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What's your farms' biggest financial risk?What's your farms' biggest financial risk?

Most people don't know who will pay this bill, says a North Dakota State University family economics specialist.

June 3, 2016

2 Min Read

What's one of the biggest financial risks to your farm or ranch you probably haven't thought of?

Lori Scharmer, North Dakota State Univeristy Extension family economics specialist, says it's long-term health care.

Without a long-term healthcare plan, a farm/ranch business is facing a potentially huge financial risk, she says.

In North Dakota, the cost for a nursing home stay may be more than $99,000 per year, and it is tough to avoid. One out of two people end up needed nursing home care.

“That’s why having a long-term healthcare plan is an essential part of any succession and estate plan. There must be planning to ensure the business transitions as the family desires,” she says.


Most people don’t know who will pay for long term health care. Many assume Medicaid will cover it. However, there are limits on how much money people can have and still qualify for Medicaid.

In general, the only assets you are allowed to have include:

Land totaling 160 acres and contiguous to the personal residence.

Property that is essential to earning a livelihood

Property that is not saleable without creating an undue hardship.

Personal residence to a maximum value of $552,000 each (2015).

One motor vehicle of any value used by the applicant .

Personal effects, wearing apparel, household goods and furniture.

Gifted assets if gifted 60 months prior to Medicaid application.

Pre-paid burials to a maximum of $6,000 per person; is available to both spouses.

Value of assets in life estate.

Value of mineral acres.

Qualified retirement fund accounts (before approval of one spouse for Medicaid, accounts must be annuitized).

Annuities that are excluded based upon Medicaid rules.

Indian trust and restricted lands.

Other assets are subject to limitations and spend-down rules, which means assets have to be liquidated or spent on medical care to become eligible for Medicaid.

NDSU and University of Minnesota Extension services have developed a publication about long-term health care planning. It outlines what long-term care is, the statistics on the probability of needing long-term care, some of the terms involved, an explanation of the federal Medicare and Medicaid program qualification guidelines, and methods of paying for long-term care.

“The publication is a good overview of long-term healthcare planning and a good place to start,” says Scharmer, one of the authors.

 “This topic is extremely complicated,” adds Gary Hachfeld, a University of Minnesota Extension educator and co-author of the publication. “When you begin to plan for this area of your life, consider seeking the help of an elder law attorney.” An elder law attorney focuses his or her law practice on the area of long-term health-care issues and Medicaid planning.

The publication is available through your local NDSU Extension office or online at http://tinyurl.com/Long-termHealthCare-NDSU.

Source: NDSU Extension Service

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