Navigating Long-Term Care in Texas

Many options are available in Texas to receive and fund long-term health care. Texas participates in the federal/state long-term care partnership program that provides dollar-for-dollar asset protection. 

Quality care options are available statewide, and several insurance solutions are available. However, rapidly increasing costs for care services throughout Texas are becoming burdensome on residents and their families for those who do not have Long-Term Care Insurance.

There are a wide variety of care options available in Texas for those who require long-term health care services, including 

• adult day care centers
• assisted living facilities
• continuing care retirement communities
• home health care providers
• memory care facilities
• rehabilitation facilities
• traditional nursing homes

Top insurance companies have several insurance options to help residents safeguard income and assets, protect lifestyles, and preserve a legacy. Plus, policyholders will have access to quality care options giving loved ones the time to be family instead of caregivers.

Federal Partnership Program

The State of Texas participates in the federal/state long-term care partnership program. The program, authorized by the federal Deficit Reduction Act of 2005 (DRA) and signed into law by President George W. Bush, gives the states the ability to provide additional asset protection to those who purchase qualified long-term care insurance policies.

The Texas Long-Term Care Insurance Partnership is a collaborative effort between private long-term care insurance providers, their authorized agents, and state government agencies. These agencies include but are not limited to the Texas Department of Insurance, the Texas Health and Human Services Commission, and the Texas Department of Aging and Disability Services.

Texas participates in the program as an incentive for Texans to plan for their long-term care needs. The partnership is a joint effort between private insurers and the state. Insurers must follow state and federal guidelines to sell partnership policies. Partnership policies have an “asset disregard” benefit, inflation protection, and tax-qualified status.

Policy Example

For example, if Texans exhaust the benefits in their qualified long-term care policies, they would have an equal amount of “asset disregard”. If the policy paid $350,000 in benefits, an individual would be able to protect that amount when calculating qualification for Medicaid long-term care benefits. The normal spend-down is $2,000 so the individual could keep $2,000 plus the $350,000 from the example and still be able to qualify for Medicaid benefits. The Partnership Program also protects those assets after death from Medicaid estate recovery.

Reciprocity

Most states have reciprocity with other states' long-term-care partnership programs including Texas. This means if you move from or to Texas, partnership asset protection follows you as well.

Medicaid

Long-Term Care Medicaid spend down is $2,000. Your spouse’s minimum monthly income allowance is $3,259.50. A spouse’s minimum asset allowance is a minimum of $26,076 up to a maximum of one-half of countable assets up to $130,380 * The home equity limit is $603,000.

For more information about the Medicaid program visit www.medicaid.gov. 

Texas Medicaid Estate Recovery Program

When a person applies for Medicaid and requires long-term services and supports, Texas will send a notice explaining the state's Medicaid Estate Recovery Program, otherwise known as MERP.

Remember, Medicaid will provide long-term care services only if you have little or no income and assets. However, the state will never require a living spouse to move out of their home. Once the person receiving Medicaid long-term care services dies, Texas will notify the estate representative or their heirs to let them know that the state intends to file a claim. The notice will ask for information so the state can decide whether to file a MERP claim.

The state may "look back" up to 60 months before application for Medicaid long-term care services to determine when income was reduced and resources were transferred.

If a person had a qualified Partnership Long-Term Care Insurance policy, the total amount of benefits paid by the policy would be sheltered from asset recovery. 

Learn more - Your Guide to the Medicaid Estate Recovery Program | Texas Health and Human Services

Rate Stability Rules

In addition, Texas consumers enjoy additional peace-of-mind as the state has adopted Long-Term Care Insurance Rate Stability Rules.  These rules, developed the National Association of Insurance Commissioners, makes it much harder for an insurance company to get an approved rate increase.

Products Approved in Texas

A variety of products are approved in Texas for Long-Term Care planning. These include traditional plans in addition to partnership certified policies, limited-duration policies, and asset-based “hybrid” policies.

Tax Incentives

Texas does not offer any state tax incentive for qualified long-term care insurance as there is no state income tax. However, federal tax incentives are available.

Reverse Mortgages in Texas

Texas residents can use reverse mortgages for various reasons, including to produce tax-free income in retirement, reduce expenses, fund Long-Term Care Insurance, or even provide long-term health care when other options are unavailable. 

You can receive a lump sum or monthly payments, which adds a lot of flexibility depending on your needs. 

There are rules in Texas that apply. An eligible borrower for a reverse mortgage must be aged 62 or older. The home must be your principal residence. In addition, you should have substantial equity and have no other liens against the home. 

As a borrower, you remain responsible for your property taxes, homeowners insurance, and home upkeep. If you fail to do so, it could result in foreclosure.

Learn more about reverse mortgages by clicking here.

*The federal government sets a new minimum and maximum amounts each year, but states can set their own minimum requirements at any level between the federal limits. This information is based on the best available sources.