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Medicaid planning is the process of arranging your finances and estate plan with the possibility of future long-term care in mind.
The goal isn’t simply to “get on Medicaid.”
Good planning looks at the bigger picture: How would you pay for care? What does your spouse need to remain financially secure? Which assets are countable? What happens to your home? What tax consequences could a transfer create? And what could Minnesota recover from your estate after your death?
The answers are different for every family.
The important point is that these questions are usually easier to address before someone needs nursing-home care.
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Because long-term care is expensive.
According to CareScout’s 2025 Cost of Care Survey, the median cost of a private nursing-home room in Minnesota is $166,440 per year. Even families with substantial retirement savings can burn through those savings quickly if someone needs several years of care.
Medicare doesn’t generally pay for ongoing custodial nursing-home care. It may cover a limited qualifying skilled-nursing stay, but that’s different from paying for years of long-term care.
For many families, Medical Assistance eventually becomes an important part of paying for that care.
Planning ahead gives you more options.
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Medical Assistance, or MA, is Minnesota’s Medicaid program.
For people who qualify, MA can help pay for nursing-home care and certain services provided at home or elsewhere in the community.
One important example is Minnesota’s Elderly Waiver program. It can provide home- and community-based services for qualifying people age 65 and older who meet nursing-home level-of-care requirements but choose to live in the community instead.
That distinction matters.
Long-term care doesn’t automatically mean moving into a nursing home. Depending on the circumstances and the programs available, some people can receive assistance while remaining at home or in another community setting.
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There isn’t one simple answer.
Eligibility depends on the particular MA program and generally involves both care needs and financial eligibility.
For nursing-home and certain waiver benefits, the applicant may need to meet applicable level-of-care requirements. Financial eligibility can depend on income, assets, marital status, and other factors.
Minnesota also has different MA eligibility categories and programs, and the rules aren’t identical for all of them.
That’s one reason families shouldn’t assume that something they heard from a neighbor, relative, or even someone who went through the process a few years ago necessarily applies to them.
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This is where a lot of confusion starts.
Some assets are countable for Medical Assistance purposes. Others may be excluded or exempt if the applicable requirements are met.
Countable assets can include things such as:
- Checking and savings accounts
- CDs
- Stocks and bonds
- Investment accounts
- Certain additional real estate
- Other financial resources
Other property may not count in the same way. Minnesota generally excludes a person’s home, household goods, personal belongings, and one vehicle from the ordinary MA asset limit, subject to the rules applicable to the particular program. For long-term care MA, separate home-equity rules can also apply.
But here’s an important distinction:
An asset being exempt for eligibility purposes doesn’t necessarily mean it’s protected forever.
A home, for example, may not prevent you from qualifying for MA but could still be affected later by Minnesota’s estate-recovery rules.
Those are two different questions.
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This is one of the most important Medicaid planning rules to understand.
When someone seeks Medical Assistance to pay for long-term care, Minnesota can review transfers made during the previous 60 months.
Why?
Because Medicaid rules generally don’t allow someone to simply give away property today and qualify for government-paid long-term care tomorrow.
If assets were transferred for less than fair market value during the look-back period and no exception applies, the transfer can result in a period during which MA will not pay certain long-term care costs.
That’s why “just give everything to the kids” can be terrible advice.
A transfer that seems simple can create Medicaid problems, tax consequences, loss of control, creditor issues, or all of the above.
Understand the consequences before moving assets.
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Most mistakes aren’t complicated. They’re usually the result of acting before understanding the rules.
Common examples include:
- Waiting until a health crisis to start planning
- Giving property to children without considering the five-year look-back
- Assuming the house is automatically protected
- Adding children to accounts or property without understanding the consequences
- Assuming joint ownership avoids Medicaid problems
- Failing to use protections available to a healthy spouse
- Using a trust that doesn’t accomplish what you think it does
- Planning for Medicaid eligibility but ignoring estate recovery
The last one deserves some attention.
Getting qualified for Medical Assistance is only one part of the planning process. You also need to understand what Minnesota may be able to recover after death.
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Quite a few families come to us worried that if one spouse enters a nursing home, the spouse at home will have to become broke too.
That’s not how the rules are designed to work.
Federal and Minnesota Medicaid rules provide certain protections for the community spouse, meaning the spouse who remains outside the nursing facility.
Depending on the circumstances, the community spouse may be allowed to keep a portion of the couple’s assets and may also have certain protections relating to monthly income. Minnesota DHS specifically confirms that the spouse living at home doesn’t have to use his or her own income to pay the institutionalized spouse’s nursing-home costs.
The calculations can get complicated, but the basic idea is important:
One spouse needing care doesn’t automatically mean the other spouse has to spend everything they own.
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This is the part of Medicaid planning that sometimes gets overlooked.
Medical Assistance can pay substantial long-term care expenses during someone’s lifetime. After that person dies, Minnesota may have the right to seek repayment for certain benefits through its estate recovery program.
For example, estate recovery generally applies when someone age 55 or older received certain MA long-term services and supports.
And Minnesota’s definition of the “estate” for recovery purposes can extend beyond property going through a traditional probate.
Depending on the circumstances, Minnesota law can reach certain interests passing through joint ownership, life estates, living trusts, transfer-on-death arrangements, and other methods of transferring property outside probate.
So simply saying, “We’ll avoid probate,” doesn’t necessarily solve the Medicaid estate-recovery problem.
Eligibility planning and estate-recovery planning need to be considered together.
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Sometimes.
But simply putting assets into a trust doesn’t make them protected.
A revocable living trust generally doesn’t remove assets from consideration for Medicaid purposes because you typically retain control over and access to those assets.
Certain irrevocable trusts can be treated differently, but the details matter. Who created the trust? Who can receive distributions? What rights did you keep? When was the trust funded? What assets went into it? And how do the Medicaid transfer and trust rules apply?
An irrevocable trust also isn’t something you create casually. You’re generally giving up rights and control that you would retain with a revocable trust.
So the question isn’t:
“Do I need a Medicaid trust?”
The better question is:
“Given my family, assets, health, goals, and likely long-term care needs, what planning actually makes sense?”
Sometimes a trust is part of that answer.
Sometimes it isn’t.
Planning Before the Crisis
Medicaid planning is usually easier when you have time.
Once someone is already entering a nursing home, there may still be planning opportunities. But the choices are often more limited than they would have been five or ten years earlier.
And Medicaid shouldn’t be the only goal.
A good estate plan also needs to consider your spouse, your children, taxes, control of your property, your own financial security, and what you actually want to happen with what you’ve spent a lifetime building.
Medicaid is one piece of that puzzle.
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If you have questions about Medicaid planning or how long-term care fits into your estate plan, the South Dakota, North Dakota, Minnesota, Iowa & Nebraska Medicaid planning attorneys at Thompson Law can help you understand your options.
Call Thompson Law at 605-362-9100 (Sioux Falls) or 701-738-0060 (Grand Forks) to schedule an appointment.
