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The cost of nursing home care varies depending on the level of care required, the facility, and its location. As of 2026, the average annual cost of nursing home care in South Dakota exceeds $120,000, and many residents require care for several years rather than a few months. As a result, even individuals with substantial retirement savings may find that those assets are depleted more quickly than anticipated. This financial reality is one of the primary reasons long-term care planning has become an essential component of estate planning. Waiting until nursing home admission becomes imminent often limits your planning opportunities, whereas beginning the process years in advance allows you to evaluate more options for preserving assets and preparing for future healthcare needs.
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There is no single funding source that works for every family. Most people rely on a combination of financial resources over time. Initially, many individuals pay privately using retirement savings, investment accounts, pensions, Social Security benefits, certificates of deposit, or proceeds from the sale of assets. Some also have long-term care insurance that helps cover a portion of their expenses. For many South Dakota seniors, Medicaid eventually becomes the primary source of payment after eligibility requirements have been satisfied.
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This is one of the most common misconceptions surrounding long-term care planning. Medicare generally pays for acute medical treatment, physician services, hospitalization, and limited rehabilitation following a qualifying hospital stay. It does not, however, pay for ongoing custodial nursing home care. Custodial care includes assistance with activities of daily living such as bathing, dressing, eating, transferring, medication reminders, and supervision for individuals with dementia or other cognitive impairments. Because these services often continue for months or years, families are frequently surprised to learn that Medicare provides little assistance with the expenses associated with long-term nursing home residency.
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Many families begin by paying privately because they have accumulated retirement savings, investment accounts, or other financial resources. Paying privately can provide greater flexibility regarding facility selection and care options. The challenge is that nursing home costs can quickly consume even substantial savings. If care extends over several years, retirement accounts intended to support both spouses or provide an inheritance for children may be significantly reduced. For that reason, relying exclusively on personal savings is not always the most effective long-term strategy.
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Unlike traditional health insurance, long-term care insurance is specifically designed to help pay for services associated with extended care, including in-home assistance, assisted living, memory care, and skilled nursing facilities. Purchasing coverage while you are younger and healthier generally results in lower premiums and more coverage options because medical underwriting is often easier before significant health problems develop. If you are considering a policy, you should carefully evaluate daily benefit amounts, lifetime benefit limits, elimination periods, inflation protection, covered services, and policy exclusions before making a decision.
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For many South Dakota seniors, Medicaid eventually becomes the primary source of payment for long-term nursing home care. Unlike Medicare, Medicaid is specifically designed to help qualifying individuals pay for long-term care. Because it is a needs-based program, applicants must satisfy detailed financial and medical eligibility requirements before benefits become available.
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One of the most important Medicaid rules involves the five-year look-back period. When you apply for Medicaid to help pay for nursing home care, South Dakota reviews certain financial transactions completed within the 60 month period prior to your application to determine whether you transferred assets for less than fair market value in an effort to qualify sooner. If prohibited transfers are identified, Medicaid may impose a penalty period during which you remain responsible for paying nursing home expenses even though you otherwise satisfy the financial eligibility requirements. Attempting last-minute gifts to children or grandchildren frequently creates unexpected problems instead of solving them.
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This is generally not advisable without first consulting an experienced elder law attorney. Although many people assume gifting assets shortly before applying for Medicaid will preserve those assets, transfers made during the Medicaid look-back period may create lengthy periods of ineligibility. During that penalty period, you may have no Medicaid assistance while simultaneously facing significant nursing home expenses. Because Medicaid regulations are highly technical, asset transfers should always be evaluated as part of a comprehensive long-term care strategy rather than undertaken without legal guidance.
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A Medicaid Asset Protection Trust (MAPT) is an irrevocable trust that may help preserve certain assets while preparing for future Medicaid eligibility. When appropriate, assets transferred into a properly structured MAPT and maintained in compliance with Medicaid rules may eventually be excluded from countable resources for eligibility purposes. This planning strategy can allow you to preserve significant family assets while preparing for the possibility that nursing home care will someday become necessary.
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Yes. Medicaid contains provisions intended to reduce the financial hardship that nursing home care could otherwise impose on a healthy spouse remaining in the community. These spousal protections allow the community spouse to retain certain income and assets rather than requiring the couple to spend virtually everything before one spouse qualifies for Medicaid. Proper Medicaid planning frequently focuses on maximizing these protections while preserving financial security for both spouses.
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The best time to begin planning is long before you need care. Many valuable planning opportunities become unavailable once serious health problems develop, or immediate nursing home admission becomes necessary. Starting early gives you more flexibility to evaluate insurance options, explore Medicaid planning strategies, organize your finances, update your estate planning documents, and make thoughtful decisions without the pressure of a healthcare emergency. Even if you never require nursing home care, having a comprehensive long-term care strategy in place provides valuable peace of mind for both you and your family.
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Contact Us
For additional information related to estate planning, contact the Iowa, Minnesota, Nebraska, South Dakota & North Dakota elder law attorneys at Thompson Law by calling 605-362-9100 to schedule an appointment.
