Medicaid Spend-Down in Montgomery County, Texas (2026)

The Program, the Threshold, and Where the Packet Goes

The program. Texas long-term care Medicaid runs through STAR+PLUS, the state’s managed care program for older adults and adults with disabilities, and through Medicaid nursing facility coverage. Both are administered by the Texas Health and Human Services Commission. Financial eligibility is determined under Medicaid for the Elderly and People with Disabilities (MEPD), a distinct set of rules from the Medicaid categories most families have heard of.

Where it goes. Applications are filed online through the state’s benefits portal or with an HHSC benefits office; Montgomery County residents typically use the office in Conroe. Confirm the current location, hours, and whether your application type must be filed online before driving anywhere.

The threshold you are documenting toward. A single applicant faces a $2,000 countable-asset limit as of 2026 — verify the current figure with HHSC. There is also an income cap for institutional Medicaid tied to 300% of the federal SSI benefit rate, roughly $2,900 a month using the 2025 figure. A married applicant whose spouse remains in the community is measured very differently, because that spouse keeps a federally indexed Community Spouse Resource Allowance and may receive a monthly income allowance.

The parallel track nobody mentions. Financial eligibility is only half the file. The nursing facility must also submit a Medical Necessity and Level of Care assessment through the state’s claims administrator portal, establishing that the applicant clinically requires nursing facility services. A family that completes a perfect financial file and never confirms the facility submitted the clinical assessment waits just as long as one that did neither. Ask the facility’s business office, by name, who submitted it and on what date.

The Five-Year Financial Trail, and Why It Sinks Applications

This is the single largest and most underestimated part of the packet. Texas verifies resources and looks for transfers within the 60-month look-back period, which means the specialist will want to see statements — not summaries — for every account the applicant has held, including accounts that were closed.

What to gather:

• Statements for every checking, savings, money market and certificate of deposit account, covering 60 months, including closed accounts.
• Brokerage and investment account statements for the same period.
• Statements for every retirement account — IRA, 401(k), 403(b), annuity — plus documentation of whether the account is in a required payout status.
• Documentation for any account on which the applicant is a joint owner, even accounts the applicant never used.
• An explanation, in writing, for every large withdrawal, transfer, or unusual deposit.

The four items families never have ready. First, the closed account: a CD that matured in 2022 and was moved somewhere else leaves a gap the specialist will notice. Second, the joint account with an adult child: Texas will generally treat funds in a jointly held account as available to the applicant unless you can document whose money it actually was, which requires deposit history, not an assertion. Third, the cash gift: money given to a grandchild for a wedding or tuition inside the look-back is a transfer for less than fair value and can create a penalty period of ineligibility. Fourth, payments to a family caregiver: paying a daughter $1,500 a month to provide care is a gift unless there was a written personal services agreement in place beforehand at a reasonable rate.

Two practical rules. Request statements from the bank now, because sixty months of records takes weeks to produce and some institutions charge per statement. And write the explanations while someone still remembers — a one-paragraph note attached to each unusual transaction, with a supporting receipt, is worth more than any argument made later. The interaction between transfers and a policy sale is covered in the Medicaid look-back and selling a policy.

Property, Vehicles, and the Over-65 Tax Ceiling That Changes the Math Here

The homestead. Texas generally treats the applicant’s homestead as an excluded resource when the applicant, a spouse, or a dependent relative lives there, or when the applicant states an intent to return home, subject to the federal home equity ceiling that was in the $730,000 range for 2025. Verify the 2026 figure with HHSC. For the packet: the deed, the most recent property tax statement, and a written statement of intent to return where applicable.

Non-homestead property. A Lake Conroe lot, a rental house, a second property, a boat, a travel trailer, or mineral interests are countable at equity value and each requires documentation — deed or title, a valuation, and any lien statement. Mineral and royalty interests deserve a specific mention in Texas: they are property, they may generate income, and families frequently forget they exist until a royalty check appears in a bank statement the specialist is reading.

Vehicles. One vehicle is generally excluded. A second vehicle is countable at equity value. Bring the titles.

The Montgomery County-specific factor. Families here are commonly equity-rich and cash-short, with a home in The Woodlands or on the Lake Conroe side worth well above the Texas median. Texas has no state income tax and relatively high property taxes, but it also provides meaningful relief for homeowners 65 and older: an additional homestead exemption and a school-tax ceiling that freezes the school portion of the tax bill once the exemption is in place, plus the option of a tax deferral for qualifying older homeowners. Verify what is in place on your parent’s account with the Montgomery Central Appraisal District.

Why that matters to a spend-down: the monthly holding cost of leaving the house empty during a nursing home stay is lower in Texas than in high-property-tax states, which changes the timing calculus on selling. Families in New Jersey or New York often have to sell quickly because the empty house costs $1,200 a month in taxes. Here, an over-65 homeowner with a frozen school tax ceiling may be able to hold the homestead — preserving its excluded status — for longer. That is a genuine advantage, and it is also exactly the kind of decision that should be made with a Texas elder law attorney rather than assumed, because Texas operates an estate recovery program discussed at the end of this page.

Packet item	What HHSC actually needs	Where families get stuck
Identity and citizenship	Birth certificate or equivalent, Social Security number	Lost documents; ordering replacements takes weeks
Bank and investment records	60 months of statements for every account, including closed ones	The closed CD, and joint accounts held with an adult child
Large withdrawals and gifts	Written explanation plus receipts for each	Cash gifts to grandchildren inside the 5-year look-back
Payments to a family caregiver	A written personal services agreement dated before payments began	No agreement exists, so payments count as gifts
Homestead	Deed, current tax statement, statement of intent to return	Equity above the federal cap on higher-value Woodlands homes
Other property and minerals	Deeds, titles, valuations, royalty statements	Forgotten mineral or royalty interests surfacing in bank records
Income	Social Security letter, pension and annuity statements	Missing pension documentation from a former employer
Qualified income trust	Trust document, separate trust bank account, monthly deposit proof	A missed monthly deposit, which can cost that month’s eligibility
Life insurance	Carrier letter with face amount, cash surrender value, loans, owner	Two to four week carrier turnaround blowing an RFI deadline
Medical necessity / level of care	Facility submission through the state portal	Nobody confirms the facility actually filed it

Income Documents and the Qualified Income Trust File

Income verification. The packet needs the Social Security award letter or benefit verification, every pension statement, annuity payment documentation, VA benefit letters, any wage or self-employment records, and rental or royalty income records. Include the Medicare card and any Medicare supplement or Medicare Advantage policy — the specialist will ask about other coverage.

The qualified income trust. If the applicant’s gross monthly income exceeds the institutional income cap — roughly $2,900 using the 2025 figure, verify 2026 — Texas’s remedy is a Qualified Income Trust, commonly called a QIT or Miller trust. This is where applications quietly fail, because a QIT is not a form. It is three things that all have to be right:

1. A properly drafted trust document, meeting the state’s requirements. Attorney work.
2. A separate bank account titled to the trust. Not a subaccount. Not the existing checking account renamed.
3. A deposit every single month, in the correct amount, with statements to prove it.

Miss one month’s deposit and eligibility for that month can be lost, which means the facility bills privately for it. Set up an automatic transfer, keep the statements, and put the monthly deposit in a calendar with a reminder. Then note the practical consequence: once eligible, the resident contributes nearly all monthly income toward the cost of care as applied income, retaining only a small personal needs allowance — Texas has used $75 a month in recent years; confirm the current amount.

Authority documents. If someone other than the applicant is handling this, the packet needs proof of authority: a durable power of attorney, guardianship papers, or a representative payee designation. Get this squared away before you need it, because a bank or a carrier that will not accept the document is a two-week delay. If a life insurance decision may be made on the applicant’s behalf, read what a power of attorney can and cannot do with a policy first, since carriers apply their own standards.

The state-level thresholds are summarized in Texas Medicaid asset and income limits.

The Life Insurance Section of the Packet, Line by Line

Families expect to hand over a policy. What the specialist actually needs is a carrier-issued verification — a letter or completed verification form from the insurance company stating, as of a specific date, the policy’s face amount, its current cash surrender value, any outstanding policy loans, and the owner and beneficiary of record. A photocopy of a 1987 policy jacket is not verification, because the values have changed and the owner may have.

Order that letter from the carrier the week you start the packet. Turnaround is commonly two to four weeks, and it is a frequent cause of a request-for-information deadline being blown.

Then the rule the letter is used to apply. Texas uses face-value aggregation, in two steps:

1. Add the face values. Total the death benefit — not the cash value — of every policy the applicant owns on the same insured. If that aggregate total is at or under the state’s threshold, commonly the $1,500 federal baseline used in Texas as of 2026, the policies are excluded entirely. Verify the current figure with HHSC.
2. If the total exceeds the threshold, the exclusion is lost for all of them, and what becomes countable is the cash surrender value of each policy. A $60,000 whole life policy with $17,000 of cash value adds $17,000 to the count, not $60,000.

The aggregation is what surprises people. Three policies of $1,000, $3,000 and $8,000 are not each tested separately — they total $12,000, the exclusion is blown, and every dollar of cash value in all three counts. Meanwhile term life insurance generally has no cash surrender value and is therefore generally not a countable asset. Do not cancel a term policy in a spend-down panic; there is nothing there to spend down, and cancelling gives up a death benefit for no eligibility gain.

When a permanent policy is countable, surrender is one option and usually the weakest. The realistic set:

• Surrender to the carrier — pays the contractual cash value, ends coverage, and converts a countable asset into countable cash that still has to be spent on care.
• Reduced paid-up election — stops premiums, keeps a smaller guaranteed death benefit.
• Irrevocable prepaid funeral contract — Texas generally excludes a properly structured irrevocable prepaid funeral or burial arrangement, and there is also a designated burial fund exclusion. Verify both current limits, and note that repositioning value into a burial arrangement is generally not a penalized transfer because value is received.
• Life settlement — sale of the policy to a third party for a lump sum. The U.S. Government Accountability Office’s study of the market (GAO-10-775) found sellers typically received roughly 10% to 35% of face value, and multiples of surrender value.

Every one of these must be documented in the packet with a carrier confirmation of what happened and when, plus proof of where the money went. Cash from any of them is countable, so sequencing relative to the application date matters — a Texas elder law attorney, not a website, should set that sequence. For the general treatment, see how life insurance counts as a Medicaid asset.

When Selling the Policy Is the Wrong Answer

Pine Lake Life Solutions provides education and a free policy review, and an honest review includes saying no. Four clear cases where a sale is the wrong move:

The face amount is small. Below roughly $100,000 of death benefit the secondary market is generally uninterested. A $10,000 or $25,000 final-expense policy should usually be left alone, or considered for repositioning into a prepaid funeral arrangement instead.

The policy is already excluded or already inside the burial exclusion. If aggregate face value is under Texas’s threshold, or the policy is term with no cash value, it is not the obstacle. Selling it solves nothing.

The insured is in good health for their age. Settlement pricing is driven by projected life expectancy. A vigorous 71-year-old with no serious diagnoses draws thin offers, sometimes none, and going through the underwriting process for nothing costs time you may not have.

A surviving spouse needs the death benefit. If the spouse who stays in the Conroe or Magnolia house will depend on that money for income or to keep the home, the death benefit is not a spare asset. Keeping it — possibly at reduced paid-up to stop the premium — usually beats converting it into cash that program rules require to be spent on care.

One more honest note on the look-back. Selling a policy at fair market value is not a gift and generally does not create a transfer penalty, because value is received. Giving a policy, or its proceeds, to a child inside the 60-month window is a transfer and can create a penalty period. Those two facts get conflated constantly, in both directions.

Where to File, Who Helps for Free, and the Letter That Comes Later

Filing. Applications go to the Texas Health and Human Services Commission — online through the state benefits portal or at the HHSC benefits office serving Montgomery County in Conroe. The nursing facility submits the medical necessity and level of care assessment separately. Confirm both were received, in writing, and keep the confirmation.

Free help. The Area Agency on Aging of the Houston-Galveston Area Council serves Montgomery County and provides benefits counseling and care coordination at no charge. Texas’s State Health Insurance Assistance Program operates as HICAP, the Health Information, Counseling and Advocacy Program, delivered through the Area Agencies on Aging, and it will help with Medicare, Medigap and Medicare Advantage questions for free. Use both before paying anyone for anything.

Insurance questions. Life insurance carriers, agents, and life settlement providers doing business in Texas are regulated by the Texas Department of Insurance, which is where to verify that a company contacting you is licensed. Our page on Texas life settlement licensing explains what regulation applies to a sale.

The letter that comes later. Texas operates the Medicaid Estate Recovery Program (MERP), administered through HHSC, which can seek reimbursement from the estate of a deceased recipient who was 55 or older and received covered long-term care services on or after March 1, 2005. MERP has exemptions, does not pursue certain small claims and small estates, and provides an undue hardship waiver process — confirm current thresholds and procedures with HHSC. A MERP notice arriving weeks after a funeral is one of the most upsetting pieces of mail a family receives, and it is entirely foreseeable. Plan for it in advance with an attorney rather than reacting to it.

For the general mechanics of exhausting private funds before eligibility, see nursing home Medicaid spend-down, and for what a month of care actually costs in this county, see Montgomery County nursing home costs. If a life insurance policy turns out to be a genuine asset in the packet, a free, no-obligation review will tell you what the secondary market would value it at and whether a sale makes sense at all — call (305) 209-7183. We provide education and a review only, and we will tell you when the answer is to keep the policy.

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Frequently Asked Questions

What is the asset limit for Texas long-term care Medicaid?

A single applicant faces a $2,000 countable-asset limit as of 2026 — verify with the Texas Health and Human Services Commission. There is also an income cap tied to 300% of the federal SSI benefit rate, roughly $2,900 monthly using the 2025 figure, with a qualified income trust as the standard remedy. A spouse at home is measured far more generously.

How many years of bank statements does Texas require?

Plan on sixty months for every account the applicant has held, including accounts that have been closed, because the specialist is verifying resources and looking for transfers within the five-year look-back. Request them early; sixty months of records takes weeks to produce and some banks charge per statement. Write explanations for large transactions while someone still remembers them.

What is a qualified income trust and do we need one?

It is Texas’s remedy when an applicant’s gross monthly income exceeds the institutional income cap. It requires a properly drafted trust document, a separate bank account titled to the trust, and a correct deposit every single month. Missing one month’s deposit can cost that month’s eligibility, so use an attorney and automate the transfer.

How does Texas count my mother’s life insurance?

Texas adds the total face value of every policy she owns on one insured. If that aggregate is at or under the state threshold, commonly the $1,500 federal baseline, the policies are excluded. Above it, the cash surrender value of each becomes countable. You will need a carrier-issued letter stating face amount, cash value, loans and ownership.

Does the house in The Woodlands have to be sold?

Not automatically. The homestead is generally excluded while the applicant intends to return, subject to the federal home equity ceiling. Texas also offers homeowners 65 and older an additional exemption, a school-tax ceiling, and a deferral option, which lowers the monthly cost of holding an empty home. Discuss timing with a Texas elder law attorney before listing.

Where do I apply in Montgomery County?

Applications are filed with the Texas Health and Human Services Commission, online through the state benefits portal or at the benefits office serving Montgomery County in Conroe. Separately, the nursing facility must submit a medical necessity and level of care assessment. Confirm in writing that both were received, and keep the confirmation.

What is MERP and will it take the house?

The Texas Medicaid Estate Recovery Program can seek reimbursement from the estate of a recipient who was 55 or older and received covered long-term care services on or after March 1, 2005. It has exemptions, skips certain small claims and estates, and offers an undue hardship waiver. Confirm current thresholds with HHSC and plan for it in advance.

Related Reading

• Nursing Home Costs Montgomery County Tx
• Sell Life Insurance Policy Montgomery County Tx
• Texas Medicaid Asset Income Limits
• Life Settlement Licensing Texas
• Sell Life Insurance Policy Brazoria County Tx
• Nursing Home Medicaid Spend Down
• Life Insurance Counts Medicaid Asset
• Medicaid Lookback Selling Policy
• Power Of Attorney Sell Policy

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Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.