Long-Term Care Planning FAQs

Medicare is a federal health insurance program primarily designed for short-term medical needs, rehabilitation, and acute care. If you enter a skilled nursing facility following a hospital stay of at least three days, Medicare may cover the full cost for the first 20 days and a portion of the cost up to day 100. It does not provide coverage for long-term, custodial care.

Medical Assistance, which is the name of the Medicaid program in Minnesota, is a joint federal and state program that covers long-term nursing home care and alternative community-based services for individuals who meet specific financial and medical eligibility requirements.

The primary residence is generally considered an exempt asset when determining your eligibility for Medical Assistance, provided your equity value falls below the state threshold of $752,000.
Additionally, the home remains exempt regardless of value if a spouse, a child under the age of 21, or a blind or disabled child continues to reside in the property.
While the home may be exempt during your lifetime, Minnesota has an active estate recovery program. The state may file a claim or place a lien against your estate after your death to recover the costs paid for your long-term care. Implementing a proactive estate plan can help protect the family home from this recovery process.

To qualify for long-term care benefits through Medical Assistance, a single applicant aged 65 or older must have no more than $3,000 in countable assets.

Countable assets include bank accounts, stocks, bonds, real estate other than the primary home, and certain life insurance policies. Non-countable assets include personal effects, household goods, one vehicle, and specific prepaid burial contracts. Regarding income, an institutionalized individual must contribute most of their monthly income toward the cost of their care. However, you are permitted to keep a personal needs allowance of $132 per month to pay for personal items not covered by the facility.

Minnesota imposes a 60-month lookback period on all asset transfers. When you apply for Medical Assistance, the local county human services agency reviews all financial transactions, bank statements, and property deeds from the preceding five years to determine if any assets were transferred or gifted for less than fair market value. If the agency finds uncompensated transfers during this timeframe, a penalty period of ineligibility is calculated. The length of the penalty depends entirely on the total value of the gifted assets divided by the state’s regional average monthly cost of nursing home care.

When only one spouse requires nursing home care, specific spousal impoverishment rules protect the spouse who remains living in the community. The community spouse is entitled to retain a portion of the couple’s marital assets, known as the community spouse asset allowance. The maximum allowance is $162,660.

The community spouse is also entitled to keep all income received in their own name. If their independent monthly income falls below the state-regulated minimum allowance of $2,705, a portion of the institutionalized spouse’s income can be legally transferred to the community spouse to close that financial gap.

An irrevocable trust can serve as an effective tool for asset protection, provided it is established and funded well in advance of needing care. When you transfer assets into a properly structured irrevocable trust, you give up control over those assets, meaning they are no longer counted toward your personal asset limit for public benefit eligibility.

Because the lookback rules apply to trust funding, the transfer of assets into the trust must occur at least five years before you apply for Medical Assistance. Utilizing a revocable living trust does not protect assets from care costs, as the creator retains full control over the assets within a revocable structure.