Picture a retired union member already living in a nursing home, with Medicaid covering her stay. In January, her union pension goes up by $90 a month. Nice, right? Then the eligibility notice shows up.

She lives in a state with a special institutional income cap, a hard monthly ceiling on countable income for nursing home Medicaid. In Texas, the 2026 nursing-facility income limit is $2,982 a month, and private pensions count as income. Her raise puts her $22 over that line. In Texas, countable income above the limit can make her income-ineligible for the whole month unless the excess is handled under the state’s Qualified Income Trust rules.

Here is how her income stacks up against the cap:

• December pension and other countable income: $2,914
• January pension increase: $90
• New monthly income: $3,004
• 2026 Texas income cap: $2,982
• Amount over: $22

Twenty-two dollars barely covers a pizza and a tip. The facility costs a lot more. The estimated 2026 national average for a shared nursing home room is $327 a day, according to medicaidplanningassistance.org. Over a 31-day January, that comes to $10,137.

Her nursing-home care is being paid through Medicaid, with most of her own income already going toward her cost of care.

In an income-cap state, Medicaid runs eligibility as a pass-fail test each month. If she fails it by $22, Medicaid may hold back its entire nursing-facility payment for that month until the problem gets fixed under state rules.

Texas’s own Medicaid handbook gives an example of this. Income that belonged in a Qualified Income Trust got deposited too late, and the beneficiary became ineligible for that entire month.

That’s how a tiny miss can turn into a five-figure private-pay problem.

Some states let residents whose income tops the institutional limit set up a Qualified Income Trust (QIT), often called a Miller Trust. Texas says a QIT can overcome its special income limit. The trust has to follow strict rules, and the required income must be deposited during the month it is received.

Her trust needs correct routing: the required income lands in the trust account on time, so Medicaid doesn’t count it against the cap.

Passing the eligibility test still leaves her paying most of her income toward her care. Once Medicaid approves her, nursing home residents generally contribute much of their income toward their care after permitted deductions. Those deductions include a personal-needs allowance and certain spouse or medical-expense allowances.

So the QIT fixes the eligibility cliff, and the pension money continues flowing to the facility. Most of her $90 raise ends up there. In exchange, she continues her Medicaid.

States handle excess nursing home income in different ways. Some run medically needy spend-down programs, which let people with income above the usual standard qualify after they rack up enough medical expenses. Medicaid.gov describes the spend-down as the difference between countable income and the state’s medically needy income level. Facility costs hit that number fast.

For families, “How far over am I?” matters less than “What does my state let me do once I’m over?”

January timing matters every year. The cap is linked to the federal Supplemental Security Income benefit, so it generally rises with the Social Security cost-of-living adjustment (COLA). The latest estimate puts the 2027 COLA at 3.5%, with two of three measurement months counted. Private pensions run on their own schedules, so a union raise and a cap increase may not line up.

Families that get through this without missing a month of coverage tend to follow the same steps:

• They compare the new gross monthly pension with the state’s current institutional Medicaid income limit.
• They report the increase right away instead of waiting for the next renewal.
• They ask whether the state uses a QIT, a medically needy spend-down, or another method for excess income.
• If a QIT is required, they make sure the right income gets to it during the correct month.

A $90 raise sounds too small to touch a facility’s budget. At a Medicaid eligibility cliff, the last $22 is the number that counts. The raise itself is not the problem. The fix is getting the income handled correctly before a month of Medicaid eligibility disappears.

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