When preparing for retirement, it is easy to assume that the government health benefits you have paid into your whole life will handle your medical needs as you age.
Many seniors expect that if they ever need long-term care in a nursing home or memory care facility, Medicare will step in to pick up the bill.
Unfortunately, relying on Medicare for ongoing long-term care is one of the most expensive misunderstandings you can face. Let’s look at the facts and the value of Medicaid planning in light of the circumstances.
The Medicare Misconception
You likely have Medicare or plan to rely on it as your primary health coverage after age 65. Medicare is excellent for hospital stays, doctor visits, prescription drugs, and short-term rehabilitation.
However, Medicare does not cover ongoing long-term care.
If you or your spouse suffers a stroke, develop dementia, or reach a point where you need ongoing daily help, Medicare coverage is strictly limited:
- Short-term rehab only: Medicare Part A pays for skilled nursing care following a qualifying three-day inpatient hospital stay.
- The clock ticks fast: Full coverage lasts for only the first 20 days. From days 21 to 100, you pay a significant daily co-insurance fee out of pocket.
- Coverage drops to zero: After day 100, or as soon as you no longer require daily active skilled therapy, Medicare stops paying entirely.
Medicare is health insurance designed for acute medical recovery, not continuous custodial care. Once Medicare steps back, nursing home costs in Minnesota can easily exceed $11,000 per month.
Without proper planning, those bills must come directly out of your personal bank accounts.
Medical Assistance Is the True Safety Net for Long-Term Care
While Medicare leaves a massive gap in long-term coverage, Medicaid, known in Minnesota as Medical Assistance, is the primary government program designed to pay for ongoing nursing home and long-term care support.
Unlike Medicare, Medical Assistance covers continuous residence in a nursing facility or comprehensive home-based care. Because Medical Assistance is a needs-based program, you must meet strict income and asset limits to qualify.
Without an advance strategy, couples are often forced to exhaust their liquid savings, sell off investments, and drain their nest eggs just to reach the state asset threshold for eligibility.
Medicaid Asset Protection Trust
You do not have to watch your life savings disappear to pay for care, nor do you have to leave your spouse without support. A Medicaid asset protection trust is an irrevocable trust designed specifically to shield your assets while preserving future Medical Assistance eligibility.
When you establish a Medicaid trust:
- Your assets are shielded. Transferring your primary home, liquid savings, or investment accounts into the trust removes them from your personal ownership for eligibility calculations. The state cannot force you to sell those assets to pay for care.
- You retain personal rights. You can maintain the right to live in your home for the rest of your life and receive income generated by trust assets.
- Your home is safe from estate recovery. Property held inside the trust is protected from state estate recovery claims after you pass away, ensuring your real estate passes to your children or designated beneficiaries.
Because Minnesota enforces a 60-month (5-year) look-back period on asset transfers, setting up a Medicaid trust well before a medical crisis arises is key.
Protecting the Healthy Spouse: Minnesota Spousal Rules
When one spouse requires long-term care in a facility while the other remains living independently at home, state laws include spousal impoverishment protections. The healthy spouse is legally referred to as the “community spouse.”
Under Minnesota law, the community spouse is not left destitute when their partner applies for Medical Assistance. Understanding what the healthy spouse can keep is a core pillar of long-term care planning.
The Community Spouse Resource Allowance (CSRA)
The community spouse is permitted to retain a specific portion of the couple’s combined countable assets. This is known as the Community Spouse Resource Allowance.
- Asset division: The state takes a snapshot of all countable assets owned by either spouse on the date long-term care begins.
- Protected amount: The community spouse is entitled to keep half of the couple’s total countable assets, up to a maximum statutory limit of $162,660.
- Countable vs. exempt: Countable assets include checking and savings accounts, certificates of deposit, stocks, bonds, non-homestead real estate, and second vehicles.
Assets above the allowed resource allowance must be spent down on care or restructured through legal planning strategies to establish Medical Assistance eligibility for the spouse requiring care.
Protected Exempt Assets
Certain assets are categorized as exempt, meaning they do not count toward the asset limit and do not have to be spent down. The community spouse can retain these without impacting the applicant’s eligibility:
- The primary home: Your principal residence is completely exempt with an equity limit of $752,000.
- One personal vehicle: One primary automobile used for household transportation is fully exempt, regardless of its monetary value.
- Personal effects and household goods: Furniture, appliances, clothing, jewelry, and personal belongings are non-countable.
- Prepaid burial arrangements: Irrevocable prepaid funeral contracts and dedicated burial space items are protected.
Minimum Monthly Maintenance Needs Allowance (MMMNA)
In addition to keeping a portion of the assets, the healthy spouse is protected from losing all household income. When one spouse enters a care facility, their income (such as Social Security or a pension) typically goes toward paying their share of facility costs.
If the community spouse’s personal monthly income is low, Minnesota allows a portion of the institutionalized spouse’s income to be diverted to the community spouse.
- Income floor: The state sets a minimum monthly maintenance needs allowance, establishing a baseline of income between $2,705 and $4,066.50 per month for the healthy spouse.
- Housing adjustment: If the community spouse has high shelter costs—such as rent, mortgage payments, property taxes, homeowner insurance, or utility expenses—the state adjusts the allowance upward toward the maximum limit.
- Preserving financial independence: This mechanism prevents the spouse staying at home from being unable to pay basic monthly living costs.
Uniting Trust Planning and Spousal Rules
Relying solely on standard spousal allowances still leaves a significant portion of a couple’s wealth exposed to nursing home spend-down rules if total countable assets exceed the maximum threshold.
Combining a Medicaid asset protection trust with Minnesota spousal impoverishment provisions provides comprehensive protection.
Placing surplus assets into an irrevocable trust prior to the 60-month look-back window removes those resources from the initial asset snapshot entirely. This allows the healthy spouse to retain the permitted asset allowance, keep the home, and maintain complete financial stability while ensuring immediate access to Medical Assistance for the spouse needing care.
Let’s Get Started!
Our firm can help you position your assets wisely with future long-term care costs in mind. To get started, call our Oakdale, MN estate planning office at 651-478-8999 or send us a message through our contact page.
- Estate Planning for Young Families: Don’t Take Any Risks - October 15, 2026
- Medicaid Planning: What Can a Healthy Spouse Keep? - October 1, 2026
- Special Needs Planning: Key Considerations - September 15, 2026