The financial costs and burdens of aging impact all Americans. However, the impact on rural America (farmers and ranchers) can be devastating since much of a farmer’s estate is tied up in the value of the land. Many people wish to leave their land and other personal property, cash and investments to their heirs. The desire is to keep it in the family. To protect the heirs’ inheritance from potentially devastating costs of Long Term Health Care an affordable plan must be in place prior to retirement or change in health.
Estate and Business Transition Planning
The University of Nebraska Center of Rural Affairs says Long-Term Care for America’s aging population is an important consideration in estate and business transition planning. Many have become increasingly aware of how easily the cost of Long-Term Care can wipe out a lifetime of savings or hamper the transfer of a family farm, ranch or business to future generations.
What is the risk of needing some type of extended health care? High. The U.S. Department of Health and Human Services says if you reach the age of 65 you have a 70% chance of needing some type of Long-Term Care service before you die. With advances in medical science we live longer, we survive health events and accidents. This all leads to more aging issues in addition to many health events which cause the need for help with activities of daily living or supervision due to memory problems.
Responsible Advance Planning Keeps Land and Legacy in Family Hands
Part of any responsible retirement and legacy plan is to provide for the financial costs and burdens that Long-Term Care places on loved ones. Long-Term Care Insurance is an affordable way to ease the burden and help preserve the farm or range for generations to come.
“I hear from farm families from all over the country. This is a key concern. The costs of care can create liquidation of assets. Too many farmers have seen this happen to fellow farmers and they want to make sure the land stays in the family. For many, Long-Term Care insurance will protect their farm and other assets and plans are very affordable if they plan early when their health is better.”Matt McCann, a nationally recognized expert in Long-Term Care Planning.
One of the biggest threats to a family legacy is catastrophic end-of-life costs. Cost of care can vary depending on where in the country a person lives. Most Long-Term Care is not in nursing homes although nursing homes are the most expensive. Long-Term Care Insurance policies will pay for care in all settings including one’s own home.
Cost of Long-Term Care Services Can Be Staggering
For example, in Iowa, an average skilled nursing home will run about $80,077 a year according to the LTC NEWS cost of care calculator (click here to view costs in your state). Monthly care at home averages about $4800 a month with base assisted living facilities running around $4000. However, costs in Ohio will be more. A Long-Term Care specialist can discuss the cost of care in your area.
The issue of the burden on the family is another consideration. Without Long-Term Care insurance, a spouse or daughter may become the primary caregiver, at least at first. Spouses who are the default primary caregiver for a partner often see a decline in their own health. Daughters or daughters-in-law have their own families and responsibilities. In some cases, they may not even live close by.
Since health insurance and Medicare(including Medicaresupplements) will pay only for a very small amount of skilled care and only if you are improving, much of the cost of Long-Term Care is placed on you.
Variety of Long-Term Care Planning Options Available
There are three types of LTC plans available. Traditional tax-qualified plans provide a monthly or daily benefit once you qualify for benefits. Generally, you start with a pool of money and both the monthly benefit and benefit pool are subject to inflation increases in those benefits. In many states, you have additional “partnership” benefits which provide dollar-for-dollar asset protection in the event you spend through your LTC policy money.
Hybrid plans are also available. These are usually single premium life insurance policies or annuities with a rider for Long-Term Care. Be careful, some of them are just an advance of death benefit or will only provide benefits for critical illness not traditional Long-Term Care. A Long-Term Care Insurance specialist can discuss the differences.
However, a few of these hybrid plans are full cash benefits. With a single premium, a farmer or rancher can pay once and never worry about ongoing premiums again. Plus, with a death benefit your estate will also have the benefit of either a tax-free long-term care benefit or a tax-free death benefit.
Short-Term plans are also available. These provide a year of extended care. While not a complete solution, for some people with health issues this might be an appropriate option.
“One of the features that makes these products extremely attractive is the ability to select a 0-day Elimination Period(EP).”
“Most traditional LTC insurance policies require that a doctor certify a need for care lasting longer than 90 days and have a 90-day wait period for benefits. With a 0-day EP period the policyholder accesses policy benefits early on when they need care.”Jesse Slome, executive director for the American Association for Long-Term Care Insurance (AALTCI).
Your Land is Your Legacy
The assets you have accumulated throughout your working life including your land you own your farm will go to one of two purposes, your lifestyle or your legacy. It’s up to you to decide how much is dedicated to each purpose. You are in control. The one thing that will get in the way is extended healthcare. The time to safeguard your property and assets should happen well ahead of your retirement. The peace-of-mind it will create is priceless.
Your land is is your legacy. You can't predict the weather or the price of your crops, but longevity does mean a high risk of needing long-term care services. Keep your land in the family with an advance plan for the financial costs and burdens that come with longevity.
About the Author
An LTC News author focusing on long-term care and aging.
Contributor since August 21st, 2017
No matter which type of plan you purchase, Long-Term Care Insurance is easy, affordable and rate stable income and asset protection. These policies are custom designed. Be careful, however, since premiums can vary over 100% between companies for the exact same coverage. This is why you should seek the help of a qualified Long-Term Care Insurance specialist. Find a specialist by clicking here.
Items to Discuss with a Long-Term Care Specialist:
- Partnership – Most states offer special policies that provide dollar-for-dollar asset protection. The Long-Term Care Insurance Partnership Program might be one of the best-kept secrets in retirement planning. Make sure the specialist explains this program and how it might help you.
- Tax incentives – There are federal tax incentives available for some people. If you own your own business be sure to ask.
- Health Savings Accounts – If you have an HSA you can use the pre-tax money in your account to pay for the premium.
- Asset-Based or Hybrid policies – These are life insurance or annuities with a rider for long-term care. Careful, only a handful are actually a long-term care benefit. However, one of these policies can provide you with the flexibility of both a long-term care benefit or a death benefit. They are expensive but can be paid with a single premium.
- Health and Family History - Make sure the specialist asks you detailed questions about your health, family history, and retirement plans. Underwritingcriteria varies with each insurance company. If they are not asking you detailed questions then find another specialist.
Take a moment and find the current and future costs of long-term care in the area you live in. This will help you decide the amount of coverage is appropriate for you in your situation. For example, if you have a defined pension when you retire the amount of benefits you would need for long-term care would be less than an individual who will fund their future retirement with earnings off investments. In that case, protecting the principal is essential since that will produce your future income.
Research Current and Future Cost of Care Services
Find your state and use the LTC NEWS cost of care calculator by clicking here.
It is always best to start planning before you retire. Once you have your plan in place you will enjoy peace-of-mind and your family will thank you decades from now.