How to Pay for Memory Care in Minnesota

The Real Cost Problem

Memory care in Minnesota averages $7,416 per month — roughly $89,000 annually. Most families cannot sustain that indefinitely from savings alone. A parent with $200,000 in liquid assets will exhaust those funds in about 27 months at the state average rate. If they're in a Twin Cities metro facility charging $8,500 per month, that drops to under two years.

The question isn't just "how do I pay?" It's "how do I sequence the payment sources so my parent doesn't run out of money before the next funding layer kicks in?"

Payment Source 1: Private Pay

Most families start here by default. Private pay gives you the widest choice of facilities and avoids the eligibility requirements of public programs. But it depletes assets fast.

Key planning considerations:

• Track the burn rate. Calculate exactly how many months your parent's liquid assets will cover at the facility's actual rate. Include incidentals the base rate doesn't cover — personal supplies, specialized activities, medication management fees
• Start the Medicaid planning process early. The Medical Assistance application for long-term care requires 60 months of financial records and a MnCHOICES assessment that can take weeks to months. Begin this work when your parent has 12–18 months of private-pay runway left, not when the money is almost gone
• Negotiate. Some facilities offer modest discounts for private-pay residents, especially if the family commits to a minimum stay. Ask — the worst they can say is no

Payment Source 2: Elderly Waiver (Medicaid)

The Elderly Waiver is the primary public funding path for memory care in Minnesota. It pays the facility's Customized Living Services rate — the care component — while the resident's income covers room and board.

To qualify in 2026: countable assets at or below $3,000 ($162,660 for the community spouse), and a MnCHOICES assessment showing Nursing Facility Level of Care needs. Income above the $1,353 maintenance allowance goes toward the cost of care.

The transition from private pay to Elderly Waiver is where most families hit trouble. As of January 2026, Minnesota law prohibits facilities from discharging a resident solely because they switch from private pay to waiver funding. Even with this protection, confirm before admission that the facility is licensed to deliver Customized Living Services and ask how it handles Elderly Waiver transitions — transferring to a new facility after your parent has adjusted to an environment is disruptive and clinically harmful for someone with dementia.

For the full financial eligibility process, see our posts on Medicaid spend down and Medicaid memory care.

Payment Source 3: Long-Term Care Insurance

If your parent purchased a long-term care insurance policy years ago, it may cover memory care — but the details matter. Check:

• Does the policy cover assisted living or only nursing homes? Older policies sometimes exclude assisted living entirely
• What's the daily or monthly benefit amount? A policy purchased in 2005 with a $100/day benefit covers roughly $3,000/month against a $7,416 bill — helpful but not sufficient
• What's the elimination period? Most policies require 30–90 days of out-of-pocket payment before benefits begin
• What's the benefit period? Three-year and five-year policies are common. A three-year policy at $150/day covers about $164,000 total

Long-term care insurance works best as a bridge — it stretches the private-pay period and buys time for the Medicaid application process. File the claim as early as possible; insurers require their own assessment of care needs, which takes additional time.

Payment Source 4: Veterans Benefits

If your parent is a wartime veteran or the surviving spouse of one, the VA Aid and Attendance pension may supplement memory care costs. Contact a county Veterans Service Officer or accredited VA representative for current eligibility and benefit amounts.

VA benefits may interact with Medical Assistance eligibility, so contact a county Veterans Service Officer or accredited VA representative about current eligibility, benefit amounts, and treatment in the Medical Assistance application.

Payment Source 5: Home Equity Conversion

If your parent owns a home and isn't currently living in it, the equity represents a potential funding source:

• Sale of the home provides a lump sum. The primary home may be exempt from Medicaid countable assets if it is occupied by a spouse or child under 21, or if its equity remains below $752,000 — but if no qualifying exemption applies and the parent isn't expected to return, selling it and spending the proceeds on care is often the practical choice
• Reverse mortgage (Home Equity Conversion Mortgage) converts equity into monthly payments or a line of credit without requiring the home to be sold. The parent must be 62+ and the home must remain their primary residence — which creates complications when the parent moves to memory care

Be aware that any home equity remaining at the parent's death is subject to Minnesota's expanded estate recovery program, which reaches assets held in joint tenancy, living trusts, and Transfer on Death Deeds.

Sequencing the Sources

The most common pattern: private pay first (using liquid assets and any long-term care insurance), with the Elderly Waiver application filed well before private funds are exhausted. VA benefits, if available, run throughout. The home either sells to fund the private-pay period or remains occupied by the community spouse (exempt from both countable assets and estate recovery during the spouse's lifetime).

The Minnesota Dementia & Memory Care Guide includes a financial inventory worksheet and monthly cost tracker designed around this sequencing — so you can project when each funding transition needs to happen and avoid the gap between private pay running out and waiver coverage beginning.

See more Minnesota guides →