How to Pay for Senior Care in South Dakota (2026)

A parent whose income is over South Dakota Medicaid's long-term care limit of $2,982 a month in 2026 can still qualify by routing that income through a Medicaid income trust.1 If you are sorting out how to pay for senior care in South Dakota, that trust is one tool among several: your parent's own income and savings, which South Dakota does not tax because it has no personal income tax, a yearly state tax refund for low-income seniors, Medicare's short skilled nursing benefit, South Dakota Medicaid and its HOPE waiver, VA benefits and long-term care insurance.2,3,4 Each source below covers a different part of the bill.

In This Guide

• Key Takeaways
• Put a Number on the Care First
• Paying for Senior Care in South Dakota From Your Own Money
  • The Senior Tax Refund
  • The Assessment Freeze on the Family Home
  • Borrowing Against the House
• The Short Window Medicare Covers
• How to Pay for Senior Care in South Dakota With Medicaid
  • Money Given Away in the Last Five Years
  • What South Dakota Can Recover Later
• Care at Home or in Assisted Living Through the HOPE Waiver
• When a Husband or Wife Stays at Home
• If Your Parent Served in the Military
• Long-Term Care Insurance
• Frequently Asked Questions
• Learn More

Put a Number on the Care First

It's hard to plan around a number nobody has said out loud yet. Find out what a year of care in the setting your parent needs will cost, then set that against the income and savings your parent actually has. Our guide to the cost of senior care in South Dakota gives the current median for each setting. The gap tells you how many of the sources below you will need.

For a specific setting, see how to pay for assisted living in South Dakota or our guide to South Dakota nursing homes.

Paying for Senior Care in South Dakota From Your Own Money

Your parent's Social Security, pension and savings are the first money available for care, and here South Dakota works in your family's favor. The South Dakota Department of Revenue states that "South Dakota is one of seven states that does not impose a state income tax." So South Dakota taxes no retirement income: not Social Security benefits, public or private pensions, IRA withdrawals or 401(k) distributions.2

The only income-tax chapter in South Dakota Codified Laws (SDCL) Title 10 is chapter 10-43, which taxes banks and financial corporations, and a South Dakota retiree still owes federal income tax.2 Details: how South Dakota taxes retirement income.

The Senior Tax Refund

A yearly check back from the state can matter on a tight budget. South Dakota's Tax Refund for Senior Citizens and Citizens with Disabilities is a yearly refund of retail sales and service taxes paid, set up by SDCL chapter 10-45A and run by the South Dakota Department of Revenue.3

For the 2026 application, which covers 2025, a South Dakota claimant must have been a resident during all of 2025, must have been 65 on or before January 1, 2025, or disabled at any time during 2025, and must either live alone on a yearly income of $17,215 or less or live in a household whose members' combined income is $23,265 or less.3 For the South Dakota senior tax refund, "disabled" means receiving or having qualified to receive payments under Title II, X or XVI of the Social Security Act.

The South Dakota senior tax refund is not a fixed payment. Under SDCL 10-45A-5 and 10-45A-6, a qualifying single-member household receives a pro rata share of the money the state appropriated, capped at $500, and a qualifying household of more than one person receives two times that share, capped at $1,000.3 Because the appropriation is split among everyone who filed on time, the check can change from year to year.

South Dakota's senior tax refund counts the gross amount of any pension or annuity and all Social Security payments as income, then subtracts real estate taxes payable, or ten percent of rent paid, on your parent's home.3 Only one claimant per household can receive the South Dakota senior tax refund each year. The South Dakota Department of Revenue accepts senior tax refund applications from May 1 to July 1, and begins issuing refund checks at the beginning of September. One trade-off to know: the Department states that people who qualify for its Property Tax Homestead Exemption, which delays payment of property taxes until the home is sold for owners at least 70 years old or a surviving spouse, cannot also get the senior tax refund.3

The Assessment Freeze on the Family Home

If your parent still owns a home, South Dakota's Assessment Freeze for the Elderly and Disabled keeps the home's assessed value from rising for tax purposes, so the owner keeps paying tax on the former, lower value even as the home appreciates.6

For the 2026 cycle, the South Dakota Department of Revenue lists the Assessment Freeze qualifications as household income of less than $56,595 for one person or less than $66,885 for a multiple-member household; age 65 or older, or disabled as defined by the Social Security Act; five years as a South Dakota resident owning an owner-occupied single-family home, unless the freeze was received the previous year; and at least 200 days living in the home in the previous calendar year.6

The Assessment Freeze has a $514,500 full and true valuation limit for 2026, but a home above that limit stays eligible if the owner has previously qualified, so a longtime participant whose house has appreciated should keep reapplying. A surviving spouse may also still qualify for the Assessment Freeze if the other requirements are met.6 Applications for South Dakota's Assessment Freeze go to the county treasurer's office by April 1 each year, and its income and value limits are indexed annually under SDCL chapter 10-6A.6 Filing steps: South Dakota senior property tax relief. If the homeowner is a disabled veteran, also read about the South Dakota disabled veteran property tax exemption.

Borrowing Against the House

If the house is your parent's largest asset, it's natural to wonder whether it can pay for care. Every way of borrowing against it is secured by the home and shrinks the equity your parent or the heirs would keep, and the Consumer Financial Protection Bureau warns that a home equity loan or line of credit is qualified for on income and credit, a real barrier on a fixed retirement income, and usually has monthly payments.7

The federally insured Home Equity Conversion Mortgage (HECM) works differently. A HECM is available to homeowners 62 and older through a lender approved by the Federal Housing Administration (FHA) and needs no monthly mortgage payment, but interest and fees are added to the loan balance each month, so the balance grows while the equity falls. If a HECM borrower spends more than 12 consecutive months in a healthcare facility such as a nursing home or assisted living facility and no co-borrower lives in the home, anyone else living there must move out unless they can repay the loan or qualify as an Eligible Non-Borrowing Spouse.7 A HECM therefore suits care at home, or a couple where one spouse stays in the house, better than a permanent move into a facility. More detail: home equity options for senior care.

The Short Window Medicare Covers

Medicare does not cover custodial care, meaning non-medical help with bathing, dressing and using the bathroom, when that is the only care a person needs, and that is why Medicare does not pay for a long-term stay in a South Dakota nursing home or assisted living facility.8

What Medicare Part A does cover is short-term skilled nursing facility care after a hospital stay, up to 100 days per benefit period. For Medicare Part A to cover a skilled nursing facility stay, the patient generally needs a qualifying inpatient hospital stay of at least three consecutive days, and time under observation or in the emergency room before admission does not count, even overnight. Ask the hospital whether your parent is formally admitted. A doctor in an Accountable Care Organization approved for a Skilled Nursing Facility 3-Day Rule Waiver may make the three-day stay unnecessary, and a Medicare Advantage plan may also waive it. A patient who leaves a skilled nursing facility and re-enters the same or another one within 30 days does not need a new three-day stay, and an inpatient whose hospital switches them to observation status can ask for a fast appeal while still in the hospital.4

In 2026, a Medicare Part A skilled nursing facility stay costs $0 a day for days 1 through 20 after the $1,736 Part A deductible (which is not owed again if it was already paid for the hospital stay in the same benefit period), $217 a day for days 21 through 100, and the full cost after day 100, when Medicare pays nothing.4 Before day 21, ask the facility's business office which source will pay from day 101 on. See also Medicare plans and coverage in South Dakota.

How to Pay for Senior Care in South Dakota With Medicaid

When savings start to run low, South Dakota Medicaid becomes the central question. South Dakota Medicaid, administered by the Department of Social Services, covers long-term care, including nursing facility care and home and community-based services, for eligible older adults and people with disabilities. South Dakota is a 1634 state, so a person approved for SSI is automatically eligible for South Dakota Medicaid with no separate application.1

Income. For nursing facility and waiver long-term care, South Dakota Medicaid uses an income cap of 300 percent of the federal SSI benefit rate, about $2,982 a month for a single applicant in 2026.1 A South Dakota applicant whose income is over the $2,982 cap can still qualify through what South Dakota's rules call a Medicaid income trust, also known as a qualified income or "Miller" trust.1 Here is how a South Dakota Medicaid income trust works:

• What goes in: only your parent's own pension, Social Security or other income.
• What your parent keeps: each month the trustee pays out the income paid in, but not more than 300 percent of the maximum SSI standard benefit once your parent's other income is added.
• Where the rest goes: each month to the nursing facility or waiver provider.
• What South Dakota takes back: at your parent's death, South Dakota must be repaid from what remains, up to the total Medicaid paid on your parent's behalf.1

In plain terms, a South Dakota Medicaid income trust lets a parent over the $2,982 cap qualify without giving up the income, but that income still goes to the cost of care.1 Have a South Dakota elder-law attorney draft the trust.

Assets. South Dakota Medicaid's countable-resource limit for long-term care is $2,000 for an individual, and $3,000 for an individual with a spouse if both spouses begin receiving long-term care services in the same month. Not everything your parent owns counts toward that limit: South Dakota does not count one automobile of any value if it is used for necessary transportation, or household goods, personal effects and items essential to everyday living.1 Details: South Dakota Medicaid income and asset limits.

The home. South Dakota Medicaid treats home property under its own rule, and federal Medicaid law lets each state set its 2026 home-equity limit between a $752,000 minimum and a $1,130,000 maximum.9 Under federal Medicaid law, that equity limit does not apply at all while your parent's spouse, a child under 21, or a child who is blind or permanently and totally disabled lawfully lives in the home.9

Our guide to the South Dakota Medicaid personal needs allowance explains what a nursing home resident on Medicaid keeps each month. To start, see how to apply for South Dakota Medicaid, and if a denial arrives, read South Dakota Medicaid appeals and fair hearings the same day.

Money Given Away in the Last Five Years

A gift can feel ordinary at the time: a check toward a grandchild's tuition, a truck signed over to a son. South Dakota Medicaid's look-back runs back to the date 60 months before the first date on which the person is both institutionalized and applying for long-term care assistance.1 Under federal law, a transfer for less than fair market value inside that look-back triggers a penalty period, calculated by dividing the total uncompensated value by the state's average monthly private-pay cost of nursing facility care, during which Medicaid will not pay for nursing facility care or home and community-based waiver services. The rest of the person's Medicaid coverage is not withdrawn by the penalty.9

Some transfers carry no penalty. Federal Medicaid law lets a home pass to a spouse; to a child under 21 or a child who is blind or permanently and totally disabled; to a sibling who has an equity interest in the home and lived there at least one year before the institutionalization; or to a son or daughter who lived there at least two years before it and, as determined by the state, provided care that let the parent stay home.9 Before anyone signs a deed or writes a large check, talk it through with a South Dakota elder-law attorney.

What South Dakota Can Recover Later

This part is hard to read about while your parent is still here, but knowing it now gives your family choices. Like every state, South Dakota must seek recovery from the estate of someone who was 55 or older when they received long-term care Medicaid, for medical assistance consisting of nursing facility services, home and community-based services, and related hospital and prescription drug services. Federal law also lets a state, at its option, recover for other services under its Medicaid plan, so that long-term care list is a floor, not a ceiling.1

Federal law allows South Dakota's Medicaid estate recovery only after the death of a surviving spouse, and only when no surviving child is under 21, blind, or permanently and totally disabled.1 Federal law also requires every state Medicaid agency to have procedures to waive recovery where it would work an undue hardship.9 How South Dakota's estate recovery works in practice is in our guide to South Dakota Medicaid estate recovery.

Care at Home or in Assisted Living Through the HOPE Waiver

If your parent wants to stay home as long as possible, or would rather move to assisted living than a nursing home, the program to know is the HOPE waiver, South Dakota Medicaid's main home and community-based long-term care waiver.1 To qualify for the HOPE waiver in assisted living, a South Dakota applicant must be 65 or older (or, if under 65, blind or disabled), must medically require the level of care provided in a nursing home, must have monthly income no higher than 300 percent of the SSI benefit amount ($2,982 in 2026), and must have resources no higher than $2,000.5 What the waiver covers at home is in our guide to how the HOPE waiver covers home care in South Dakota.

Budget for one cost the waiver will not carry. Federal rules bar Medicaid from paying room and board in a home and community-based waiver, apart from room and board that is part of respite care in a state-approved facility or, in waivers that allow personal caregivers, a reasonable share of rent and food for a live-in caregiver. A South Dakota assisted living resident on the HOPE waiver therefore still pays for room and board.5

Assisted living centers in South Dakota are licensed by the South Dakota Department of Health under South Dakota Codified Laws chapter 34-12 and Administrative Rules of South Dakota (ARSD) article 44:70. Under ARSD 44:70:04:13, each new resident needs written orders from a physician, physician assistant or nurse practitioner, plus a physical examination certifying the resident is in reasonably good health, and the center must evaluate the resident's care needs at admission, 30 days later and every year after.5 More on choosing a setting: assisted living in South Dakota.

If a relative is doing the caregiving, see how to get paid as a family caregiver in South Dakota, caregiver programs in South Dakota and respite care in South Dakota.

When a Husband or Wife Stays at Home

Watching one parent move into care while the other stays home brings a particular fear: that the spouse at home will be left with nothing. When one spouse needs care, federal spousal-impoverishment rules let the at-home spouse in South Dakota keep a community spouse resource allowance of at least the $32,532 minimum resource standard and up to the $162,660 maximum in 2026.1 The rest of the rules, including what the at-home spouse can keep from income, are in our guide to South Dakota Medicaid spousal impoverishment rules. Read it before either spouse moves money.

If Your Parent Served in the Military

A veteran or a veteran's surviving spouse may be able to add VA Aid and Attendance to the plan, and the current rules and rates are in our guide to VA Aid and Attendance in South Dakota. Our overview of VA benefits you can use for senior care in South Dakota covers the rest.

Long-Term Care Insurance

If your parent ever bought a long-term care insurance policy, find it now and read its benefit triggers and daily maximum. Per-diem benefits from a tax-qualified long-term care insurance policy are excluded from federal income up to the greater of $430 a day for 2026 or the actual cost of care.10 Premiums on a tax-qualified long-term care policy count as a federal medical expense only up to age-based limits, and on Schedule A they reduce tax only for medical expenses above 7.5 percent of adjusted gross income.10

A long-term care insurance partnership policy can shelter assets from Medicaid, but a partnership is a state option, and it exists only where the state has an approved Medicaid state plan amendment.10 Before buying a policy for that reason, ask South Dakota Medicaid in writing whether it is a partnership policy. More: long-term care insurance.

If your parent has Medicare and a modest income, also check whether your parent qualifies for South Dakota Medicare Savings Programs.

Learn More

Find personalized help paying for senior care in South Dakota at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.