Why Farmers and Ranchers Need to Plan for Long-Term Care Now

The high costs and likelihood of needing long-term health care, and changes in tax laws, make planning for the costs & burdens of aging imperative to do now.

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Why Farmers and Ranchers  Need to Plan for Long-Term Care  Now
4 Min Read July 11th, 2017 Updated:August 24th, 2022

Family farmers and ranchers always have concerns, be it the weather, prices on crops or cattle, their health, retirement, and taxes. Keeping their land in family hands for generations is always a goal, but two things could prevent that from happening.

Maintaining the family farm or ranch can be problematic between future long-term health care costs and the Biden administration's tax proposals. The high costs and likelihood of needing long-term health care, and changes in tax laws, make planning for the costs and burdens of aging imperative to do now. 

Without proper planning for the costs and burdens of long-term care, the expensive cost of care can financially cripple the farm or ranch business. Chronic health problems due to an illness, mobility problems, accidents, or the frailty of aging will be costly - and very likely to happen as we get older. When no advance plan is in place, many farmers and ranchers must sell off their land to fund the cost of long-term care services.  

Family members have little time nor the skills to be caregivers. Given the likelihood that you will need extended health care, farming and ranch families have two choices, self-fund and risk their land and assets or obtain Long-Term Care Insurance. 

Self-Funding Long-Term Care Costs Jeopardize Farm Assets

When you add higher estate and capital gains taxes, self-funding, which is never an ideal way to fund long-term care to start with, is less of an ideal option.

We all notice changes in our health and bodies as we get older. At some point, we may also experience a decline in our memory. The result is a need for help with daily living activities or supervision because of dementia.

Farmers and ranchers, just like most Americans, prefer in-home care as opposed to a nursing home or another type of facility. In some cases, that facility might not be close to family. Plus, farmers and ranchers want to keep the land in the family, and most of their assets are tied to that real estate.

Avoid Misconceptions That Risk Family Farm and Ranches

In short, there are three reasons why many farm families overlook planning for long-term health care when doing business transition and estate planning:

  • They do not realize the probability of needing long-term care.

  • They do not realize long-term health care costs increase year after year

  • They have misconceptions about what they can do to shelter their assets from long-term care costs.

Long-term health care costs increase yearly and will continue to grow in the decades ahead. Family members are not trained or prepared to be caregivers - plus, the role is physically and mentally demanding. 

The LTC NEWS Cost of Care Calculator shows you the current and future cost of extended health care where you live - Cost of Care Calculator - Choose Your State | LTC News.

Long-Term Care Costs are Devastating to the Family Farm/Ranch

Long-term health care costs are potentially more financially devastating to a farm business than any tax issue.

Gary A. Hachfeld, University of Minnesota Extension educator in agricultural business management.

Read more from the University of Minnesota Extension Office by clicking here. 

Whether you are a farmer, rancher, small business owner, or just an average person attempting to safeguard their future retirement income and assets, affordable Long-Term Care Insurance will protect those assets and ease the burdens otherwise placed on your family. 

However, long-term care is a significant issue for individuals like farmers and ranchers who have much of their assets tied to the value of their land.

Robert Moore is the agricultural and resource law specialist with Ohio State University Extension's Agricultural and Resource Law program. He says few farmers can withstand a scenario where they need many years of expensive care, like a nursing home.

The issue of planning for long-term care costs for farmers and producers is significant, considering that nursing homes can cost some $100,000 per year, a cost that many farms cannot absorb and remain viable.

Moore says that while a farmer has little control over the long-term health care they may need in the future, they have options for how to plan for those costs.

Unlimited Benefit Plans Offer Complete Protection 

Farmers and ranchers will often look for a policy with unlimited benefits - meaning they could never exhaust their long-term care benefits no matter of long they require care. 

The problem is there are few unlimited Long-Term Care Insurance plans available today. Some plans also include a death benefit. Unlimited plans cost more than more traditionally designed policies, but if protecting the land is very important, it is an available option. 

Single premium products are very popular for some farmers and ranchers as their income can vary yearly. However, since farmers and ranchers are business owners, they can deduct premiums as a business expense. If the farm or ranch is set up as a "C" corporation, it can deduct 100% of the premium, no matter the size of the premium. Otherwise, paying annually would usually be recommended.

Keep in mind the best time to plan is well before you retire. Premiums are based on several factors, including age, health, and family history at the time of applying. 

Best to Plan in Your 40s or 50s

Be sure to work with an experienced and trusted Long-Term Care Insurance specialist. There are very few specialists nationwide. Be sure they have extensive experience in long-term care, work with all the major companies, and have at least 500 clients with Long-Term Care Insurance policies in place. 

When you own a Long-Term Care insurance policy, you will enjoy peace of mind knowing you have preserved your legacy and avoided becoming a burden on your loved ones.

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About the Author

An LTC News author focusing on long-term care and aging.

LTC News Contributor James Kelly

James Kelly

Contributor since August 21st, 2017

Editor's Note

If you are a farmer or rancher, you work very hard for your money. WIth new tax law changes, keeping your money and your family farm or ranch will be more difficult. 

Putting in place a plan to address the costs and burdens of aging will give you the guaranteed tax-free resources so you can have your choice of quality care, including in-home care, asset protection, and time for your family to be family. 

Caregiving is physically tough on spouses and adult children, in addition to being emotionally draining. When you own a Long-Term Care policy, your family won't have to worry about how to afford the best quality care for you, nor will they be forced into the role of being your caregiver.

Affordable Long-Term Care Insurance gives you access to your choice of quality care either at home or in a facility. Paid care services are expensive and can quickly drain estates, both large and small. 

Find a trusted and experienced specialist who works with all the top companies to help you plan for financial costs and the burdens of aging.

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LTC NEWS offers many tools and resources to help you plan for the costs and burdens of aging - or to help you find quality care for a loved one.

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How About Elderly Parents?

If your older parents or family members are declining and need help now, what can you do to help? You can get help finding quality caregivers or long-term care facilities and get recommendations for a proper care plan, whether or not they have an LTC policy. - Filing a Long-Term Care Insurance Claim | LTC News

If your loved one is lucky enough to own a Long-Term Care Insurance policy, be sure they use it. Sometimes families wait, thinking they can save the benefits for a rainy day. Waiting on using available Long-Term Care Insurance benefits is not a wise idea. 

Is a Reverse Mortgage Helpful?

Today's reverse mortgages for those aged 62 and older could be an ideal resource. You can fund a Long-Term Care Insurance policy OR even provide money to pay for care if you, or a loved one, already needs help and assistance. 

You might be eligible at younger ages as well. 

Some people have much of their savings invested in their homes. With today's reverse mortgages, you can find ways to fund care solutions, care itself, and even help with cash flow during your retirement. 

Learn more by asking questions to an expert. Mike Banner, LTC NEWS columnist and host of the TV Show "62 Who Knew," will answer your questions regarding caregiving, aging, health, retirement planning, long-term care, and reverse mortgages. 

- Just "Ask Mike." - Reverse Mortgages | LTC News.


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