Houston Estate Planning and Elder Law Attorney Blog
Federal Medicaid law treats a married couple differently from a single applicant the moment one spouse enters a nursing facility. The governing provisions are the spousal impoverishment rules at 42 U.S.C. § 1396r-5, and they decide how much of a Houston couple’s savings and monthly income the spouse who stays at home may keep while the other qualifies for long-term care coverage. What is at stake is the financial survival of the spouse who remains at home.
Congress wrote those rules so that no family would have to be reduced to nothing to get a husband or wife into care. Section 1396r-5 splits the couple into an institutionalized spouse and a community spouse, protects a share of the couple’s countable resources for the community spouse, and allows part of the institutionalized spouse’s monthly income to be diverted to the community spouse when that spouse’s own income falls below a federal floor. Texas administers the calculation through its own eligibility rules, but the architecture is federal, which is why Medicaid crisis planning in Texas begins with those same two definitions.
How Federal Law Divides a Married Couple
The statute assigns each spouse a role, and nearly every figure that follows depends on which role applies. The institutionalized spouse is the one residing in a nursing facility or medical institution and seeking Medicaid coverage. The community spouse is the husband or wife who remains at home.
The community spouse resource allowance is the share of a married couple’s countable resources that federal law permits the community spouse to keep when the other spouse qualifies for Medicaid long-term care. Section 1396r-5 pairs that asset-side protection with income-side mechanisms, and together the statute provides for the following.
- Separate identification of the institutionalized spouse and the community spouse
- A community spouse resource allowance, protecting assets
- A community spouse monthly income allowance, shifting income
- A minimum monthly maintenance needs allowance, setting an income floor
- An excess shelter allowance, raising that floor where housing costs are high
- Written notice to both spouses and a right to a fair hearing
Texas counts the couple’s resources as of a snapshot date set at the beginning of the institutionalized spouse’s first continuous period of institutionalization, with the spousal share at one-half of that total under 42 U.S.C. § 1396r-5(c)(1)(A), so the timing of an admission changes the arithmetic.
What the Community Spouse Resource Allowance Protects
Countable resources are pooled first. The calculation looks at what the couple owns between them rather than whose name sits on an account, so an account in the community spouse’s name alone is still counted. From that pooled figure the community spouse is allotted the resource allowance, and the institutionalized spouse must be at or below the $2,000 countable resource limit before eligibility begins.
In Texas the allowance is the greater of one-half the couple’s combined countable resources or $32,532, capped at $162,660. Both bounds are federal and adjust each January. Some assets are exempt rather than countable, which in Texas ordinarily includes the homestead, subject to conditions and a $752,000 equity limit.
Transfers made before an application are reviewed under a lookback period, and a gift inside that 60-month window can produce a penalty period, computed in Texas against a transfer-of-assets divisor of $262.37 per day. Moving money to a child shortly before applying is therefore not a dependable way to enlarge it. McCulloch & Miller, PLLC handles Medicaid crisis planning for families across Harris, Fort Bend, and Brazoria counties, running these numbers against actual account statements.
A written resource assessment completed before an application is filed can show what the allowance may look like for your household and surface a transfer problem while there is still time to respond. That review is part of the firm’s public benefits planning work.
How Monthly Income Is Allocated Between the Spouses
Income is handled separately from resources, and the two calculations do not mirror each other. Once coverage begins, most of the institutionalized spouse’s monthly income goes toward the cost of care, leaving only a personal needs allowance, which in a Texas nursing facility is $75 per month. Texas separately applies a special income limit for institutional Medicaid, $2,982 per month for an individual in 2026, set at 300 percent of the Supplemental Security Income federal benefit rate, a threshold question resolved before the spousal allocation begins.
The community spouse is protected by a floor called the minimum monthly maintenance needs allowance, which Texas sets at $4,066.50 per month. Where the community spouse’s own income falls below that floor, § 1396r-5 permits a community spouse monthly income allowance, which moves part of the institutionalized spouse’s income across to close the shortfall.
The excess shelter allowance can raise that floor further. It is built on the community spouse’s rent or mortgage principal and interest, property taxes, insurance, any required condominium or cooperative maintenance charge, and a standard utility allowance, counted to the extent those costs exceed 30 percent of the minimum monthly maintenance needs allowance figure. A community spouse still carrying a mortgage in Houston may therefore qualify for a larger allowance than one who owns free and clear.
The Income First Rule and Court-Ordered Support
Section 1396r-5 also fixes the order of operations. It imposes an income first rule, under which the state must treat all of the institutionalized spouse’s income capable of reaching the community spouse as having reached them, before allocating any additional resources to close the gap between the minimum monthly maintenance needs allowance and that spouse’s available income. Resources come last, limiting how far an allowance can expand on income grounds alone.
Under § 1396r-5(d)(5), where a court has ordered the institutionalized spouse to provide monthly income supporting the community spouse, the community spouse monthly income allowance may not fall below the ordered amount.
The statute also requires notice to each spouse on an eligibility determination or on request, covering the computation method and the fair hearing right. Texas Health and Human Services administers eligibility, and its handbook carries the current figures.
Common Questions About Spousal Impoverishment Rules in Texas
Does the Community Spouse Have to Sell the House?
Not necessarily. If your spouse enters a facility and you remain in the home, the Texas homestead is ordinarily treated as an exempt asset rather than a countable resource, subject to conditions and to an equity limit of $752,000. Selling a home during a Medicaid application can convert an exempt asset into countable cash, so the decision is worth examining before it is made.
Can the Community Spouse Keep Their Own Social Security and Pension?
Yes. Section 1396r-5 does not require the community spouse to turn over income paid in that spouse’s own name to the cost of the other spouse’s care. The allocation runs the other way, from the institutionalized spouse toward the community spouse.
What Happens if the Community Spouse Cannot Live on the Allowance?
Where the calculated allowance leaves the community spouse short, that spouse may request a hearing and ask that the allowance be raised, and a prior court support order under § 1396r-5(d)(5) sets a floor the state may not go below. McCulloch & Miller, PLLC advises Houston-area families on Texas elder law questions of this kind.
Talking With a Houston Attorney About Both Spouses
Spousal impoverishment planning turns on figures that change every year and on facts particular to one couple, so a general article cannot stand in for an actual calculation. McCulloch & Miller, PLLC works with families across the Houston area on qualifying one spouse for Medicaid long-term care while protecting what the other spouse needs to keep living at home. Contact the firm at (713) 333-8900 or through its Houston office contact page to arrange a resource and income review. Flat fees are available for defined planning work.