Medicare beneficiaries increasingly rely on long-term care, and the portion of seniors needing these services will keep rising as the population ages. However, long-term care is mostly not covered by Medicare. While Medicaid fills the gap in Medicare coverage for long-term care, its complex eligibility rules can make qualifying for benefits difficult. What’s more – eligibility rules vary significantly from state to state.
Medicaid nursing home coverage
Income limits: The income limit is $2,742 a month if single and $5,484 a month if married (and both spouses are applying).
When only one spouse needs Medicaid, the income limit for single applicants is used – and only the applicant’s income is counted.
However, nursing home enrollees are not allowed to keep all of their income up to this limit. Enrollees have to pay nearly their entire income toward their care, other than a small personal needs allowance of $60/month and money for health insurance premiums (such as Medicare Part B and Medigap).
Assets limits: The asset limit is $2,000 if single and $3,000 if married (and both spouses are applying). If only one spouse has Medicaid, spousal impoverishment rules allow the other spouse to keep up to $148,620.
Certain assets are never counted, including many household effects, family heirlooms, certain prepaid burial arrangements, and one car. Applicants also are not allowed to have more than $688,000 in home equity.
Home and Community Based Waiver (HCBS) services
Every state’s Medicaid program covers some community-based long-term care services, which are provided in an enrollee’s home, adult day care center, assisted living facility, or other “community” location. Programs offering these services are called Home and Community Based Services (HCBS) waivers because recipients continue living in the community, rather than entering a nursing home. In South Dakota, HCBS enrollees must need a nursing home level of care.
One HCBS waiver program in South Dakota is the Home and Community-Based Options and Person Centered Excellence (HOPE) waiver, which includes the following benefits:
- Homemaker services
- Private duty nursing
- Adult day care
- Emergency response systems
- Meals – Nutritional Supplements
- Assisted living
- Adult companion services
- Community transition supports
Income limits: The income limit is $2,742 a month if single and $5,484 a month if married (and both spouses are applying).
When only one spouse needs Medicaid, the income limit for single applicants is used – and often only income received by the applying spouse is counted.
Assets limits: The asset limit is $2,000 if single and $3,000 if married (and both spouses are applying). If only one spouse has Medicaid, spousal impoverishment rules allow the other spouse to keep up to $148,620.
HCBS recipients can’t have more than $688,000 in home equity.
Qualifying for Medicaid LTSS with income above the eligibility limit in South Dakota
Applicants with incomes greater than the eligibility limits for nursing home care and HCBS can become eligible for those services by depositing income into a Qualified Income Trust, which is also called a “Miller Trust.”
After it is placed in the Miller Trust, almost all of this income must be paid toward an enrollee’s care if they are in a nursing home. However, some states allow HCBS recipients to keep a significant personal needs allowance to pay for certain health-related expenses.
Spousal impoverishment protections in South Dakota
Eligibility rules for Medicaid LTSS programs differ from other Medicaid benefits when only one spouse is applying. When this occurs, only the applying spouse’s income is counted. With other Medicaid benefits, the income of both spouses is counted – regardless of who applies.
Spousal impoverishment rules allow community spouses of Medicaid LTSS recipients (i.e. the non-applying spouse) to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s monthly income.
In South Dakota as of 2022, these spousal impoverishment rules allowed community spouses to keep:
Medicaid home equity limit in South Dakota
Federal law requires states to limit eligibility for Medicaid nursing home and HCBS to applicants with a home equity interest below a specific dollar amount. States set these home equity levels based on a federal minimum of $688,000 and maximum of $1,033,000 in 2023.
South Dakota uses the federal minimum home equity limit – meaning applicants with more than $688,000 in home equity are ineligible for LTSS programs.
Penalties for transferring assets in South Dakota
Because long-term care is expensive, individuals can have an incentive to give away or transfer assets to make themselves eligible for Medicaid LTSS. To curb these asset transfers, federal law requires states to institute a penalty period for Medicaid nursing home applicants who give away or transfer assets for less than their value. States can also have a penalty period for community-based LTSS.
South Dakota has an asset transfer penalty for both nursing home care and HCBS. The state uses a 60-month lookback period to calculate this asset transfer penalty – meaning that asset transfers or gifts made during this period may result in ineligibility. This penalty is calculated by dividing the value of asset transfers and gifts by the monthly cost of nursing home care (which is about $8,365 in 2023).
Estate recovery in South Dakota
A state’s Medicaid agency is required to recover what it paid for long-term care related costs while an enrollee was 55 or older. The law allows states to also pursue estate recovery against beneficiaries who did not receive LTSS.
South Dakota usually pursues estate recovery from the estates of enrollees who received long-term care. If the state does recover from a beneficiary, it will also recoup what it paid for other services like hospital and medical care.
