July 31, 2026
1:47 pm

Medicaid Spend-Down Rules for San Antonio Families (2026)

Texas long-term care Medicaid generally requires a single applicant to be at or below $2,000 in countable assets, and spend-down is the lawful process of converting excess countable assets into things the program does not count. Done properly it is a documented sequence of purchases and transfers. Done casually, it can cost a family months of coverage.

Families in Bexar, Comal and Guadalupe counties usually meet these rules under pressure, right after a hospital discharge planner explains that a parent needs a level of care nobody has budgeted for.

Two things surprise San Antonio families most often. One is that an old life insurance policy can single-handedly block eligibility. The other is that Texas runs an active estate recovery program that comes back after death. Both are covered below.

In This Article

How Texas Delivers Long-Term Care Medicaid
The Life Insurance Rule Families Never See Coming
The 60-Month Look-Back
Spend-Down Options That Survive Review
When Only One Spouse Needs Care
MERP: What Happens After Death
Where Selling a Policy Fits
Applying Locally, and a Free Policy Review
Frequently Asked Questions

Medicaid Spend-Down Rules for San Antonio Families (2026)

How Texas Delivers Long-Term Care Medicaid

Texas provides long-term services and supports primarily through STAR+PLUS, a managed care program covering nursing facility care as well as services that help people remain at home or in the community. Eligibility has two independent halves: a clinical assessment of care needs and a financial determination.

On the financial side, the countable asset limit for a single applicant is $2,000 in 2026. Income rules, applied income calculations, and any qualified income trust requirements are handled separately from assets. Confirm current figures with Texas Health and Human Services before filing, since these are periodically adjusted.

The Life Insurance Rule Families Never See Coming

In most states, life insurance is disregarded only when the total face value of all policies on the applicant is $1,500 or less. Once total face value crosses that line, the cash surrender value of those policies becomes a countable resource.

Picture a common San Antonio case: a retiree in Stone Oak or New Braunfels holding a $200,000 whole life policy with $35,000 of accumulated cash value. Measured against a $2,000 limit, that policy alone makes the application fail until it is dealt with. Term insurance with no cash value is generally treated differently, but confirm how each policy in the file is being counted.

The 60-Month Look-Back

Texas applies the federal five-year look-back. Caseworkers review 60 months of financial history for assets transferred for less than fair market value, and uncompensated transfers in that window can create a penalty period during which Medicaid pays nothing, even though the asset is already gone.

This is exactly why signing a policy over to an adult child backfires. A gift of a policy with cash value is a transfer for less than fair market value. Selling that same policy at arm’s length for fair market value is a sale, and a sale generally does not create a transfer penalty. Keep the settlement contract, escrow records, and closing statement for the file.

Spend-Down Options That Survive Review

Real spend-down converts countable dollars into exempt value or into care the applicant genuinely needs. Common approaches include an irrevocable funeral trust or prepaid burial contract, paying down debt, and home repairs or accessibility work such as a ramp, grab bars, a walk-in shower, roof repair, or air conditioning replacement, which is not a luxury in South Texas.

Others include replacing an unreliable vehicle, prepaying legitimate medical and dental costs, and a written personal care agreement compensating a family caregiver at a reasonable market rate. That last one only holds up when the agreement is signed before care is provided, priced at market, documented with time records, and reported as income by the caregiver.

Spend-down option	What it accomplishes	What to document
Irrevocable funeral trust or prepaid burial	Converts countable cash into an exempt, prepaid expense	The contract, showing irrevocability and amount
Home repairs and accessibility work	Turns cash into value in an often-exempt homestead	Contractor invoices and proof of payment
Paying off debt	Reduces countable assets and monthly obligations	Payoff statements and confirmations
Replacing an unreliable vehicle	One vehicle is generally excluded	Bill of sale and title
Personal care agreement	Pays a family caregiver lawfully rather than by gift	Signed agreement, time records, income reporting
Spousal resource transfer up to the CSRA	Protects resources for the community spouse	Account records and the eligibility worksheet
Selling a life insurance policy	Converts a countable policy into fair-market cash	Settlement contract, escrow record, closing statement

When Only One Spouse Needs Care

If the applicant is married and the other spouse remains at home, spousal impoverishment protections apply. The community spouse may retain a Community Spouse Resource Allowance (CSRA) and, depending on income, a monthly maintenance needs allowance drawn from the applicant’s income.

These figures are federally indexed and change annually, so verify the 2026 amounts rather than relying on an older number. Texas is also a community property state, which affects how assets are characterized in a Medicaid case. That alone is reason enough for married couples to work with a Texas elder law attorney instead of improvising.

MERP: What Happens After Death

Texas runs an active Medicaid Estate Recovery Program. After a recipient dies, MERP can file a claim against the probate estate to recover certain long-term care costs Medicaid paid. Families who never heard of it during the application are often blindsided by a notice afterward.

Exemptions, hardship waivers, and rules about what actually passes through probate can change the outcome substantially, and Texas homestead protections are their own subject. None of it should be guessed at from a website. Ask a licensed Texas elder law attorney how MERP applies to your family’s specific assets before you finalize a plan.

Where Selling a Policy Fits

If a policy carries meaningful cash value and no one depends on the death benefit, compare the three exits honestly. Lapsing pays nothing. Surrendering pays the cash surrender value, which on older policies is often modest. Selling on the secondary market usually pays more: settlements commonly fall between 10% and 35% of face value, and GAO-10-775 found sellers received roughly four to eight times cash surrender value.

Two caveats. A settlement takes roughly 60 to 120 days, so it has to begin well before an application deadline. And once received, the proceeds are countable cash, so the family still needs a plan to spend them down on allowable items. Sequence all of it with an attorney before signing anything.

Applying Locally, and a Free Policy Review

Applications are processed through the state agency and the county or regional offices serving Bexar, Comal and Guadalupe counties. Before filing, gather five years of bank and investment statements, every insurance policy including cover pages, the deed, vehicle titles, income documentation, and receipts for anything already spent down. Missing paperwork, not ineligibility, causes most delays.

If an old policy is the item holding things up, find out what it is worth before deciding. Send the policy cover page for a free, no-obligation review. Pine Lake Life Solutions reviews policies with $100,000 or more in death benefit. Call (305) 209-7183.

This page is educational only and is not legal, tax, or investment advice. Medicaid rules and dollar limits change; verify every figure with Texas Health and Human Services and work with a licensed Texas elder law attorney before acting. For a free, no-obligation policy review, send the policy cover page or call (305) 209-7183.

Frequently Asked Questions

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

A single applicant is generally limited to $2,000 in countable assets in 2026. Married cases use spousal impoverishment rules that protect a portion of resources for the spouse at home. Verify current figures with Texas Health and Human Services before applying.

Why does my father’s life insurance policy count?

The disregard applies only when total face value across all policies is $1,500 or less. Above that threshold, the cash surrender value is treated as a resource he could access. That is why a modest policy with real cash value can stop an application by itself.

Can we just transfer the policy to a child?

That is a gift, and gifts within the 60-month look-back can create a penalty period during which Medicaid will not pay for care. A fair-market sale is treated differently, because value comes back to the applicant. Speak with a Texas elder law attorney before transferring any asset.

What is STAR+PLUS?

It is the Texas managed care program that delivers long-term services and supports, covering nursing facility care and community-based services that help people stay at home. Eligibility involves both a clinical assessment and a financial determination. Details and plan options are handled through Texas Health and Human Services.

How does MERP affect our planning?

Texas Medicaid Estate Recovery can file a claim against the probate estate after death to recover long-term care costs Medicaid paid. Exemptions, hardship waivers, and Texas homestead rules can change the result significantly. Ask a Texas elder law attorney how it applies to your family before finalizing anything.

Where do we apply in the San Antonio area?

Applications are handled through the state agency and the county or regional offices serving Bexar, Comal and Guadalupe counties. Bring five years of financial records, all insurance policies, the deed, and vehicle titles. Confirm which office is assigned to your case and keep one point of contact.

How long does everything take?

Document gathering and spend-down often take longer than families expect, and a life settlement alone runs roughly 60 to 120 days. The application then takes additional weeks to process. Starting early is the single biggest variable a family controls.

Are the settlement proceeds treated as income or assets?

Treatment can differ between the month funds are received and later months, and it may affect other benefits too. Generally the money becomes a countable resource once it sits in an account. Plan the spend-down before the funds arrive rather than afterward.

Find out what your policy is worth — free, confidential, no obligation.

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