Kentucky has a long and proud history of farming that stretches back centuries and continues to shape the Commonwealth’s economy, culture, and tourism. The Bluegrass State boasts approximately 13 million acres of farmland spread over nearly 75,000 farms, most of which are owned by families rather than corporations.
Preserving the family farm for the next generation is a key priority for many Kentucky farmers. Unfortunately, the high cost of long-term care, whether in a nursing facility or at home, can jeopardize your ability to pass your agricultural property to your heirs.
Here’s what you should know about long-term nursing costs, Medicaid eligibility and estate recovery, and how our skilled Central Kentucky estate planning and elder law attorneys can help you create a robust estate and farm succession plan to achieve your goals.
How the High Cost of Long-Term Nursing Care Can Affect Kentucky Family Farms
According to the U.S. Department of Health and Human Services, 10,000 Baby Boomers will turn 65 every day until 2030 and 7 out of 10 will require some type of long-term care services or support in their remaining years.
Long-term care costs are high throughout the country, and though they’re slightly lower than the national average in Kentucky, seniors still face expenses ranging from nearly $60,000 per year for home health or homemaker services to almost $100,000 per year for a private room in a nursing home.
Medicare Coverage for Long-Term Nursing Home Care Is a Common Misconception
Medicare only covers skilled nursing care under certain circumstances, such as when a patient requires a brief stay in a specialized facility following a covered hospitalization. It does not pay for long-term custodial or nursing care. Sadly, if families don’t realize the limitations of Medicare coverage until there’s already a need for long-term care, they could find themselves forced to sell the farm to cover the costs.
Medicaid for Long-Term Care: What to Know About Eligibility, the Five-Year Look-Back Period, and Estate Recovery
Unlike Medicare, Medicaid does cover long-term care and is actually the country’s primary payer for nursing services. However, as a needs-based program, applicants must meet strict income and asset guidelines and require a “nursing home level of care” as determined by a state medical specialist.
In 2023, applicants for long-term care Medicaid could qualify with a monthly income of up to $2,742 and countable assets of no more than $2,000. Several commonly held assets, don’t count to the $2,000 asset limit. We can help you determine if your farm qualifies as an exempt asset.
Medicaid Spend-Down and Look-Back Rule
Seniors who don’t qualify due to their assets may assume that they can sell or gift property until they’re eligible. Unfortunately, Medicaid has a specific rule preventing that. Medicaid examines all transactions in the five years (60 months) preceding your application and penalizes you with an extended period of ineligibility if you gifted, transferred, or sold assets below fair market value.
Medicaid Estate Recovery
Even if your farm was considered noncountable for eligibility purposes, that doesn’t mean it’s safe. When a Medicaid beneficiary dies, the Commonwealth can, under certain circumstances, file a claim against the estate to try to recoup some of the money it spent on their long-term care services. This could put your family farm at risk for going to the state, rather than your heirs.
Our Central Kentucky Estate Planning and Elder Law Attorneys Can Help You Safeguard Your Family Farm
Skeeters, Bennett, Wilson & Humphrey have helped clients throughout the Bluegrass State plan for long-term care needs while preserving their agricultural properties for the next generation. Here’s a brief overview of some of the strategies we recommend:
- Plan ahead. The sooner you start planning for long-term care needs, the more options you’ll have to achieve your goals. Ideally, you want to plan for long-term care well before the need arises.
- Consider long-term care insurance. These policies are available from various sources, with premiums for new policies typically rising with age.
- Get ahead of the Medicaid Look-Back period. Consider developing and enacting a farm succession plan well in advance of the need for long-term care. A Medicaid Asset Protection Trust is another valuable tool that can help you qualify.
- Get experienced and trustworthy legal help. Our highly skilled team can help you develop a comprehensive estate plan to obtain necessary long-term care, save your family farm, and leave a lasting legacy.