Long-term care: Do I need to worry? | TSLN.com

Long-term care: Do I need to worry?

Lori Tonak
SDCFRM Instructor

As transitions on the farm continue between generations, one area that needs to be discussed when designing a plan is long term care. How will the farm handle long term care of individuals, if needed? With the dramatic rise of long-term care costs in the past two decades, it is a necessary part of any transition or retirement plan. According to the American Association of Retired Persons (AARP), the average monthly cost of nursing home care is $6,226 or $75,000 annually.

What are the chances someone will end up needing nursing home care? The national statistics have the following findings:

• 44 percent of people reaching age 65 will enter a nursing home once in their lifetime.

• Of those, 53 percent will have a one year stay; the other 47 percent will stay less than a year.

• 56 petcent of people over age 65 will not need nursing home care.

No one knows if they will be in the 44 percent that needs nursing homes, or the 56 percent that will not; only time will tell.

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Even if an individual does not end up in a nursing home, there are other types of long term care that may be necessary. Home health nurses, assisted living facilities, and other types of assistance all play into long term care. So, what is a farm to do?

If your operation has multiple generations involved, check into how Medicare, Medicare Supplement, and Medicaid work when someone is still tied to the business. This may also include meeting with an estate planner for the best options to help the older generation without impacting the ability to pay bills for the farm. Some people do not qualify for Medicaid and the long term care expense comes out of the family's pocket or the farm resources.

What about long-term care insurance? Would that be a good plan? Long-term care insurance can be an option, but some plans are better than others. Also, the cost of the premium for long-term care insurance is in addition to a Medicare/Medicare Supplement plan. Many of the long-term insurance plans have many options, so the consumer must pay close attention to all parts of the insurance contract. Keep in mind most of these insurance policies do not refund the premium money if the policy is never used. A trusted insurance agent can help with finding the policy that would be best for a given situation.

Do I need to worry? Only the individual can answer this question after looking at family history, age, health status, and retirement goals. Do I need to have a discussion about long-term care with other affected parties? Absolutely, as planning is the key to being prepared for the financial impact on an operation.

If any producer would like more information on financial analysis, the SD Center of Farm and Ranch Management can help. To contact the SDCFRM office or any of our instructors, call 1-800-684-1969 or email us at sdcfrm@mitchelltech.edu.