Can Medicaid Take the House in South Dakota

The Short Answer

Medicaid cannot force the sale of a home while the recipient is alive and a qualifying family member lives there. But after the recipient dies, South Dakota's expanded estate recovery program can — and routinely does — pursue the home to recoup long-term care costs.

While the Recipient Is Alive

The primary home is an exempt asset during the Medicaid application and throughout the recipient's lifetime, provided two conditions hold:

1. Equity limit: The home's equity must be below $752,000 in 2026.
2. Occupancy: A spouse, minor child, or blind/disabled child lives in the home, or the institutionalized recipient credibly intends to return.

If both conditions are met, the home doesn't count against the $2,000 asset limit and Medicaid cannot force its sale.

However, South Dakota can place a pre-death lien (sometimes called a TEFRA lien) on the home under specific circumstances. If the Medicaid recipient has been in a nursing facility for more than 30 days and a medical determination concludes they are unlikely to return home, DSS can file a lien against the property. The lien doesn't force a sale, but it must be satisfied before the home can be sold or transferred. If a spouse, minor child, or blind/disabled sibling lives in the home, the lien cannot be placed.

After the Recipient Dies: Expanded Estate Recovery

This is where South Dakota's rules turn aggressive. Under SDCL 28-6-23 and ARSD 67:48:02:01, all Medicaid payments made for individuals age 55 or older — nursing home care, HOPE waiver services, and related hospital and prescription expenses — become a debt to the Department of Social Services upon death.

Most states limit estate recovery to assets passing through probate. South Dakota goes further with "expanded estate" recovery, which reaches:

• The home — whether it passed through probate or was held in a revocable trust
• Joint tenancies — under SDCL 43-46-1, a surviving joint owner is legally liable for the debts of the deceased joint owner, making jointly-held real estate directly reachable by DSS
• Life estates — if the recipient held a life estate interest at death, DSS can recover against it
• Transfer-on-death accounts — non-probate transfers do not escape recovery
• Revocable living trusts — because the recipient retained a legal interest during their lifetime

When Estate Recovery Must Be Deferred

DSS cannot pursue estate recovery while any of these individuals survive:

• A surviving spouse (recovery is deferred until the surviving spouse's death)
• A child under age 21
• A child who is blind or permanently disabled

Once these protections end — typically when the surviving spouse dies — DSS files its claim against the estate.

Protecting the Home

Several strategies can shield the home, but each has tradeoffs and timing requirements:

The caregiver child exception allows a parent to transfer the home to an adult child who lived in the home for at least two years immediately before the parent entered a facility and provided care that provably delayed institutionalization. This transfer is exempt from the 60-month lookback penalty.

Irrevocable trusts can remove the home from the recoverable estate, but the trust must be established outside the 60-month lookback period and the recipient must retain no legal title or interest in the property. A trust set up within the lookback window triggers a transfer penalty.

Life estate with remainder interest used to be a common planning technique, but South Dakota's expanded recovery rules specifically include life estates. A life estate alone does not protect the home from DSS.

The South Dakota Medicaid Long-Term Care & Asset Protection Guide maps the estate recovery exposure for every asset type, details the caregiver child documentation requirements, and includes a home-protection decision tree for South Dakota families.

See more South Dakota guides →