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Transition Planning: Long-Term Senior Care
When you think of the biggest risk to the transfer of the family farm, things like estate taxes, lack of communication, marketing challenges, and rising interest rates commonly come to mind.
Although all of these are threats, they may not be the toughest to manage. The quiet killer of the family farm is the potential for long-term care needs for the senior generation. With medical advances, life expectancies continue to expand. Although this is good news, it also can increase costs incurred in the final years of life.
Many farmers spend time transitioning management duties and finding ways to reduce taxes in the ownership transfer. Less time is spent working through the risk of long-term care events.
Maria Sarci, a long-term care expert at Ash Brokerage in Fort Wayne, Indiana, shares the following four common misconceptions about long-term care.
1 “I won’t ever need long-term care.” According to the U.S Department of Health and Human Services, 70% of individuals over the age of 65 will experience a care event.
2 “My family will care for me.” Although families have the best intentions, their ability to provide such care often is stifled by physical limitations, home layout, or a caregiver’s inability to modify or give up a job to care for a family member. Medical expertise and experience also become an issue if individuals need this type of care.
3 “I’ll pay for it out-of-pocket.” Depending on the level of care needed, the costs can be tough for a farm to cash-flow.
According to the Genworth 2014 Cost of Care Study, the average cost of hands-off care (such as cooking, cleaning, and running errands) averages $19 per hour. If your needs require an assisted living facility, the national median monthly rate is $3,500 per month, and those costs are rising steadily every year. If a loved one requires a private room in a nursing home care facility, the national median daily rate is $240, which adds up to over $87,000 per year.
4 “I’ll be covered by Medicare or Medicaid.” Medicare is limited to those 65 or older, is typically limited to 100 days of care, and has costs that are capped, Sarci says. “Medicaid is designed for the impoverished, and it significantly limits the type of available care. Choices regarding the type of facility and environment become a decision of the government, not the family.”
As you and your family consider planning for the potential of requiring long-term care, consider these four myths and truths, and plan accordingly.
Communicate with your family about their intentions to care for family members in a home or if full-time care would be an option. Families also should calculate the potential cost of care and determine if the farm can provide the necessary cash flow to cover long-term care.
Use these questions to help your family decide how to deal with the risk of long-term care for your senior generation. Don’t let the silent killer of the family farm end your family’s legacy. Plan accordingly.