.

Fortunately, with proper planning, you can protect your legacy from potentially devastating long-term care costs. To set the wheels in motion, call our Fort Worth, TX elder law office at 817-899-3286 or send us a message through our contact page.

Brandon McGee
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