No one ever thinks they will need long-term health care. What most folks do is ignore the problem, or purchase the least expensive policy possible. For farm families, failing to plan for long-term health care for aging family members can unravel an otherwise carefully constructed business transition plan. They may not be aware of how expensive health care costs have become, and simply do not know how to shelter assets.
The Hutchinson (MN) Leader reports in a recent article, “Why farmers need to plan for long-term care,” that long-term health care costs could be even more financially devastating to a farm business than any tax issue. The article emphasizes that long-term care costs can thwart all of your transition and estate planning, if it’s not addressed.
A total of 50% of those Americans who are currently 65 or older will have some type of stay in a nursing home. One in 10 will have a nursing home stay that will be more than five years. Of those now getting nursing home-level care, 40% are younger than age 65.
A recent survey estimates that long-term care costs on average $65,000, with a private nursing home room at $97,000. At the most, Medicare will pay for a 100-day stay in a nursing home, if certain criteria are satisfied.
Note that Medicaid eligibility rules say an applicant can’t own more than $3,000 worth of assets and prepaid burial proceeds. In addition, life estates and most trusts won’t shelter assets from long-term care costs. If assets are given away, it must be done 60 months before the donor can qualify for Medicaid.
Long-term care insurance is the only way to protect farm business assets from the explosive costs of long term health care. An elder law attorney will be able to help your family make these critical decisions that need to be part of your plan for the farm and the family’s future.
Reference: Hutchinson (MN) Leader (March 11, 2017) “Why farmers need to plan for long-term care”