Nursing home care in the Austin area commonly runs well over $7,000 a month. Medicare pays for very little of it. Private long-term care insurance is uncommon. For most families, the realistic payer after savings run low is Medicaid — and the rules for qualifying are strict, technical and unforgiving of improvisation.
This guide explains how those rules work in Texas in 2026, in plain terms.
Medicare and Medicaid are not the same thing
Medicare is the federal health insurance most people get at 65. It covers a short skilled-nursing or rehabilitation stay after a qualifying hospital admission, but not ongoing custodial care — help with bathing, dressing, eating and supervision.
Medicaid is a needs-based program run by the state. In Texas it is administered by the Texas Health and Human Services Commission (HHSC). It is the program that pays for long-term nursing home care, and it has limits on both income and assets.
The 2026 numbers
Texas nursing home Medicaid — key 2026 figures
- Income cap
- $2,982 per month (gross) for the applicant
- Countable assets
- $2,000 for the applicant
- Spouse at home can keep
- Generally between $32,531 and $162,660 in countable assets
- Spouse's income allowance
- Up to $4,066.50 per month, in some cases
- Home equity limit
- $752,000 (with exceptions)
- Personal needs allowance
- $75 per month kept by the resident
- Look-back period
- 5 years before the application
These figures change every January. Treat them as a starting point and confirm them before relying on them.
What if income is over the cap?
Being over $2,982 a month does not end the conversation. Texas allows a Qualified Income Trust, often called a Miller trust. Income above the cap is deposited into a special bank account each month and used for care costs. Set up correctly, it lets a person with a pension and Social Security qualify. Set up carelessly, it is one of the most common reasons applications are denied.
What counts as an asset — and what doesn't
Countable assets include checking and savings accounts, CDs, stocks, bonds, most retirement accounts, and real estate other than the home.
Some things are generally not counted:
- The home, if the applicant intends to return or a spouse or dependent lives there, up to the equity limit.
- One vehicle.
- Household goods and personal effects.
- Certain prepaid funeral arrangements and burial plots.
- Some life insurance with a small face value.
The five-year look-back
When someone applies, HHSC reviews transfers made in the five years before the application. Gifts or sales for less than fair value during that window — including deeding the house to a child, adding a child to an account, or “paying back” family members informally — can create a penalty period: months during which Medicaid will not pay, even though the money is gone.
The most expensive errors we see are well-meant transfers made before anyone got advice. A parent signs the house over to a child “to protect it.” That can trigger a penalty, cost the parent the homestead's favorable tax treatment, and expose the house to the child's own creditors or divorce. Please ask first.
Protecting the spouse who stays home
When one spouse needs care and the other does not, the law does not require the couple to spend down to $2,000 together. The at-home spouse (the “community spouse”) can keep a protected share of assets and, in some cases, a portion of the applicant's income. How assets are counted and when the snapshot is taken matters a great deal, and planning before the application can meaningfully change the result.
What happens to the house after death?
Texas runs a Medicaid Estate Recovery Program. After a Medicaid recipient aged 55 or older dies, the state may file a claim against their probate estate to recover the cost of certain long-term care. There are exemptions — for example, while a surviving spouse is living, or where there is a child under 21 or a disabled child — and hardship waivers. Because Texas estate recovery generally reaches property passing through probate, tools such as a transfer-on-death deed can matter. See our guide to transfer-on-death deeds.
It is rarely too late
Families often assume that once a parent is already in a nursing home, the planning window has closed. Usually it has not. “Crisis planning” after admission can still protect a meaningful part of the estate, especially for married couples. The earlier the conversation, the more options remain.
Common questions
Do we have to sell Mom's house before she can get Medicaid?
Usually not. A home is generally exempt while she intends to return or a spouse or dependent relative lives there, up to the equity limit. The bigger question is what happens to the house after her death, which is where estate recovery planning comes in.
Can we just give everything to the kids now?
Gifts made within five years of applying can create a penalty period. Outright gifts also take the asset out of the parent's control and expose it to the children's creditors and divorces. There are better tools; get advice before moving anything.
Does Medicaid pay for assisted living in Texas?
Texas has waiver programs, such as STAR+PLUS, that can help with some assisted living and in-home care costs, but availability, waitlists and coverage differ from nursing home Medicaid. It is worth asking about early.
This guide is general information about Texas law as of September 2026, not legal advice for your situation. Laws and dollar figures change, and small facts change outcomes. Reading it does not create an attorney-client relationship. Grover C. Peters III is responsible for this content.