Today's Greatest Threat to Family Farms

Today’s Greatest Threat to Family Farms

By Dale S. Davidson, Esquire

I think we can all agree that our great country was built by family farmers who shed their blood, sweat and tears to feed us as well as the world.  Without our farmers we would be dependent on foreign imports for our food just as we are with the oil for our cars.  Family farms are often the source of pride and, to our farm families, their land is sacred.  Our country’s farmers have survived droughts, floods, high interest rates, and fierce competition from foreign imports.  Throughout the years family farms have endured these hardships but our farmers now face an almost insurmountable threat; the rising costs of healthcare.  Everyone has experienced the enormous costs of health care and we have all heard the never ending debate from politicians on how to fix our health care system.  All politicians, regardless of their political party, have promised to protect our family farms, yet rising health care costs and current health care policy is threatening to take our family farms.

The US Department of Agriculture has determined that our family farmers make little to no income from farming operations.  The latest data from the US Department of Agriculture and Georgia Statistics System sayt that net farm incomes in Brooks, Colquitt, Decatur, Grady, Mitchell and Thomas Counties Georgia decreased 5% to an average of $35,448.  How then are our family farmers to pay for their health and long-term care?  Unless a family farmer has significant income from other sources, cash reserves or long-term care insurance to pay these enormous costs then he or she will be forced to seek government assistance; but at what cost to our farmers and their families?  If an individual seeks government assistance for their long-term care needs in the form of Medicaid then the State of Georgia has the right to recover benefits paid against a family farm.

Legislation greatly increases the burdens on our family farmers who continue to struggle to survive.  A prime example is the increase of the look back period from 3 to 5 years for estate recovery (i.e., the “Medicaid Lien”).  In the past, the State of Georgia has not been aggressive in enforcing its Medicaid Lien, but given the State’s current financial affairs and our county’s financial outlook it should come as no surprise to anyone that the State of Georgia has begun enforcement of its rights.

It is true that a person’s home is exempt from his or her assets when applying for Medicaid if he or she lives there and this is his or her principal residence.  This would include a farm if the residence is located on the farm.  But we are talking about two separate things: (1) Medicaid Eligibility-in which the residence is generally not included in meeting the eligibility requirements; and (2) Medicaid Lien-where the State of Georgia has the right to recover benefits paid to or on behalf of a recipient from the assets of the recipient, including the family farm.  A person’s home is not counted for eligibility purposes but is available for Medicaid Lien purposes upon the death of the recipient and the recipient’s spouse.  Once both the recipient and his or her spouse pass away then the residence is not longer exempt and subject to the Medicaid Lien.

How are the heirs of family farmers to pay back this Medicaid Lien?  From parent’s or grandparent’s savings?  By getting a loan against the farm? Or will the heirs be forced to sell all or a part of the family farm to pay back the State of Georgia?  Data from the Georgia Statistics System suggests the number of farms in southwest Georgia farm have decreased 26.5% since 2002 and the estimated fair market value of farm land and buildings is $2,794.50 per acre.  Family farms are already being abandoned and/or sold at an alarming rate and the values are low. 

As our laws stand now and with impending new and proposed legislation we will lose more of our family farms.  I encourage everyone to proactively plan for their long-term care so that they may achieve their goals.  Let me give you an illustration of proactive versus crisis in farming terms.  Soybean farmers don’t plant late because (1) their soybean crop will not collect as much sun as possible, (2) their soybean crop will not transpire enough water, and (3) their soybean crop will not produce as many plant stem nodes if they would have planted their crop earlier.  This same logic applies to long-term care planning.  I want my clients to proactively plan because: (1) there is more time in which to fully analyze and discuss their assets in order to suggest certain planning techniques; (2) there are more planning techniques available to help meet their goals; (3) many long-term planning techniques require time in which to mature; and (4) proactive long-term care planning versus crisis planning is cheaper.

Should you or a loved one have any questions concerning elder care and long-term planning please do not hesitate to call my office (229) 226-8182 or email dale@ddavidsonlaw.com.