By Sarah Sunderman, Sarah.Sunderman@house.mn.gov
Medical Assistance
Treatment of Assets and
Income
September 2023
Executive Summary
Medical Assistance (MA) provides payment for nursing home and other long-term care
services for people whose assets are at or below the limits prescribed in state law and whose
income has been used to pay health service bills.
The MA program limits the amount of income and the value of assets a recipient may have.
If an MA recipient lives in the community and is age 65 or older, the income limit is $1,215
per month, or $1,644 for a couple. Individuals with incomes higher than this can spend down
their income to qualify for MA. MA recipients who live in a nursing home must contribute
most of their income to the cost of nursing home care.
The asset limit is $3,000 for an individual and $6,000 for a couple, plus $200 for each
dependent. Several assets are excluded from the MA asset limit.
The MA program specifies how the income and assets of a married couple are treated
when one spouse receives certain long-term care services and applies for MA. At the time
of application for MA for Elderly Waiver services or for a spouse residing in a long-term care
facility, an asset assessment is conducted. In 2023, the spouse receiving long-term care can
transfer assets to the spouse who is still living in the community to bring that spouse’s assets
to a maximum of $148,620.
The long-term care spouse must use nearly all of his or her income to pay for the cost of long-
term care services, while the community spouse can keep all of his or her income and is not
required to pay for the care of the long-term care spouse if that spouse is eligible for MA.
The MA program places some prohibitions on the transfer of assets and income. In general,
a person seeking or receiving long-term care cannot transfer assets or income for less than
fair market value, though there are several exceptions. If a person does so, he or she may
lose eligibility of MA coverage of long-term care services.
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Please note: This publication provides general information on asset and income provisions and
transfer prohibitions under the Medical Assistance program. The House Research Department
provides services to the Minnesota House of Representatives; it does not and cannot represent
or provide legal services to private individuals, private entities, or other government
organizations. For advice or an opinion as to what law applies in a specific situation, the person
involved will need to contact his or her own attorney or advisor.
Contents
MA Program Long-term Care Coverage ........................................................................ 2
General Income and Asset Limits in the MA Program ................................................ 2
MA Program Provisions for Dividing Income and Assets ............................................ 4
Prohibitions on Asset and Income Transfers ................................................................ 7
Appendix A: Exceptions to the Transfer Prohibitions ............................................... 10
Appendix B: Eligibility and Asset Transfer Prohibitions ............................................ 11
MA Program Long-term Care Coverage
MA provides coverage for nursing home and other long-term care services to
qualified persons.
Medical Assistance (MA), Minnesota’s Medicaid program, is the federal-state program that
reimburses health care providers for services to persons who meet program eligibility
requirements. The MA program will pay for long-term care services for individuals whose assets
are at or below the limits prescribed in state law and whose income, minus certain deductions,
has been contributed toward the cost of long-term care services. Minnesota’s MA program also
has federal approval to provide home and community-based “waivered services” to certain MA
recipients who would otherwise need nursing facility or other institutional level of care.
1
Persons can apply for MA by contacting their local county or Tribal human services agency.
General Income and Asset Limits in the MA Program
The MA program sets limits on the amount of income and the value of assets a
recipient may have.
Income is defined as net countable income after certain allowable deductions have been
subtracted. Assets include all real and personal property owned by the recipient. When a
married couple is living together and neither spouse is receiving long-term care services, all
1
For more information on home and community-based waivered services, see the House Research Department
publication, Medicaid Home- and Community-Based Waivered Programs.
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assets and income of each spouse are considered available to the other in determining
eligibility for MA.
In general, an MA recipient living in the community who is age 65 or older may have income of
no more than $1,215 per month. This limit is $1,644 for a couple.
2
However, individuals with
incomes higher than these limits can still qualify for MA by “spending down” their income.
Spending down means that the individual pays for medical expenses out-of-pocket that equal
or exceed the amount by which the individual’s income exceeds the MA spenddown limit.
3
In contrast to an MA recipient living in the community, an MA recipient living in a nursing home
must contribute most of his or her income towards the costs of nursing home care (see page 5).
The MA asset limit is $3,000 for an individual and $6,000 for a couple, plus $200 for each
dependent. The following assets are excluded from consideration when eligibility for MA is
determined:
4
The homestead (real property or personal property used as a home), subject to an
equity limit of $688,000 effective January 1, 2023 (see Appendix B for more details)
A motor vehicle, regardless of value, if it is used for transportation of the recipient or
a member of the recipient’s household
Household goods and certain personal effects
Prepaid burial spaces and burial space items
Burial funds (up to $1,500 each for the recipient and the recipient’s spouse),
irrevocable prepaid burial arrangements ($2,000 for an individual, or $3,000 for a
couple), and life insurance or annuity-funded burial arrangements under contract
Capital and operating assets of a business necessary to earn an income
In addition, if an applicant for MA payment of long-term care services has exhausted benefits
under a long-term care insurance policy issued on or after July 1, 2006, and that policy qualifies
under the state’s long-term care partnership program, an amount of assets equal to the dollar
amount of benefits paid out under the qualifying policy is disregarded for purposes of
2
These income limits became effective July 1, 2023, and are set at 100 percent of the federal poverty guidelines.
They are adjusted each July 1 to reflect changes in the federal poverty guidelines.
3
See Minnesota Statutes, section 256B.056, subdivision 5c. As of July 1, 2023, the spenddown limit for persons
who are elderly, blind, or disabled is the same as without a spenddown: 100 percent of the federal poverty
guidelines.
4
See Minnesota Statutes, section 256B.056, for a more complete explanation of asset limits in the MA program.
“Personal property” means all property other than real estate.
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determining eligibility for MA payment of long-term care services. These assets are also
protected against estate recovery
5
and are not subject to asset transfer penalties.
6
MA Program Provisions for Dividing Income and
Assets
Definition of Terms
Long-term care services: For purposes of spousal asset assessments, “long-term care services”
means care provided in a nursing facility, hospital, an intermediate care facility for persons with
developmental disabilities (ICF/DD), or home care services that would be covered through the
Elderly Waiver or the Alternative Care program. The other home and community-based waiver
services, Community Alternative Care (CAC), Community Alternatives for Disabled Individuals
(CADI), Developmental Disabilities (DD), and Brain Injury (BI), are also long-term care services.
Long-term care spouse: The spouse who resides in a long-term care facility or who receives
Elderly Waiver services for at least 30 consecutive days and is married to a community spouse.
Community spouse: The spouse living in the community who is not receiving long-term care
services and is married to a long-term care spouse.
The MA program specifies how the income and assets of a married couple are treated when
one spouse receives specified long-term care services and applies for MA.
When a long-term care spouse seeks MA coverage for certain long-term care services for a
continuous period expected to last at least 30 consecutive days, the MA program conducts an
asset assessment to determine the Community Spouse Asset Allowance (CSAA)—the amount
the community spouse is permitted to keep.
A Medicaid state plan amendment was approved in May 2020, effective October 1, 2019,
limiting the spousal asset assessment to long-term care spouse applicants for MA applying for
Elderly Waiver services or who live in a long-term care facility. The spousal asset assessment is
no longer conducted for applicants for other types of home and community-based waiver
services; community spouse assets are not considered for eligibility purposes for these
applicants.
The asset assessment is based on the assets owned by one or both spouses on the date of
application for MA coverage. The spousal share is calculated only once and is used for any
subsequent periods during which a person may receive long-term care services.
5
Federal and state law require the Department of Human Services and local county or Tribal agencies to recover
costs that MA paid for specified health care services through estate recovery processes. For more information,
see the House Research Department publication, Medical Assistance Estate Recovery and Liens, July 2022.
6
See Minnesota Statutes, section 256B.0571, for a more complete description of the long-term care partnership
program.
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The division of marital assets is subject to a maximum specified in law; the
long-term care spouse can transfer available assets to the community spouse
to bring that spouse’s assets up to the maximum.
All assets not protected for the community spouse must be reduced to the MA asset limit of
$3,000. The assets determined to be available to the long-term care spouse must be reduced to
the MA asset limit of $3,000.
The long-term care spouse is allowed to transfer available assets to the community spouse until
the value of the assets retained by the community spouse reaches the federal maximum. The
$148,620 maximum spousal share amount is effective from January 1, 2023, to December 31,
2023. These amounts are adjusted each January 1 by the percentage change in the Consumer
Price Index (CPI-U).
The long-term care spouse may be eligible for MA under a hardship waiver, even if assets in
excess of the maximum amount exist (in a tax-deferred retirement account or postsecondary
education savings plan, for example). A hardship waiver may be granted if the community
spouse owns the assets and does not make those assets available to the long-term care spouse
(the long-term care spouse cannot use those assets without the consent of the community
spouse), and if any of the following circumstances exist:
the long-term care spouse assigns the right to support from the community spouse
to the commissioner of human services
the long-term care spouse cannot assign the right to support due to a physical or
mental impairment
the denial of eligibility would cause an imminent threat to the long-term care
spouse’s health and well-being
When a hardship waiver is granted, the local agency makes a referral to the county attorney’s
office to determine if a cause of action exists against the community spouse.
The long-term care spouse must apply nearly all of his or her income towards
the cost of the long-term care services.
MA permits the long-term care spouse specified deductions from income, but the person must
then contribute all of his or her remaining countable income towards the cost of the long-term
care services. In many cases, the only permitted deduction is a personal needs allowance of
$121 per month.
7
Other allowable deductions are listed in Minnesota Statutes, section
256B.058.
7
This personal needs allowance is adjusted for inflation each year. For a more detailed list of the permitted
deductions, see Minnesota Statutes, section 256B.0575.
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The community spouse can keep all of his or her income and is not required to
contribute towards the cost of care of the long-term care spouse after the
long-term care spouse is determined eligible for MA.
Beginning with the first month that the long-term care spouse is determined to be eligible for
MA and receives long-term care services, none of the community spouse’s income is considered
available to the long-term care spouse. The community spouse’s income does not affect the
long-term care spouse’s eligibility once the long-term care spouse has received long-term care
services under MA, as long as there is no break in MA-LTC eligibility for one or more calendar
months.
Some income of the long-term care spouse can be used to provide a monthly
income allowance to the community spouse and a monthly family allowance
for certain dependent family members.
The long-term care spouse can use his or her income to provide the community spouse with a
monthly income allowance. This allowance is the amount sufficient to raise the income of the
community spouse to the lesser of:
the sum of 150 percent of the monthly federal poverty guideline for two (this
amount is $2,466, effective July 1, 2023
8
), plus a basic shelter allowance of $740; or
$3,715.50.
9
If the income of the long-term care spouse is not sufficient to raise the income of the
community spouse to this standard, income-producing assets can also be transferred in an
amount sufficient to reach the standard.
If the community spouse obtains a court order for support that specifies a higher monthly
income allowance than the monthly maximum, the long-term care spouse can transfer to the
community spouse the amount of monthly income specified by the court order.
The long-term care spouse can also provide a monthly family allowance to minor or dependent
children, dependent parents, or dependent siblings residing with the community spouse, who
have incomes that are less than 150 percent of the federal poverty guidelines. For minor
children not living with the community spouse, the amount of the allowance is equal to the
difference between the gross income of the children and 100 percent of the federal poverty
guideline amount for the applicable family size. For other eligible family members, the family
allowance is the family member’s gross income subtracted from 150 percent of the federal
poverty guideline (the minimum monthly income allowance).
8
The $2,466 amount became effective July 1, 2023, and will remain in effect until the federal poverty guidelines
are updated.
9
The $3,715.50 maximum monthly maintenance needs allowance became effective January 1, 2023, and will
remain in effect until December 31, 2023.
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Prohibitions on Asset and Income Transfers
Definition of Terms
Long-term care services: For purposes of asset transfer provisions, “long-term care services”
means care provided in a nursing facility, hospital swing bed, intermediate care facility for
persons with developmental disabilities (ICF/DD), or through one of the home and community-
based services under MA.
Look-back period: A designated period of time prior to a request for MA payment of long-term
care services during which transfers made by a person or the person’s spouse are evaluated.
Transfer penalty: The calculated length of time a person requesting MA payment of long-term
care services is ineligible for those payments due to an uncompensated transfer during a look-
back period.
MA prohibits a person who is seeking or receiving long-term care services
from transferring assets or income for less than fair market value.
A person may be penalized under the MA program if the person, the person’s spouse, or any
other person or entity with legal authority to act on the person’s or spouse’s behalf, gives away
or otherwise transfers assets or income for less than the fair market value. State and federal
law on MA asset and income transfers
10
prohibits a person from making such uncompensated
transfers, with the intent to obtain or retain MA, within a 60-month “look-back period,” while
the MA application for long-term care services is pending, or while the person is eligible for MA
payment of long-term care services.
Certain transactions involving: (1) annuities; (2) promissory notes, loans, or mortgages; and (3)
life estate interests in another individual’s home, are classified as transfers for less than fair
market value, unless specified criteria are met. See Appendix B for a description of these and
other uncompensated transfer classifications.
Asset and income transfer prohibitions apply to single adults without children who are eligible
for MA under Minnesota’s Medical Assistance expansion and who receive long-term care
services.
There are exceptions to the prohibition on asset and income transfers.
The MA program allows for several exceptions to the prohibition on asset and income transfers.
For example, a person may transfer a homestead, other assets, and income at less than fair
market value to a spouse, or to a qualifying child. See Appendix A for a detailed list of the
exceptions to the asset and income transfer prohibition.
10
See Minnesota Statutes, sections 256B.059 and 256B.0595.
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The transfer penalty for making uncompensated transfers is losing eligibility
for MA coverage of long-term care services.
The transfer penalty for making uncompensated transfers is that the person is ineligible for MA-
paid long-term care services for a calculated period of time. The person remains eligible for all
other MA services during the transfer penalty.
The length of the transfer penalty is determined by dividing the value of the
uncompensated transfer by the average monthly payment rate for skilled
nursing facility care.
The length of the transfer penalty is calculated by dividing the total value of all uncompensated
transfers of assets or income made during the look-back period by the statewide average
monthly payment rate for skilled nursing facility care.
11
This calculation results in the number of
months for which a person is not eligible for long-term care services. If this calculation results in
a fractional month of ineligibility, this fraction is multiplied by the statewide average monthly
payment rate for skilled nursing facility care. This is the dollar amount of long-term care
services that the recipient will be financially responsible for during the last, partial month of
ineligibility.
For example, if an individual makes uncompensated transfers of $15,000 in one month, the
period of ineligibility is calculated by dividing $15,000 by $9,526,
12
resulting in a quotient of 1.6.
The individual will be ineligible for long-term care services for one month and will be financially
responsible for $5,715 as a result of the fractional month of ineligibility (0.6 x $9,526 = $5,715).
Periods of ineligibility due to a transfer penalty begin on the date an
individual would otherwise be eligible for MA payment of long-term care
services.
If a person makes a transfer during the look-back period, a person’s period of ineligibility begins
in the month in which the individual requests MA payment of long-term care services and is
otherwise eligible to receive MA payment of long-term care services but for application of the
transfer penalty.
The transfer penalty period for persons who make uncompensated transfers at a time when
MA is already paying for long-term care services begins the first month following the month in
which a ten-day notice is provided following the uncompensated transfer.
13
11
The current statewide average monthly payment rate for skilled nursing facility care is $9,526. This amount
became effective July 1, 2023, and applies to persons who apply for MA on or after that date; it is recalculated
each July 1.
12
$9,526 is the current statewide average monthly payment rate for skilled nursing facility care in effect on the
date the person requests MA payment of long-term care services.
13
Minnesota Statutes, section 256B.0595, subdivision 2, paragraph (b), authorizes the penalty period to begin in
this situation: “the first day of the month following advance notice of the period of ineligibility, but no later than
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Transfer penalties for transfers that result in partial months of ineligibility are
combined and treated as one transfer.
If the transfer of assets is valued at less than the statewide average monthly payment rate for
skilled nursing facility care made in more than one month, the total, cumulative,
uncompensated value of all assets transferred is treated as one transfer, and the transfer
penalty begins on the date the individual would otherwise be eligible for MA payment of long-
term care services.
the first day of the month that follows three full calendar months from the date of the report or discovery of the
transfer…” Ten days’ advance notice is required before a penalty period can begin.
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Appendix A: Exceptions to the Transfer Prohibitions
A homestead can be transferred for less than fair market value without penalty if:
(a) the title is transferred to the individual’s:
spouse
child under 21, including a child of the individual’s spouse
blind or certified disabled child, including a child of the individual’s spouse
sibling who has equity interest in the home and who resided in the home for at least
one year before the individual’s receipt of long-term care services
child of any age residing in the home for at least two years before the individual
received long-term care services, and who provided care that, as certified by the
individual’s physician, allowed the individual to reside at home rather than in a
facility
(b) the individual demonstrates intent to dispose of the house at fair market value or for
other valuable consideration; or
(c) the local agency grants a waiver because denial of eligibility would cause undue
hardship (in this case, a cause of action may exist against the person(s) receiving the asset).
Nonhomestead assets or income may be transferred at less than fair market value if:
(a) the transfer is to the spouse or to another individual for the sole benefit of the spouse;
(b) the transfer is to the transferor’s child who is blind or permanently and totally disabled,
or is to a trust for an individual under age 65 who is disabled according to criteria of the
federal Supplemental Security Income (SSI) program;
(c) the local agency grants a waiver because denial of eligibility would cause undue
hardship, based on an imminent threat to the individual’s health and well-being; or
(d) the individual demonstrates intent to dispose of the assets at fair market value or for
other valuable consideration.
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Appendix B: Eligibility and Asset Transfer
Prohibitions
Eligibility
Homestead equity limit for institutionalized persons. For recipients who continuously receive
MA payment of long-term care services, the homestead equity limit is increased annually by the
change in the Consumer Price Index, rounded to the nearest $1,000. In 2023, the homestead
equity limit is $688,000. This provision can be waived in the case of demonstrated hardship by a
process determined by the federal Secretary of Health and Human Services.
The homestead is excluded if the homestead is the lawful residence of: the individual’s spouse
or child who is under age 21, blind, or disabled; the individual’s sibling who has an equity
interest in the home and who has lived in the home for at least one year; or a child or
grandchild who lived in the home for at least two years prior to the individual’s admission to
the facility, and who provided care that permitted the person to remain at home. The
homestead is excluded for the first six calendar months of a person’s stay in a long-term care
facility, and continues to be excluded for as long as the individual is reasonably expected to
return to the homestead. [Minn. Stat. § 256B.056, subd. 2, 2a]
Treatment of entrance fees. An entrance fee paid to a continuing care retirement or life care
community is treated as an available asset to the extent that:
1) the individual has the ability to use the fee, or the contract allows the fee to be
used, to pay for care should other resources or income be insufficient;
2) the individual is eligible for a refund of remaining fees when the individual dies or
terminates the contract; and
3) the entrance fee does not confer an ownership interest.
[Minn. Stat. § 256B.056, subd. 3e]
Disclosure of annuities. Individuals applying for or seeking recertification of eligibility for MA
payment of long-term care services must provide to the department a complete description of
any interest either the individual or the individual’s spouse has in annuities, using a form
provided by DHS. The disclosure form must include a statement that DHS becomes the
remainder beneficiary under the annuity or similar financial instrument by virtue of receipt of
MA. The individual and the individual’s spouse must execute separate disclosure forms for each
annuity or similar instrument.
The issuer of an annuity must confirm that this designation has been made and notify the
county agency when there is a change in the amount of income or principal being withdrawn
from the annuity. The county agency must provide the issuer with contact information. [Minn.
Stat. § 256B.056, subd. 11]
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Long-Term Care Partnership Program
The Long-Term Care Partnership Program is a state option that allows MA applicants to exclude
assets upon MA application, and protect assets from MA recoveries, in an amount equal to the
benefits paid out by a qualified long-term care insurance policy. In order to qualify for the
program, applicants must have exhausted all of the benefits under the insurance policy and
benefits under the policy must not have been paid out prior to July 1, 2006.
The Long-Term Care Partnership Program:
allows beneficiaries to exchange existing long-term care insurance policies or add
necessary riders, in order for those policies to meet federal standards for
partnership policies. The exchange of policies and addition of riders is allowed unless
the policy is already paying benefits on the date the policy is exchanged or the rider
is added;
exempts assets designated as protected from asset transfer penalties; and
specifies inflation protection requirements and provisions related to the offering of
an elimination or deductible period, meeting implementation requirements,
provision of total asset protection policies, and minimum daily benefits.
[Minn. Stat. ch. 62S, and § 256B.0571]
Asset Transfer Prohibitions
Treatment of annuities. The purchase of an annuity on or after February 8, 2006, by or for an
individual who has applied for or is receiving long-term care services, or the individual’s spouse,
is treated as a disposal of an asset for less than fair market value, unless DHS is named as a
preferred remainder beneficiary and the annuity meets specified Internal Revenue Code and
other standards.
A change in the designation of DHS as remainder beneficiary results in the annuity being
treated as a disposal of assets for less than fair market value. Issuers of annuities are required
to notify county agencies when there is a change in the amount of the income or principal
being withdrawn from the annuity. A change in the amount of income or principal withdrawn
may be treated as a disposal of assets for less than fair market value. [Minn. Stat. § 256B.0595,
subd. 1, paras. (e) and (f)]
When a payment becomes due under an annuity that names DHS a remainder beneficiary, the
issuer must request and DHS must provide a written statement of the total amount of MA paid.
The issuer must pay DHS an amount equal to the lesser of the amount due the department
under the annuity or the total amount of MA paid on behalf of the individual or individual’s
spouse. Any amounts remaining are payable according to the terms of the annuity. [Minn. Stat.
§ 256B.0594]
Promissory notes, loans, and mortgages. The prohibition on transfers for less than fair market
value applies to funds used to purchase a promissory note, loan, or mortgage, unless the
instrument purchased has a repayment term that is actuarially sound, provides for payments to
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be made in equal amounts with no deferral or balloon payments, and prohibits cancellation of
the balance upon the death of the lender. [Minn. Stat. § 256B.0595, subd. 1, para. (h)]
Life estates. The purchase of a life estate in another individual’s home constitutes a transfer for
less than fair market value, unless the purchaser resides in the home for a period of at least one
year after the date of purchase. [Minn. Stat. § 256B.0595, subd. 1, para. (i)]
Start date for period of ineligibility. For uncompensated transfers made by or on behalf of an
individual receiving MA payment of long-term care services, the period of ineligibility begins the
first day of the month following the advance notice of the period of ineligibility. For
uncompensated transfers by individuals requesting MA payment of long-term care services, the
period of ineligibility begins on the date on which the individual is eligible for MA and would
otherwise be eligible to receive MA payment of long-term care services but for application of
the penalty period. [Minn. Stat. § 256B.0595, subd. 2, para. (b)]
Undue hardship waiver requests by facility. A long-term care facility, with the written consent
of a resident or the resident’s personal representative, may file an undue hardship waiver
request on behalf of a resident who is denied eligibility for MA payment of long-term care
services. When a waiver is granted, a cause of action exists against the person to whom an
asset was transferred. The local agency, in evaluating the waiver request for nonhomestead
transfers, must take into account whether the individual has taken any action to prevent
designation of DHS as a remainder beneficiary on an annuity. [Minn. Stat. § 256B.0595, subds. 3
and 4]
Minnesota House Research Department provides nonpartisan legislative, legal, and
information services to the Minnesota House of Representatives. This document
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