South Dakota Medicaid Estate Recovery 2026 (Expanded Estate)

South Dakota is an expanded-estate state for Medicaid estate recovery, so jointly held property, life estates, and transfer-on-death accounts are not automatically safe from recovery. After a Medicaid recipient dies, the South Dakota Department of Social Services (DSS) may recover what Medicaid paid not only from the probate estate but also from assets that pass outside probate, under SDCL 28-6-23 and Administrative Rule 67:48:02:01.1 That reach changes the planning math for families.

In This Guide

• The 60-Second Version
• Why South Dakota Medicaid Estate Recovery Reaches Beyond Probate
• Who Is Subject to Recovery
• What DSS Can Recover From: The Asset-by-Asset Walkthrough
• Who Is Protected From Recovery
• The Small-Estate Affidavit
• The Undue-Hardship Waiver
• How to Respond If You Receive a Claim
• Planning Around South Dakota Medicaid Estate Recovery
• Worked Examples
• Common Pitfalls
• Frequently Asked Questions
• Where to Get Help

The 60-Second Version

• Federal law (42 U.S.C. 1396p(b), enacted by OBRA '93) requires every state to recover from the estate of a deceased Medicaid recipient who was 55 or older when they received long-term-care services, or who, at any age, was a nursing-home or other medical-institution inpatient the state determined, after notice and a chance for a hearing, could not reasonably be expected to return home.2
• South Dakota reaches further than that federal floor. Its statute also makes Medicaid paid for an institutional inpatient of any age a debt, and DSS says no age restriction limits which estates it can recover from.1
• Federal law lets a state choose to recover from non-probate assets too, and South Dakota has adopted that expanded definition. The recoverable estate includes assets passing through joint tenancy, tenancy in common, survivorship, life estate, or living trust (ARSD 67:48:02:01).1,2
• Under SDCL 43-46-1, a surviving joint owner is liable for the deceased joint owner's debts, under the conditions that chapter sets, so joint-tenancy property is reachable for recovery.1
• Recovery is deferred, not waived, while a surviving spouse is living or a surviving child is under 21, blind, or disabled, and DSS says even that deferral falls away if the recipient owned or transferred assets that would have made them ineligible. After the spouse dies, DSS may file a claim against the surviving spouse's estate, and the surviving spouse has only six months from the recipient's death to petition DSS to cap that liability.1,2
• A properly drafted irrevocable trust funded before the 60-month look-back, in which the recipient kept no legal title or interest, stays outside the recoverable estate.1,3
• When DSS uses the small-estate affidavit, it claims only on estates under $100,000 and only for the long-term-care, hospital, and prescription-drug services DSS lists. That limit governs the affidavit route, not whether larger estates owe a claim.1
• Every state must offer an undue-hardship waiver.2 South Dakota law directs DSS to set hardship limitations on recovery by rule, so ask DSS for its hardship process when a claim arrives.1
• A narrow federal carve-out keeps Medicare Savings Program cost-sharing (Medicare premiums, coinsurance, and deductibles) out of a state's optional recovery, but it does not shield nursing-home or other long-term-care costs, or the home.2
• A costly mistake in South Dakota is assuming a jointly titled house or a beneficiary account is automatically safe. In an expanded-estate state, it often is not.1

Why South Dakota Medicaid Estate Recovery Reaches Beyond Probate

Medicaid estate recovery is a federal requirement, not a South Dakota invention. Federal law at 42 U.S.C. 1396p(b), enacted by the Omnibus Budget Reconciliation Act of 1993 (OBRA '93), requires every state Medicaid program to seek recovery from the estate of a deceased recipient who was 55 or older when they received nursing facility services, home and community-based services (HCBS), and related hospital and prescription-drug services. It also requires recovery, at any age, from a nursing-home or other medical-institution inpatient whom the state has determined, after notice and an opportunity for a hearing, cannot reasonably be expected to be discharged and return home.2

Here is where states diverge. Federal law sets a floor for what counts as the "estate": it must include the probate estate. But it also gives each state the option to expand the estate definition to non-probate assets such as joint tenancy, tenancy in common, survivorship interests, life estates, and living trusts. A state that takes only the floor is a "probate-only" recovery state. A state that takes the option is an "expanded-estate" state.2

South Dakota took the option. South Dakota Administrative Rule 67:48:02:01 defines the recoverable estate as "all real and personal property and other assets included within the individual's estate as defined in SDCL 29A-1-201, and any other real and personal property or other assets in which the individual had any legal title or interest at the time of death, including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement." That language mirrors the federal expanded-estate option almost word for word.1

Two further South Dakota provisions reinforce the reach:

• SDCL 28-6-23 makes any Medicaid payment for a person 55 or older for nursing facility services, HCBS, intermediate care facility services for individuals with intellectual disabilities, hospital, and prescription-drug services "a debt due the Department," and separately makes any Medicaid payment for an inpatient of a nursing facility or other medical institution, at any age, a debt as well. ARSD 67:48:02:05 directs that, once the recipient dies, "the department shall seek to recover from the individual's estate the benefits paid on behalf of the individual."1
• SDCL 43-46-1 provides that when a joint owner dies, "the surviving joint owner or owners shall be liable for the debts and obligations of the deceased joint owner," under the conditions set out in that chapter. That is the legal hook that lets DSS reach jointly titled property the surviving co-owner thought was protected.1

The practical takeaway: in South Dakota, the common assumption that "if it avoids probate, it avoids Medicaid" is wrong. The state's estate definition was written specifically to reach beyond probate.1

Who Is Subject to Recovery

South Dakota's statute, SDCL 28-6-23, creates two separate debts that DSS can collect from a recipient's estate:

1. Institutional care, at any age. Any Medicaid payment for someone who was an inpatient in a nursing facility, an intermediate care facility for individuals with developmental disabilities, or another medical institution is a debt due the Department.
2. Listed services, at 55 or older. Any Medicaid payment on behalf of a person 55 or older for nursing facility services, home and community-based services, intermediate care facility services for individuals with intellectual disabilities, hospital services, or prescription-drug services is a debt due the Department.1

So South Dakota recovery is not limited to recipients who were 55 or older. Asked whether any age restriction limits which estates it can reach, DSS answers no: it may recover from any estate if the individual was a recipient after July 1, 1994. What the 55-and-older provision limits is which services DSS can claim for. When it claims on the estate of someone who was 55 or older, DSS says it is restricted to the services listed above.1

Federal law sets the floor beneath this. It requires every state to recover for nursing facility, home and community-based, and related hospital and prescription-drug services received at 55 or older, and, at any age, from an institutional inpatient the state has determined, after notice and an opportunity for a hearing, cannot reasonably be expected to return home.2

One caution before you assume a claim cannot reach your family. Notice that the 55-and-older list names hospital and prescription-drug services on their own, not only nursing-home care. If a claim arrives on an estate you expected to be exempt, do not dismiss it as an error: ask DSS in writing which services and dates it is claiming for, and have an elder-law attorney measure the claim against the SDCL 28-6-23 lists.1

To qualify for long-term-care Medicaid in the first place, a single applicant's monthly income must be at or below $2,982 (300% of the 2026 SSI benefit amount), and countable resources must be at or below $2,000. South Dakota treats that income limit as a hard cap, so an applicant over it needs a Medicaid income trust (what other states call a Qualified Income Trust or Miller trust) to hold the excess.3 These are eligibility rules, separate from recovery, but they tell you which families end up facing a recovery claim: those whose loved one needed Medicaid to pay for a nursing home or waiver care.

What DSS Can Recover From: The Asset-by-Asset Walkthrough

Because South Dakota uses the expanded-estate definition, the asset-by-asset picture looks very different from a probate-only state. The general rule: if the recipient held any legal title or interest in the asset at the moment of death, it is within reach, even if the asset passes outside probate, as the table below details.1

Joint-ownership exposure has a ceiling. SDCL 43-46-1 makes the surviving joint owner liable for the deceased owner's debts, but SDCL 43-46-4 limits that liability to the value of what the deceased joint owner contributed to the jointly owned property, measured at the time of death, and subject to all homestead and legal exemptions in the deceased owner's jointly owned property. A surviving co-owner who paid into a joint account or a jointly titled home is not liable for the part they contributed themselves, so keep records of who put in what.1

The irrevocable-trust line is the key planning distinction. The expanded definition reaches assets "in which the individual had any legal title or interest at the time of death." A properly drafted irrevocable trust, where the recipient is not a trustee and retains no power to revoke, amend, or benefit from the principal, holds property in which the recipient has no remaining interest, so it falls outside the recoverable estate. A revocable living trust or a retained life estate is the opposite: the recipient kept an interest, so DSS can reach it.1

A caution on beneficiary designations. In a probate-only state, a POD/TOD account or a beneficiary-designated IRA is a reliable shield. In South Dakota's expanded-estate framework, do not assume it is. DSS's authority extends to assets conveyed to a survivor or assign through "survivorship, life estate, living trust, or other arrangement." Whether a particular beneficiary-designated account is reached can depend on the asset and the facts, so confirm the treatment of a specific account with DSS or an elder-law attorney rather than assuming it is safe.1

Who Is Protected From Recovery

Federal law and South Dakota rule provide protections that pause or block recovery. These are the genuine shields in an expanded-estate state.

Surviving spouse, minor child, or disabled child (deferral). Under ARSD 67:48:02:05, "the department may not seek recovery from the individual's estate if the individual's spouse is still living or if the individual has a surviving child who is under age 21 or is blind or disabled." This mirrors the federal mandate at 42 U.S.C. 1396p(b)(2).1,2 These prohibitions are not absolute in South Dakota: DSS states that if it finds the recipient owned or transferred property or other assets that would have made them ineligible for Medicaid, it will seek to recover the full amount of benefits paid, and the spouse and child prohibitions do not apply.1

But read the word carefully: recovery is deferred, not permanently waived. While the spouse is alive, DSS cannot recover. After that, SDCL 28-6-23 expressly lets the Department "file a claim against the estate of the surviving spouse of a medical assistance recipient to satisfy the debt." So a couple cannot defeat recovery simply by leaving everything to the surviving spouse; the claim follows the assets. For this purpose the statute defines a surviving spouse as someone who was married to the recipient when the recipient became eligible for Medicaid, did not divorce the recipient, and has not remarried since the recipient's death.1

The six-month petition that caps the surviving spouse's exposure. South Dakota gives the surviving spouse a way to limit that liability, and it is easy to miss because nothing in the deferral itself announces it. Under SDCL 28-6-23.1, the financial responsibility of the surviving spouse's estate "may not exceed the value of the estate of the surviving spouse as of the date of death of the medical assistance recipient," and the petition claiming that limit "shall be filed with the Department of Social Services within six months of the date of death of the medical assistance recipient." ARSD 67:48:02:08 directs that the petition goes on a form available from the Department, completed and signed by the surviving spouse or the spouse's authorized representative or legal guardian. Note what the cap is measured against: the value of the surviving spouse's estate as of the recipient's date of death, figured as if the surviving spouse had died at the same moment as the recipient, with property valued at 100 percent of the county's tax valuation. Calendar that six-month date the week the recipient dies, and request the form from DSS Estate Recovery at 605.773.3653.1

Home protection through qualifying residency. Federal law adds a home-specific protection, but it is narrower than it is usually described. Under 42 U.S.C. 1396p(b)(2)(B) it operates in the case of a lien on the home imposed under 1396p(a)(1)(B), and it bars adjustment or recovery only while a qualifying relative is lawfully residing in the home and has lawfully resided there on a continuous basis since the date the recipient was admitted to the medical institution. Two relatives qualify:2

• A sibling of the recipient who was residing in the home for at least one year immediately before the date of that admission. The subsection does not itself require the sibling to hold an equity interest in the home; that condition belongs to different provisions.
• A son or daughter of the recipient who was residing in the home for at least two years immediately before that admission and who establishes to the state's satisfaction that they provided care that permitted the recipient to live at home rather than in an institution or facility.2

The continuous-residence condition is the one families lose: the protection runs only while the relative has lived there continuously since the admission, so keep proof of unbroken residence from the admission date forward, such as utility bills, mail, and a driver's license at that address. Losing it does not by itself expose the home. Recovery still cannot be made while a surviving spouse is alive or a surviving child is under 21, blind, or permanently and totally disabled, and the hardship waiver remains available.2 Whether South Dakota extends a similar protection to a home on which no such lien was placed is a question of state law, so ask DSS directly.2

Long-term-care partnership reduction. The Long-Term Care Partnership program, provided for at Section 6021 of the Deficit Reduction Act of 2005 and codified at 42 U.S.C. 1396p(b)(1)(C), disregards an amount equal to the long-term-care benefit payments actually made under a qualifying partnership policy, both in determining Medicaid eligibility and in Medicaid estate recovery. It is a state option rather than a national entitlement: states may establish a partnership, and one exists only where the state has an approved Medicaid state plan amendment providing for the disregard, so the policy also has to have been issued no earlier than that amendment's effective date and cover someone who was a resident of the state when coverage first took effect.4 South Dakota's rule sets how that plays out at recovery. Under ARSD 67:48:02:05, if a long-term care partnership policy approved by the South Dakota Division of Insurance paid for services, DSS must reduce its estate claim by the assets that were disregarded when Medicaid eligibility was determined, minus any of those assets disposed of before death, and the reduction can never exceed what the policy paid. If the recipient held a partnership policy, bring the policy, its benefit-payment records, and the eligibility notice showing the disregard to DSS when you respond to the claim.1

Medicare Savings Program carve-out, and its limits. Federal law at 42 U.S.C. 1396p(b)(1)(B)(ii) lets a state choose to recover for any state-plan item or service from a recipient who was 55 or older, but that optional category excludes Medicaid payments for Medicare cost-sharing (Medicare premiums, coinsurance, and deductibles) made for Medicare Savings Program enrollees. The carve-out stops there. It does not reach the nursing facility, home and community-based, and related hospital and prescription-drug services every state must recover for, and it does not put a home beyond reach. If a claim lists Medicare premiums or cost-sharing, ask DSS which recovery basis it is relying on.2

The Small-Estate Affidavit

South Dakota's small-estate affidavit is easy to misread as a $100,000 "protection threshold." It is not. It is a collection mechanism with a ceiling.1

Per the DSS Estate Recovery program, when DSS uses the affidavit process for small estates, it may only claim on estates of less than $100,000, and only for nursing facility services, home and community-based services, intermediate care facility services for individuals with intellectual disabilities, hospital services, and prescription-drug services. The affidavit statute itself, SDCL 29A-3-1201, applies where the whole estate, less liens and encumbrances, does not exceed $100,000. In other words, the affidavit is a streamlined route for small estates, and when DSS uses it, the claim is limited to estates under $100,000 and to those listed services.1

This does not mean estates of $100,000 or more escape recovery. The debt under SDCL 28-6-23 and the expanded-estate definition apply whatever the estate's size, so the $100,000 figure caps the affidavit shortcut, not the state's overall recovery right.1

The Undue-Hardship Waiver

Federal law at 42 U.S.C. 1396p(b)(3) requires every state to establish procedures to waive recovery where it would work an undue hardship, judged on criteria the federal Secretary of Health and Human Services sets.2

South Dakota's own statute builds this in. SDCL 28-6-23 directs the secretary of social services to adopt rules that "establish hardship limitations on recoveries," so a hardship route exists in South Dakota by law. We could not find a published South Dakota source that sets out its grounds or the steps to apply, and the DSS estate-recovery page does not describe one. So ask DSS Estate Recovery directly for its hardship limitation when you respond to a claim, rather than reading the rules above as offering no way out.1

Federal guidance shows the kind of case hardship is meant for. HHS reports that states "have considerable discretion in their definition of hardship," and that federal guidelines point to two situations:

1. A homestead of modest value.
2. Income-producing property, such as a farm or family business, that is essential to the support of surviving family members.2

Document the hardship with specifics: for a modest homestead, evidence of the home's value; for a farm or family business, evidence that the family depends on it for support. An elder-law attorney can help you put the request together.

How to Respond If You Receive a Claim

If your family member received long-term-care Medicaid and has died, DSS may present a recovery claim. Work through these steps:

Contact SD DSS Estate Recovery at 605.773.3653 or Recoveries@state.sd.us.1

Planning Around South Dakota Medicaid Estate Recovery

In a probate-only state, the planning playbook is to move assets out of probate. In South Dakota, that playbook largely does not work, because the expanded-estate definition follows assets out of probate. Effective planning therefore looks different.1

1. Irrevocable trusts, funded well ahead of need. The most reliable structure is a properly drafted irrevocable trust in which the recipient retains no title or interest. Because the recipient has no interest at death, the assets are outside the recoverable estate. The trust must be funded before the 60-month look-back to avoid an eligibility transfer penalty, and it must be drafted by elder-law counsel so no retained interest creeps in.1,3

2. The caregiver-child home transfer. Federal law at 42 U.S.C. 1396p(c)(2)(A)(iv) lets a parent transfer the home during life, without a transfer penalty, to an adult child who lived in the home for at least two years immediately before institutionalization and who, as determined by the state, provided care that kept the parent out of a facility. A completed lifetime transfer removes the home from the recipient's estate.2

3. Long-term-care partnership insurance. A qualified Long-Term Care Partnership policy both pre-funds care (reducing reliance on Medicaid) and earns a dollar-for-dollar asset disregard, equal to the benefits the policy paid, when Medicaid eligibility is determined.4 In South Dakota, DSS must then reduce its estate claim by the disregarded assets the recipient still held at death, capped at what the policy paid, and the policy must be a partnership policy approved by the South Dakota Division of Insurance.1 To qualify under federal law, the policy must be a tax-qualified LTC policy meeting the model standards, with compound inflation protection if bought before age 61, some inflation protection if bought from 61 through 75, and optional inflation protection at 76 or older.4

4. Spend-down with a care strategy. Spending countable savings on the recipient's own care reduces both the assets counted for eligibility and the estate left for recovery. Converting cash into assets South Dakota does not count for eligibility, such as repairs to the home, one vehicle used for necessary transportation, or an irrevocable prepaid burial contract, helps with eligibility but leaves that value in the estate.3 The home and the vehicle remain recoverable, and DSS can reach any funds left in a prepaid burial trust or account after reasonable burial expenses are paid.1

What does not work in South Dakota: simply re-titling the house into joint tenancy with a child, adding a POD beneficiary to the bank account, or moving assets into a revocable living trust. Each of these avoids probate, but none of them removes the recipient's interest, so DSS can still reach the asset. Always plan with an elder-law attorney before transferring anything.1

Worked Example 1: The Jensen Family, Joint-Tenancy Home

This is an illustrative scenario. Margaret Jensen, 81, of Sioux Falls, added her son David to the deed of her home as a joint tenant with right of survivorship in 2022, believing it would keep the house away from Medicaid. She entered a nursing facility in 2023, qualified for Medicaid, and died in 2025.1

• Home: $240,000 fair market value, held in joint tenancy with David1
• Bank account: $9,000, sole name1
• Medicaid paid: roughly $130,000 in nursing facility care1

The mistake: the family assumed the joint-tenancy home was protected because it passed to David outside probate. In a probate-only state, it would have been. In South Dakota, it is not. Under ARSD 67:48:02:01 the recoverable estate includes assets conveyed through joint tenancy, and under SDCL 43-46-1 David, as the surviving joint owner, is liable for Margaret's debt to DSS. The home is within reach.1

Outcome: DSS can pursue recovery against the home's value, up to the Medicaid amount and limited to the value Margaret contributed to the jointly owned home (SDCL 43-46-4), because no surviving spouse or protected child defers the claim and no hardship applies. Had Margaret instead placed the home in a properly drafted irrevocable trust in 2017, more than 60 months before she entered the nursing facility and applied, retaining no interest, the result would have been the opposite, and the home would have been outside recovery.1,3

Worked Example 2: The Hofer Family, Surviving Spouse

This is an illustrative scenario. Walter Hofer, 79, of Aberdeen, entered a nursing facility in 2023 and received Medicaid until his death in 2025. His wife Ruth, 77, survives him. Their home, held jointly, passed to Ruth, along with their joint accounts. Medicaid paid roughly $115,000.1

While Ruth is alive: under ARSD 67:48:02:05, DSS may not seek recovery from Walter's estate because his spouse is still living. The claim is deferred, and Ruth keeps the home and accounts without interference.1

After Ruth dies: under SDCL 28-6-23, DSS may file a claim against Ruth's estate to satisfy Walter's debt. So the deferral bought time and protected Ruth for life, but it did not erase the claim. Ruth's most valuable move is in the first six months. If she petitions DSS on the department's form within six months of Walter's death, SDCL 28-6-23.1 caps her estate's responsibility at the value of her estate as of Walter's date of death. Miss that window and the cap is not there to claim later. Beyond that, if the family wants the assets to pass to the next generation free of recovery, Ruth should plan during her lifetime (for example, by consulting elder-law counsel about an irrevocable trust funded well ahead of any future need).1

Lesson: spousal deferral is powerful protection during the surviving spouse's life, but in South Dakota it is a deferral, not a permanent escape.1

Common Pitfalls

1. Assuming "avoids probate" means "avoids Medicaid." The expanded-estate definition was written to reach non-probate transfers.1
2. Re-titling the house into joint tenancy with a child. Joint tenancy does not protect the home; the surviving joint owner is liable under SDCL 43-46-1, on the conditions that chapter sets.1
3. Trusting a revocable living trust to shield assets. A revocable trust keeps the recipient's interest, so DSS can reach it. Only an irrevocable trust with no retained interest works.1
4. Reading the $100,000 affidavit limit as a protection threshold. It caps the small-estate affidavit shortcut; it does not waive recovery on larger estates.1
5. Treating spousal deferral as permanent, and letting the six-month petition lapse. SDCL 28-6-23 lets DSS claim against the surviving spouse's estate, and the SDCL 28-6-23.1 cap on that liability has to be petitioned for within six months of the recipient's death.1
6. Not questioning Medicare Savings Program cost-sharing in a claim. Federal law keeps Medicare premiums and cost-sharing paid for Medicare Savings Program enrollees out of a state's optional recovery, so ask DSS what basis it relies on if they appear. The carve-out does not cover nursing-home or other long-term-care costs.2
7. Letting a claim notice sit. If the notice sets a response date, calendar it the day the notice arrives.
8. Funding an irrevocable trust too late. It must be funded before the 60-month look-back to avoid an eligibility transfer penalty.3
9. Overlooking the home-residency protections, or assuming they survive a gap. Where the state placed a lien on the home, a qualifying sibling or caregiver child can protect it, but only with lawful residence there continuously since the recipient's admission; document the whole stretch, not just the years before.2
10. Skipping the partnership-policy reduction. If a Long-Term Care Partnership policy approved by the South Dakota Division of Insurance paid for care, DSS must reduce its claim by the assets disregarded at eligibility that remained at death, never by more than the policy paid.1

Where to Get Help

If you have questions about South Dakota Medicaid estate recovery, hardship waivers, partnership-policy reductions, or planning options, start with these resources.

Learn More

Find personalized help navigating South Dakota Medicaid estate recovery 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.