Do IRAs Count for Medicaid in Texas?

If you or a loved one is considering applying for nursing home Medicaid in Texas, one of the most common and confusing questions is whether IRAs count as a resource. The answer isn’t always straightforward, in part because Texas does not have an official published rule stating whether an IRA (or other tax-deferred retirement account) is a countable resource for Medicaid eligibility. Instead, eligibility case workers follow unwritten internal procedures and interpretations.

IRAs that are in payout status are generally not counted as a resource for Medicaid purposes in Texas. That means if the applicant is receiving Required Minimum Distributions (RMDs) from their IRA, the value of the IRA itself is often not considered in the resource calculation. However, to be in payout status, the applicant must typically be at or past the age when RMDs are required by federal law. A Required Minimum Distribution (RMD) is the minimum amount the IRS requires you to withdraw each year from certain types of retirement accounts, including traditional IRAs, once you reach a specific age. It’s important to note that taking some distribution or voluntarily withdrawing funds from an IRA is not enough. The distributions must comply with the IRS's RMD requirements and match the applicable RMD table.

The age at which you are required to take RMDs depends on the applicant's birth date as follows:

·         Born before July 1, 1949: RMDs began at age 70½

·         Born July 1, 1949 – December 31, 1950: RMDs begin at age 72

·         Born 1951 – 1958: RMDs begin at age 73

·         Born 1959 or later: RMDs begin at age 75

You should consult with an elder law attorney to confirm whether an IRA is countable or exempt, ensure you meet RMD requirements, and structure your assets and income to maximize Medicaid eligibility.