Editorial Team · Content Writer
Reviewed by John Brown, CSA®
Updated October 2026 · 7-minute read
Table of Contents
- 10 Best Ways to Protect Assets for Medicaid Planning
- How a Medicaid Asset Protection Trust Fits Into Your Plan
- Assets Exempt From Medicaid: What You Can Keep
- Medicaid Planning for Married Couples
- What About the Look-Back and Penalties?
- How We Help
- Frequently Asked Questions
Last reviewed: October 2026
10 Best Ways to Protect Assets for Medicaid Planning
Medicaid planning means arranging finances and legal affairs within the rules so an older adult can pursue long-term-care benefits without making costly mistakes.
A family in New Braunfels may be arranging nursing-facility care after a hospital stay while one spouse remains at home. Another family in Temple may be exploring STAR+PLUS services for a parent who wants to remain in the community. Both families are asking about Medicaid, but their eligibility rules and planning options may be different.
Texas Medicaid considers income, countable resources, medical need and the program being requested. In 2026, the resource limit for many nursing-facility and Home and Community-Based Services applicants is $2,000 for an individual or $3,000 for an eligible couple. Other protections may apply when one spouse remains in the community.
Review the current Texas HHSC nursing-facility and waiver eligibility information before relying on any dollar amount.
| # | Planning step | Why it matters |
|---|---|---|
| 1 | Identify the correct Medicaid program | Nursing-facility Medicaid and STAR+PLUS services have different care and enrollment requirements |
| 2 | Inventory income, property and accounts | Ownership and accessibility affect how an asset is treated |
| 3 | Document potentially excluded resources | A home, one vehicle and certain burial or insurance arrangements may be excluded |
| 4 | Spend excess resources for the applicant | Paying for care, debts and needed goods may be allowed when fair value is received |
| 5 | Review funeral and burial arrangements | Some arrangements may be excluded, but contract terms matter |
| 6 | Use applicable spousal protections | A spouse remaining at home may keep protected income and resources |
| 7 | Avoid unreviewed gifts or deed changes | Transfers for less than fair market value may create a Medicaid penalty |
| 8 | Consider long-term-care insurance early | Existing coverage may reduce dependence on personal savings or Medicaid |
| 9 | Have trusts and annuities legally reviewed | These products do not automatically protect assets |
| 10 | Work with a qualified Texas elder-law attorney | Medicaid planning is legal and fact-specific |
Key takeaway: The strongest plans usually begin before a care crisis. If a hospital discharge is already approaching, do not give away money, change a deed or purchase a financial product in an attempt to qualify quickly.
How a Medicaid Asset Protection Trust Fits Into Your Plan
A Medicaid Asset Protection Trust, commonly called a MAPT, is an irrevocable trust sometimes used in advance planning. It may hold a home or other assets, but it is not a guaranteed way to qualify for Medicaid.
Whether trust property is countable depends on:
- When the trust was created and funded
- Who controls the trust
- What payments the trustee can make
- Whether the applicant retained access to the property
- How Texas applies its trust and transfer rules
- Tax, homestead and estate-recovery consequences
Creating or funding a trust may be considered a transfer. If it occurs during Medicaid’s five-year look-back period, it could delay payment for long-term care. An irrevocable trust may also remain countable if its terms allow payments to or for the applicant.
A revocable living trust generally does not protect assets merely because the property has been placed in the trust.
Watch out: Do not use a generic online trust or assume that naming someone else as trustee solves the Medicaid issue. A Texas elder-law attorney should review the complete document, its funding and the family’s long-term-care plan.
Assets Exempt From Medicaid: What You Can Keep
Texas Medicaid does not necessarily count every item a person owns.
Depending on the circumstances, excluded resources may include:
- A qualifying homestead
- One vehicle
- Household goods and personal belongings
- Certain burial spaces
- Limited burial funds or qualifying funeral arrangements
- Certain life-insurance policies
Texas generally excludes one vehicle regardless of value. Life-insurance policies with a combined face value of $1,500 or less per insured person may be excluded. If the combined face value is higher, the cash surrender value may be countable. Term insurance without cash surrender value is treated differently.
The home may be excluded while the applicant, spouse or certain dependent relatives live there, or when applicable intent-to-return rules are met. A 2026 substantial-home-equity limit of $752,000 may apply.
Read the current Texas HHSC Medicaid resource guidance before treating any asset as exempt.
An excluded asset must still be disclosed. Excluded for eligibility also does not necessarily mean protected from the Texas Medicaid Estate Recovery Program after death.
Medicaid Planning for Married Couples
When one spouse needs nursing-facility or qualifying waiver services and the other remains at home, spousal-impoverishment rules may protect additional resources and income for the community spouse.
For 2026, Texas lists a Spousal Protected Resource Amount ranging from $32,532 to $162,660. The actual protected amount depends on the couple’s circumstances and is not automatically the maximum.
Some transfers between spouses are permitted, but transfers by either spouse to children or other third parties may create a penalty.
Before moving money or retitling property, determine:
- Who owns each asset?
- Which assets are excluded?
- What amount may be protected for the community spouse?
- Can income be allocated to the community spouse?
- Could the transaction affect future estate recovery?
What About the Look-Back and Penalties?
Texas generally reviews asset transfers made during the 60 months before an application for certain Medicaid long-term-care services.
A transfer for less than fair market value may include:
- Giving money to relatives
- Adding a child to a deed
- Selling property below its market value
- Forgiving a loan
- Paying relatives for undocumented care
- Moving property into a trust
A penalty is a period during which Medicaid will not pay for applicable long-term-care services. It is not simply a fine, and the penalty may begin when the applicant otherwise qualifies and needs care—not when the property was originally transferred.
Some exceptions apply, including certain transfers to a spouse or a person who meets applicable disability requirements. These exceptions are technical and should be reviewed before a transfer occurs.
See the Texas HHSC transfer-of-assets guidance for the state’s current rules.
Pro tip: Keep five years of bank statements, deeds, contracts, invoices and receipts. Clear records can help explain transactions and establish that fair value was received.
How We Help
Senior Industry Services is a Central Texas education and resource hub. SIS does not determine Medicaid eligibility, prepare trusts or provide legal, tax, financial or insurance advice.
SIS helps families:
- Understand differences among home care, assisted living, memory care and nursing-facility care
- Explore the SIS Senior Care Directory
- Find local Central Texas resources
- Prepare questions for providers and professionals
- Use Senior-AI for general educational information
- Recognize when an elder-law attorney or Texas HHSC representative is needed
Families can also read How to Pay for Long-Term Care in Central Texas for an overview of Medicaid, Medicare, insurance and private-pay options.
Frequently Asked Questions
Can a spouse keep assets when the other spouse needs Medicaid?
Yes. A spouse who remains in the community may be able to keep certain excluded property plus an additional protected amount of countable resources. The amount depends on the couple’s finances and the applicable Medicaid calculation. Do not divide or retitle property without reviewing the rules first.
What assets are exempt from Texas Medicaid spend-down?
Possible exclusions include a qualifying homestead, one vehicle, household belongings, certain burial arrangements and some life-insurance policies. Each exclusion has conditions. The home may also be subject to estate recovery later.
What is the Medicaid five-year look-back period?
Texas generally reviews transfers made during the 60 months before an application for certain long-term-care Medicaid services. Transfers for less than fair market value can delay Medicaid payment for care unless an exception applies.
Can I give my house to my child before applying?
Do not transfer a house without legal review. Adding a child to a deed or transferring the home below fair market value may create a Medicaid penalty and additional tax, ownership or creditor consequences.
Does an irrevocable trust automatically protect assets?
No. Medicaid considers when the trust was funded, who controls it and whether funds can be used for the applicant. Creating the wrong trust—or creating it too late—can create eligibility problems.
Where should a Central Texas family start?
Identify the level of care needed, gather financial records and contact Texas HHSC about the appropriate program. Before transferring property or creating a trust, consult a qualified Texas elder-law attorney. The State Bar of Texas lists certified lawyer-referral services, including one serving Central Texas.
Educational disclaimer: This article provides general educational information and is not legal, tax, financial, insurance or Medicaid eligibility advice. Medicaid rules are fact-specific and may change. Senior Industry Services and Senior-AI do not determine eligibility, prepare legal strategies or guarantee providers or professionals. Confirm current requirements with Texas Health and Human Services and qualified advisers before taking action.