How to Protect the Family Farm from Medicaid

Long-Term Care Planning for Farmers: How to Save the Family Farm from Medicaid

What is the greatest threat to the family farm here in America? Some say it’s the rising costs of fertilizer or farm equipment. But actually, the greatest threat to the family farm is long-term care. As we’ve mentioned on previous blogs, 70% of us will need long-term care at some point in our life. If you don’t have a proper plan in place, the entire family farm could be compromised due to the exorbitant costs of nursing home care. Below, we’ll discuss these concerns in more detail and provide some strategies that you can use to protect your family farm.

Long-Term Care Risks to the Family Farm

I think we can all agree that we live in the greatest country in the world. This country was built by family farmers who shed their blood, sweat, and tears to not only feed us, but they also feed a majority of the world. Without our farmers, we would be more dependent on foreign imports as we are with gas and oil.

Family farmers have a lot of pride in what they do and their land is sacred to them. These family farms usually have significant wealth in the land that they have accrued over the years. Since long-term care is inevitable for 70% of us, how do we ensure this land is preserved when a member of the family farm needs long-term care?

If you or a family member needs to go into a nursing home, how do you pay for it? If you don’t have the cash or a long-term care insurance policy, your property could be at risk. The US Department of Agriculture has determined that our family farmers make very little money as far as cash flow goes. And according to government statistics, family farm income recently decreased by 5% here in south Georgia. Since cash flow is at a premium on these family farms, how do you pay for long-term care when most of your wealth is in your land and equipment?

According to the Genworth survey, the average cost of nursing home care in Georgia is approximately $8,300 a month. If you need nursing home care but your spouse is still at home, you still have all those household expenses that you have to pay. So you’ve basically doubled or tripled your expenses if somebody has to go into a nursing home. And that’s just the financial costs. That’s not counting the emotional tolls of the process as well.

What does our government do about it? Well, they put more burdens on us and more burdens on our farmers. One of the largest burdens we are facing is this five-year look back rule. This makes it even tougher to help people plan and prepare for long-term care. The government will look back into your financial records for the last five years to make sure you haven’t given away any assets. If you have, that makes you ineligible for Medicaid benefits for a period of time until that five years has passed.

Medicaid Eligibility for Farmers

Let’s dig a little deeper into Medicaid eligibility as it relates to farmers. It is true that your homestead is an exempt asset for Medicaid eligibility, and that works well as long as your farm and house is combined. But what happens if your land is split into many different tracts that are not contiguous? That extra acreage will then make you ineligible for Medicaid benefits. But if your farm and house are combined, we have a good exempt asset there.

Then we have the Medicaid lien to consider. Your home and land may be exempt for Medicaid eligibility, but they’re not exempt from the Medicaid lien. If you are receiving Medicaid benefits in the State of Georgia, they can place a lien against your assets for the benefits that have been paid for your long-term care. This not necessarily true if you have a spouse. But if you are single, this is a huge concern.

If you have a pending lien, how are you going to protect your homestead? Traditionally the States have not been enforcing these liens as much. But with the economy in decline and the government’s ferocious appetite for spending, they’ll soon need to find those assets and convert them to cash so they can give away our money.

Let’s use an example here to make this more clear. The average family farm in Georgia is 235 acres and the average sale price is $3,700 per acre. These are all statistics from the US Department of Agriculture and Georgia Farm Bureau. Given those numbers, the average sale price would be approximately $870,000. If you need nursing home care, clearly that $870,000 of assets is over the Medicaid eligibility limit. If you have a spouse, the limit is only $135,400. So how do you get around all that extra value?

Fortunately for you, we do this every single day. We work with many farmers around southwest Georgia and north Florida. We help them protect and preserve their farms so that they can qualify for Medicaid and skilled nursing care. We make sure they can qualify but still maintain their family farm and have the pride that they can pass that family farm to their children.

What if You Don’t Have a Plan?

Now let’s look at the situation where you didn’t have any kind of long-term care planning. Medicaid would likely have a lien against the family farm in this case. As an heir, how are you going to pay back that Medicaid lien? Savings? A loan against the property? Loans nowadays have very high interest rates, so that’s probably not a great idea. Or are you going to be forced to sell all or part of the family farm? How are you going to save this sacred land but still be able to pay back the State of Georgia?

Data from the Georgia Statistics System suggests that the number of farms in southwest Georgia has decreased by almost 27% since 2002. Family farms are already being abandoned and sold at an alarming rate. But now we have higher interest rates and higher healthcare costs. It’s unfortunate, but we’re probably going to lose more of our family farms in the next decade. As a result, proper long-term care planning is important now more than ever! The earlier you start, the more we can help you.

If you start now with a proactive plan, we can better achieve your goals. If your goal is to save the family farm, we can do that. If your goal is only to save the residence, we can do that too. Whatever your goal may be, we can help you save those assets from Medicaid and the nursing home.

Proactive Planning versus Crisis Planning

We often talk about proactive planning versus crisis planning and how proactive planning is much better. Let’s look at an example of this from the family farm perspective. Let’s say that I’m a soybean farmer. I don’t want to plant my crop too late because it may not get enough sun or may not get enough water. This would mean that I’m likely going to get a substandard soybean crop. But if I plant early, I’m likely to get more sunlight, more water, and have a greater yield from my soybean crop.

This is the same concept as proactively planning for long-term care. The earlier we plan, the more time in which we can fully analyze your assets and suggest different techniques to help preserve and protect those assets. The earlier we plan, the more techniques that are available to use to help you meet your goals of asset protection. Any plan is going to require time to consider all the options and put it together. But the earlier we start, the better the plan will be.

Contact Us So We Can Help!

Proactive long-term care planning is much cheaper than crisis planning over the long-term. Proactive plans provide more time for us to do what we need to do to preserve your assets and the family farm in this case. If we’re in a time crunch, we will be restricted by government regulations and not be able to adequately save your property from Medicaid. Haste makes waste and we don’t want to waste anything.

We hope this information regarding family farms and long-term care has been helpful and we hope it has encouraged you to make sure you have a plan in place — especially if you are a farmer! If you need assistance with long-term care planning, you can complete this form or give us a call at (229) 226-8183.

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