When it comes to Medicaid eligibility in Texas, many people are surprised to learn there’s an option for those with income above the standard limit—if they also have significant medical expenses. This is called the “spend down” or “Medically Needy” program. Here’s what you need to know for 2025, including key rules, how the process works, and important tips for navigating eligibility.
Note: Medicaid rules change over time and may be interpreted slightly differently in each local office. Always verify details with Texas Health & Human Services (HHSC) or a Medicaid specialist for your county.
Key Numbers & Limits for Texas (2025)
- Texas updates its Medicaid income and asset limits each year. For 2025, check the latest HHSC tables or consult with a professional for the current figures.
How the Texas Spend Down / Medically Needy Program Works
Who Qualifies?
The program is designed for people whose income is too high for regular Medicaid but who have substantial medical expenses. If you’re in this situation, you may be able to “spend down” your excess income by paying (or owing) medical bills, which brings your countable income down to the Medicaid limit.
Certification Period
Texas uses a three-month window called the “certification period.” You can use medical expenses incurred during the month you apply and the two months before to meet your spend down. For example, if you apply in March, bills from January, February, and March count.
What Medical Expenses Count?
Not every expense is eligible. Typically, you can use:
- Doctor and hospital bills
- Prescription drugs
- Medical supplies
- Insurance premiums (sometimes)
Expenses must be for the applicant and incurred within the certification period. Rules on over-the-counter medications can vary by county.
Achieving Eligibility
Once your medical expenses in the period equal or exceed your “excess income” (the amount by which your income exceeds the Medicaid limit), you qualify for Medicaid for the rest of that three-month period.
After the Period Ends
When the three months are up, your eligibility resets. You’ll need to demonstrate again that your medical expenses offset your excess income for the next period to continue receiving Medicaid coverage.
Special Notes: Nursing Home Medicaid
Nursing home (institutional) Medicaid in Texas has stricter income rules. Many long-term care applicants need a Qualified Income Trust (also known as a Miller Trust) if their income is too high. The spend down option may not be available or sufficient for nursing home eligibility, so specialized planning is often needed.
Bottom Line
If your income is above the Medicaid limit but your medical costs are high, the Texas spend-down/Medically Needy program may help. However, rules can be complex and differ by location—always check with your local eligibility office or a Medicaid specialist. For the most accurate, up-to-date information, consider reviewing the latest HHSC guidelines or asking for documentation specific to your county.
Understanding your options can make a significant difference in accessing the care you need in 2025.
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