South Dakota Medicaid Spousal Impoverishment 2026: CSRA Guide

When one spouse needs nursing facility care and the other stays home, South Dakota Medicaid does not make the couple spend down everything before coverage begins. The federal spousal impoverishment rules protect the at-home spouse's assets and income, and this guide walks you through exactly how much your spouse can keep in 2026.

How South Dakota Medicaid Spousal Impoverishment Works

When one spouse enters a nursing facility or qualifies for a home- and community-based services (HCBS) waiver, South Dakota Medicaid applies the federal spousal impoverishment protections found at 42 U.S.C. § 1396r-5. The idea behind these rules is simple: the law does not want the healthy spouse left destitute because their partner needs long-term care. So the protections split into two parts, one that shields a share of the couple's assets and one that shields a share of the couple's income. South Dakota's rules do not apply them to a spouse entering an assisted living facility without HCBS services, or an adult foster care facility; those cases follow the ordinary resource rules.2

South Dakota Medicaid is administered by the Department of Social Services (DSS), and it operates as an income-cap state. To qualify for long-term care coverage, the institutionalized spouse must have income at or below $2,982/month, which is 300% of the 2026 SSI Standard Benefit Amount. An applicant whose income runs over that limit is not simply disqualified, but must route the excess through a Qualified Income Trust (also called a Miller Trust) before Medicaid will pay for care.2

It helps to keep the vocabulary straight from the start. The spouse entering long-term care is the institutionalized spouse. The spouse who remains at home is the community spouse. The community spouse's asset and income protections are calculated on their own track, separate from the income test that decides whether the institutionalized spouse is eligible in the first place.

How Much Can the Community Spouse Keep? (CSRA vs. MMMNA)

South Dakota's protections come in two flavors, and they are easy to mix up, so here is the contrast at a glance. One rule protects a pool of savings; the other protects a monthly income stream. The table below shows how they differ.

Neither maximum is an absolute cap: federal law lets a fair hearing or a court order raise the community spouse's protection above either one, as the sections below explain.1,4

How Much of the Couple's Savings Can the Spouse Keep? (CSRA)

The Community Spouse Resource Allowance (CSRA) is the portion of the couple's countable assets that the community spouse gets to keep when the institutionalized spouse applies for South Dakota Medicaid long-term care coverage. Everything else counts toward the institutionalized spouse's own eligibility and generally has to be spent down first.1,4

The Snapshot Date

Before South Dakota calculates the CSRA, the couple's combined countable assets are added up as of a snapshot date, counting anything either spouse owns. The snapshot date is the beginning of the institutionalized spouse's first continuous period of institutionalization. South Dakota's spousal rules apply when that spouse is expected to stay in a hospital, nursing facility, or intermediate care facility, or to keep receiving HCBS waiver services, for at least 30 consecutive days.4,2

The snapshot fixes the spousal share: one-half of the couple's total countable assets on that date. At the Medicaid application, though, DSS looks at what the couple owns then, and everything above the CSRA counts as available to the institutionalized spouse. So the snapshot sets how much the community spouse can protect, and the application date sets how much has to be spent down. Any planning a couple wants to do needs to happen with both dates in mind.4

The Half-of-Assets Formula

South Dakota uses the federal formula. DSS assesses the couple's combined countable resources to determine the community spouse's share, and that share is half of the couple's total countable assets at the snapshot date, subject to a floor and a standard maximum. So what a community spouse keeps depends on what the couple actually owns.2

For 2026, the floor and standard maximum on that half-of-assets result are:1

• Minimum: $32,532 (if half the assets is less than this, the community spouse can still keep up to $32,532).1
• Standard maximum: $162,660 (if half the assets exceeds this, the formula stops at $162,660).1

The $162,660 figure limits the half-of-assets formula, not the allowance itself. Federal law lets a fair hearing raise the CSRA when the protected assets would not produce enough income to bring the community spouse up to her MMMNA, and a court order transferring resources to her can also set a higher amount. Without a hearing or court order, the formula result is the number that matters: half of a modest estate is protected only up to that half, and the $32,532 floor protects couples with very little.1,4

A worked example illustrating the formula:

The figures below are hypothetical and shown only to illustrate how the calculation works. They are not a real case and not a prediction of your own result.

A couple in Sioux Falls has $150,000 in joint savings and a $60,000 CD, for a total of $210,000 in countable assets. Half of that is $105,000, which falls between the floor and the standard maximum, so the community spouse keeps $105,000. The institutionalized spouse's share is the other $105,000. Because South Dakota allows a single applicant just $2,000 in countable assets, roughly $103,000 has to be spent down before Medicaid eligibility is established.2

What Counts as a Countable Asset?

Both spouses' assets are pooled, regardless of whose name is on the account and regardless of state marital-property law.4 South Dakota's resource limit takes in both liquid and nonliquid resources, and DSS names items such as:2

• Checking and savings accounts
• Certificates of deposit (CDs)

Other holdings, liquid or not, can count too unless a rule excludes them, and how DSS treats a specific one can turn on its details, so confirm each uncertain item with DSS before you assume it counts or doesn't.2

Assets that are exempt include the home (subject to the equity rules below), one vehicle of any value used for necessary transportation, household goods and personal effects, and irrevocable prepaid burial contracts.2

How Much Income Can the At-Home Spouse Keep? (MMMNA)

The Minimum Monthly Maintenance Needs Allowance (MMMNA) is the income protection for the at-home spouse. Where the CSRA guards a pool of savings, the MMMNA guards a monthly income floor, making sure the community spouse has enough coming in each month to cover basic living expenses.1

South Dakota's rule sets the community spouse's minimum allowance at 150 percent of the federal poverty level for two people, divided by twelve, and limits the combined spousal allowances to $4,066.50 unless a court orders support or a fair hearing finds financial duress.2 For 2026 the CMS standards are:1

• Floor (minimum MMMNA): $2,705.00/month (effective 7/1/2026 through 6/30/2027).1
• Standard maximum: $4,066.50/month (effective from 1/1/2026).1

The Name-on-the-Check Rule

Under federal law (42 U.S.C. § 1396r-5(b)), no income of the community spouse is treated as available to the institutionalized spouse while he is in the institution, however large it is. Income paid solely in one spouse's name counts only for that spouse, and income paid in both names generally counts half to each, which is why the name on the check matters so much when a couple has income in both names.1

Income Diversion

When the community spouse's own income falls below the MMMNA floor, South Dakota allows an income diversion (the community spouse monthly income allowance) from the institutionalized spouse's income to bring her up to that floor. South Dakota's rule adds a condition: the allowance is not permitted if the institutionalized spouse does not actually make that income available to her.2,4

Here is how the money moves. The institutionalized spouse's income is first reduced by the Personal Needs Allowance ($100/month in South Dakota).2 Next, enough is diverted to the community spouse to bring her up to the MMMNA floor.4 After any other allowable deductions, such as a family allowance or incurred medical expenses, the income that remains goes toward the cost of his care, and South Dakota Medicaid covers the rest.5

Worked example illustrating income diversion:

The figures below are hypothetical and shown only to illustrate how the calculation works. They are not a real case and not a prediction of your own result.

Suppose the community spouse receives $1,400/month from Social Security, and the MMMNA floor is $2,705.00/month, leaving her short by $1,305.00/month.1 The institutionalized spouse receives $2,300/month from Social Security and a pension. After the $100 Personal Needs Allowance is deducted, $2,200 remains.2 Of that, $1,305.00 is diverted to the community spouse to close her shortfall. Any other allowable deductions come out of the remaining $895, and the balance goes toward the cost of his care, with South Dakota Medicaid covering the rest.5

Going Above the MMMNA Floor

The community spouse's allowance can rise above the $2,705.00 floor, up to the $4,066.50 standard maximum, when she has excess shelter costs.1 Federal law adds up her rent or mortgage payment (principal and interest), property taxes, homeowners insurance, any condominium or cooperative maintenance charge, and the state's standard utility allowance, and whatever that total exceeds a shelter standard is added to her allowance.4 For the year starting July 1, 2026, CMS puts that shelter standard at $811.50 a month in every state except Alaska and Hawaii, so it applies in South Dakota.1 Beyond the standard maximum, her allowance rises only if a fair hearing finds exceptional circumstances causing significant financial duress, or a court orders the institutionalized spouse to pay her support.1,4

Is the Home at Risk in South Dakota?

The home is excluded from countable resources while it remains the principal place of residence, up to an equity limit. For applications DSS receives after December 31, 2023, South Dakota's rule sets that limit at $752,000, the same as the 2026 federal minimum.2,3

When the community spouse lives in the home, federal law does not apply the equity limit at all: under 42 U.S.C. § 1396p(f)(2) it is lifted whenever the applicant's spouse, a child under 21, or a blind or permanently and totally disabled child is lawfully living there, so home equity of any amount does not by itself disqualify the applicant.3 South Dakota's own rule is worded more narrowly and, read literally, requires the spouse to be blind or disabled. If DSS raises the equity limit while a healthy spouse lives in the home, point to the federal provision.2 The limit matters most for a single applicant with a high-value home and no qualifying relative living there, and even then federal law allows a reverse mortgage or home equity loan to bring the equity down.3

South Dakota applies a 60-month lookback on asset transfers, counted back from the first date the applicant is institutionalized and applies for long-term care.2 If any assets were given away or transferred for less than fair market value within those five years, consult an elder law attorney, because those transfers can make the applicant ineligible for a period.2

Which Assets Are Exempt?

Beyond the home, South Dakota excludes several asset categories from the Medicaid eligibility calculation:2

• Home (excluded up to the equity limit; with a spouse lawfully living there, federal law lifts the limit)3
• One vehicle of any value, if used for necessary transportation
• Household goods, personal effects, and items essential to everyday living
• Irrevocable prepaid burial contracts

Does South Dakota Require a Miller Trust?

Because South Dakota is an income-cap state, an institutionalized spouse whose monthly income exceeds $2,982 is ineligible for nursing facility or HCBS waiver coverage unless the excess is handled through a trust.2 South Dakota's rules call it a Medicaid income trust, the state's version of a Qualified Income Trust (Miller Trust). The $2,982 limit is a hard cap, not a spend-down threshold, so the trust is the route for income above it.2

Under the state rule, the trust may hold only the beneficiary's own pension, Social Security, or other income. Each month the trustee must pay him an amount that, together with income kept outside the trust, stays within 300 percent of the SSI benefit, and must pay the remaining income to the nursing facility or waiver provider, apart from trust administration costs and health items that Medicaid and the facility do not cover. When he dies, DSS receives what is left, up to the total Medicaid paid on his behalf.2 An elder law attorney should draft it so the terms meet the state's requirements.

For more on income eligibility, see South Dakota Medicaid eligibility and income limits.

How Do You Apply for South Dakota Medicaid Long-Term Care?

South Dakota Medicaid for long-term care is administered by the South Dakota Department of Social Services (DSS), and the CSRA and MMMNA are calculated as part of the nursing home Medicaid application. A couple does not have to wait until they are ready to file a full application to get clarity, though. Either spouse, or the couple's authorized representative, can ask DSS for a resource assessment on its own, which documents the couple's combined resources at the snapshot and tells the couple where they stand before any spend-down begins.2 If the request is not part of an application, federal law lets the state charge a fee covering the reasonable cost of the assessment.4

The application itself generally follows the sequence below. For a full walkthrough, see the South Dakota Medicaid how-to-apply guide.

What Medicaid Planning Strategies Should Couples Consider?

South Dakota's half-of-assets formula gives couples a solid baseline, but families whose half-share would run past the $162,660 standard maximum sometimes have room for additional planning.1 A few approaches to raise with an attorney:

• Converting countable assets to exempt ones: making home improvements, prepaying an irrevocable burial contract, or purchasing a needed vehicle can shift value out of the countable column.
• Community-spouse annuities: converting excess countable assets into an income stream with an annuity that meets the federal rules the Deficit Reduction Act of 2005 added. The state must be named as remainder beneficiary in the right position, and the annuity must be irrevocable, nonassignable, actuarially sound, and paid in equal amounts, or it can be treated as a transfer.6
• Fair hearing: if the CSRA would not produce enough income to bring the community spouse up to her MMMNA, a fair hearing can raise the resource allowance above the standard maximum. The state must first count all of the institutionalized spouse's income that could be made available to her (the "income first" rule), so this route helps most when his income is also low.1,4

For broader options, see Medicaid planning strategies. Couples with significant assets above the standard maximum should consult a South Dakota-licensed elder law attorney before applying, because the right sequence of steps depends heavily on the specific facts.

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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.