Quick answer: Long-term care planning is not simply about protecting assets from a nursing home. It is about preparing for the possibility that you or your spouse may need extended care, understanding what Medicare and Medicaid will—and will not—cover, preserving financial stability for the healthy spouse, and making sure the right people have authority to act if a crisis occurs.
The best planning usually happens before a hospitalization, dementia diagnosis, or nursing-home admission forces the family to make decisions quickly.
Medicare Usually Does Not Pay for
Ongoing Long-Term Custodial Care
This is one of the most important misunderstandings families have.
Medicare may cover qualifying skilled nursing or rehabilitation services under particular circumstances.
But Medicare does not generally pay for ongoing long-term custodial care—the kind of help many people eventually need with bathing, dressing, eating, toileting, supervision, and other activities of daily living. Medicare itself states that long-term custodial care is generally not covered.
That means families often must look to some combination of:
- personal savings;
- retirement income;
- long-term-care insurance;
- family assistance;
- Medicaid;
- other available benefits.
The time to understand those options is before the need becomes urgent.
Long-Term Care Can Take Several Forms
Long-term care does not necessarily mean moving immediately into a nursing facility.
Depending on the person, care may include:
- help in the home;
- adult day services;
- assisted living;
- memory care;
- nursing-facility care;
- home- and community-based Medicaid services;
- transportation and supervision;
- personal attendants.
Medicaid is a major payer of long-term services and supports nationally and covers both institutional and home- and community-based services through qualifying programs.
So a good plan should ask not only:
“How will we pay for a nursing home?”
but also:
“Where would we want care provided, and what resources would allow us to maintain the most independence possible?”
Medicaid Is a Needs-Based Program
Texas Medicaid can help pay for qualifying long-term services and supports, but eligibility is not automatic.
The analysis can involve:
- income;
- countable resources;
- marital status;
- ownership of property;
- previous transfers;
- trusts;
- annuities;
- home equity;
- medical and functional eligibility;
- the particular Medicaid program involved.
For 2026, Texas HHSC publishes specific income and resource limits for certain institutional and waiver programs, along with separate rules for married couples and other circumstances.
Those numbers change over time.
That is one reason families should avoid relying on old internet articles or advice from someone who handled a Medicaid application years ago.
Married Couples Have Special Protections
A common fear is:
“If my spouse goes into a nursing home, do I have to become impoverished too?”
Federal Medicaid law includes spousal impoverishment protections intended to protect a spouse who remains in the community while the other spouse receives long-term services and supports.
The rules can affect how income and resources are treated between the spouses.
The practical goal is not to strip the healthy spouse of everything.
It is to apply the eligibility rules correctly while preserving as much stability as the law allows.
This is one reason married couples should get advice before transferring or spending assets in a panic.
The Five-Year Lookback Is Real
Giving away property shortly before applying for Medicaid can create serious problems.
Medicaid generally examines certain transfers made during the 60 months before an application for institutional or qualifying waiver services.
Transfers for less than fair market value can result in a period during which Medicaid will not pay for those long-term-care services.
That means last-minute ideas such as:
- giving cash to children;
- deeding the house away;
- transferring investment accounts;
- selling property to relatives for far less than its value;
- adding family members to accounts for the purpose of moving assets;
may create more problems than they solve.
The rule is not:
“Never make a gift.”
The rule is:
“Understand the Medicaid consequences before making the transfer.”
Do Not Simply Give Everything to the Children
This deserves its own warning.
Parents sometimes hear:
“Just put everything in the kids’ names five years ahead of time.”
That is not a complete long-term-care strategy.
Transferring ownership can create other consequences involving:
- the child’s creditors;
- divorce;
- bankruptcy;
- lawsuits;
- tax basis;
- loss of parental control;
- family disagreement;
- death of the child before the parent.
A transfer may solve one problem while creating several others.
Long-term-care planning should be coordinated with estate planning, tax planning, family circumstances, and the person’s need to retain financial security.
What About the Texas Homestead?
The family home receives special treatment in Medicaid planning, but the rules are more complicated than saying:
“Medicaid cannot touch your house.”
A home may be excluded from countable resources for Medicaid eligibility under qualifying circumstances, although home-equity and other rules can apply. Texas HHSC publishes the applicable limits and eligibility rules.
Eligibility and estate recovery are also two different issues.
A home may receive favorable treatment while the owner is alive but still become relevant to the Texas Medicaid Estate Recovery Program after death.
Medicaid Estate Recovery Is a Separate Issue
Texas participates in the Medicaid Estate Recovery Program, commonly called MERP.
HHSC may seek recovery from the estate of certain deceased Medicaid recipients who were age 55 or older when they received specified long-term-care services and who initially applied for those services on or after March 1, 2005.
MERP can apply to costs associated with services such as:
- nursing-facility care;
- certain home- and community-based waiver services;
- Community Attendant Services;
- related hospital and prescription services.
But MERP is not part of the Medicaid eligibility determination itself.
That distinction matters.
Families often mix together three different questions:
- Does the home count for Medicaid eligibility?
- Can the person continue owning or using the home?
- Could HHSC later assert an estate-recovery claim?
Those questions need separate answers.
A Lady Bird Deed Is Not a Universal Medicaid Solution
Texas families often hear that a Lady Bird Deed “protects the house from Medicaid.”
That is too broad.
An enhanced life estate deed may be useful in appropriate Texas estate planning and can affect how property passes at death.
But Medicaid eligibility, estate recovery, property ownership, homestead rights, tax consequences, and family goals all have to be considered separately.
No deed should be treated as a magic Medicaid document.
Powers of Attorney Become Crucial During
a Long-Term-Care Crisis
Long-term-care planning is not only about money.
Someone may need legal authority to act.
A strong incapacity plan may include:
- Statutory Durable Power of Attorney;
- Medical Power of Attorney;
- HIPAA authorization;
- Directive to Physicians;
- guardian declarations.
Those documents can become critical if dementia, stroke, or another condition prevents a person from handling financial or medical decisions.
Without sufficient authority, family members may encounter delays or even need court involvement before they can act.
A Durable Power of Attorney Needs the Right Powers
Not every power of attorney is equally useful for long-term care planning.
The document should be reviewed to determine whether the agent has authority appropriate for the person’s circumstances.
Depending on the plan, questions may include authority involving:
- real estate;
- financial accounts;
- insurance;
- taxes;
- government benefits;
- trusts;
- gifts or transfers;
- other planning transactions.
Powerful provisions should not simply be added automatically.
But discovering during a crisis that the agent lacks authority to perform an important transaction can severely limit available options.
Long-Term-Care Insurance Can Be Part of the Plan
For some families, insurance can shift part of the long-term-care risk away from personal savings.
Texas also participates in the Long-Term Care Partnership program. Qualifying Partnership policies can provide Medicaid asset-disregard protection tied to benefits paid under the policy, although the policyholder must still satisfy Medicaid eligibility requirements.
Insurance is not right for everyone.
The cost, age, health, policy benefits, inflation protection, and family resources all matter.
But it deserves consideration before health conditions make coverage unavailable or prohibitively expensive.
Long-Term Care Planning Is Not the Same as Medicaid Planning
This distinction is important.
Medicaid planning asks how Medicaid rules apply and what lawful options may be available.
Long-term-care planning is broader.
It also asks:
- Where would you prefer to receive care?
- Who would make decisions?
- Could the healthy spouse remain financially secure?
- Is insurance available?
- Who can manage the home?
- What happens if one spouse develops dementia?
- How will children know what to do?
- What happens to the estate after both spouses die?
A family can have a technically correct Medicaid plan and still have a poor overall long-term-care plan.
Planning Early Creates More Options
The best time to think about these issues is generally before the crisis.
Early planning may allow time to:
- review insurance;
- correct powers of attorney;
- coordinate property ownership;
- evaluate estate-recovery exposure;
- organize financial information;
- discuss care preferences;
- identify family decision-makers;
- consider lawful Medicaid-planning options;
- avoid rushed transfers that create eligibility problems.
Waiting until someone is already hospitalized or entering a nursing facility does not mean nothing can be done.
It does mean some planning options may no longer be available.
Crisis Planning Is Still Possible
Families sometimes come for advice only after a spouse has entered rehabilitation, a nursing facility, or memory care.
At that stage, the situation should be analyzed based on what exists now.
The family may need to determine:
- current income;
- current countable resources;
- marital assets;
- prior transfers;
- home ownership;
- insurance coverage;
- powers of attorney;
- Medicaid eligibility;
- the healthy spouse’s needs.
The important thing is to avoid panicked transfers based on general advice.
A crisis is the time for careful analysis, not improvisation.
A Simple Example
Consider a retired Texas couple.
They own a paid-for home, retirement accounts, savings, and modest investments.
One spouse develops dementia and eventually requires significant assistance.
Without planning, the healthy spouse may suddenly face:
- substantial care expenses;
- unfamiliar Medicaid rules;
- responsibility for all financial decisions;
- uncertainty about the home;
- pressure from children to move assets immediately.
With planning, the couple may already know:
- who has legal authority;
- what insurance exists;
- how assets are titled;
- which resources are countable;
- what protections are available to the healthy spouse;
- what happens to the home;
- whom to call before making major financial changes.
That does not eliminate the difficulty.
It eliminates a great deal of unnecessary confusion.
Five Questions to Ask Before a Crisis
- If one of us needed long-term care tomorrow, how would we pay for it?
- Do we understand what Medicare will and will not cover?
- Are our powers of attorney strong enough for incapacity and long-term-care planning?
- How would Medicaid rules affect our income, savings, and home?
- Does our estate plan address both Medicaid eligibility and possible estate recovery?
If those answers are unclear, that is a good reason to review the plan.
The Better Question
Do not ask only:
“How do I keep Medicaid from taking my assets?”
Ask:
“If long-term care becomes necessary, how do we protect the healthy spouse, preserve as much independence as possible, use the rules correctly, and keep our family from making panicked decisions?”
That is a much better long-term-care planning question.
Ready to Review Your Long-Term-Care Plan?
If you want to understand how your powers of attorney, property ownership, insurance, Medicaid exposure, home, and estate plan fit together, you can schedule a private consultation.
If you would rather begin by organizing your information, the Texas Probate Risk Workbook can help identify property, ownership, and planning issues to review.