Failing to plan for the costs of long-term health care is a major issue for farm families hoping to pass their family business and land to the next generation.
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 portion of a 100-day stay in a nursing home, but only if certain criteria are satisfied.
Note that Medicaid eligibility rules say an applicant can’t own more than $2,000 worth of countable assets. In addition, life estates and most trusts won’t shelter assets from long-term care costs. Also, assets given away within 60 months of applying for Medicaid can cause an exclusion period.
Long-term care insurance can be an option protect farm business assets from the explosive costs of long term health care. An elder law attorney may also provide alternatives to protecting your assets.
Reference: Hutchinson (MN) Leader (March 11, 2017) “Why farmers need to plan for long-term care?”