A lot of families in Kingsbury and Moody counties think long-term care is something you deal with when it happens, not something you plan for a decade ahead of time. By the time a parent needs help with daily living, the family is scrambling to figure out how to pay for it, and the options left on the table are usually the most expensive ones. Long-term care is a financial risk, not just a health event, and it deserves the same kind of planning you'd put into retirement savings or a farm succession plan.
The numbers involved are bigger than most people expect. A private room in a South Dakota nursing home commonly runs $8,000 to $10,000 a month, and assisted living facilities in the Brookings area often land between $3,500 and $5,500 monthly depending on the level of care. Multiply that by even two years and you're looking at a six-figure expense that Medicare does not cover beyond a short post-hospital stay. Medicaid can help, but only after a person has spent down most of their assets, which is exactly the outcome most families are trying to avoid.
Why waiting until you need it is the most expensive option
Long-term care insurance is priced on age and health at the time you apply. A 55-year-old in good health pays substantially less for a policy than a 65-year-old with early signs of hypertension or diabetes, and someone who waits until a diagnosis is already on the table may not qualify at all. This is the same logic that applies to life insurance: the earlier you lock in the rate, the less the insurer has to account for known risk, and the lower your premium.
Self-funding is the other end of the spectrum. Some clients decide to set aside investments specifically earmarked for care costs rather than pay premiums for coverage they may never use. This can work, but it requires discipline and a big enough asset base that a $200,000 to $400,000 care event doesn't derail a spouse's retirement or a farm's operating capital. For agribusiness families where land and equipment make up most of the balance sheet, self-funding a care event without touching the operation takes real planning, not wishful thinking.
Comparing your funding options side by side
| Funding method | Best for | Watch out for |
|---|---|---|
| Long-term care insurance | Clients in their 50s to early 60s in good health | Premiums can rise over time; underwriting gets stricter with age |
| VA Aid and Attendance benefit | Wartime veterans and surviving spouses needing help with daily activities | Requires meeting service and net worth criteria; application process takes months |
| Self-funded savings or investments | Clients with significant liquid assets outside the farm or business | Requires a large enough cushion to avoid touching operating capital |
| Hybrid life insurance with LTC rider | Clients who want a death benefit if care is never needed | Higher premiums than standalone LTC policies |
Most families end up using a blend of these, not a single option. A veteran client might combine a modest VA Aid and Attendance benefit (opens in new tab) with a smaller insurance policy and a dedicated savings account, spreading the risk across three sources instead of leaning on one.
The VA Aid and Attendance benefit is underused
Veterans and surviving spouses who need help with daily activities like bathing, dressing, or managing medication may qualify for the Aid and Attendance benefit, an additional payment on top of a standard VA pension. It's not automatic. You have to apply, document net worth and medical need, and the approval process can stretch several months. But for a veteran already receiving a VA pension, this benefit can offset a meaningful chunk of assisted living or in-home care costs, often several hundred dollars to over $2,000 a month depending on the household situation. Full details on eligibility and the application process are available directly through the VA Aid and Attendance and Housebound Allowance page (opens in new tab).
We see this benefit go unclaimed more often than it should. Farmers and small business owners who served decades ago sometimes don't realize their military service still qualifies them for support now, when they need it most.
The tax side most people miss
A portion of long-term care expenses can be deductible as medical expenses if they exceed 7.5% of adjusted gross income, and premiums paid for qualified long-term care insurance contracts are deductible up to age-based limits set annually by the IRS. The specifics of what counts, from nursing home costs to certain in-home care, are laid out in IRS Publication 502 (opens in new tab). For a retired couple already itemizing deductions, this can meaningfully reduce the tax bite of a care event, but only if the expenses are tracked and categorized correctly throughout the year, not reconstructed from memory at tax time.
This is where a lot of families lose money without realizing it. Medical expense deductions require documentation, and if a parent's care is being paid partly by the family and partly by savings, someone needs to be keeping a clean record of what was spent, when, and by whom.
Building a plan instead of reacting to a crisis
The families who handle this well start the conversation years before it's urgent. That usually means:
- Reviewing insurability in your mid-50s while premiums are still reasonable
- Checking veteran status and pension eligibility for Aid and Attendance
- Setting a savings target based on local facility costs, not national averages
- Coordinating any care spending with your annual tax planning so deductions aren't left on the table
For agribusiness families, there's an added layer: land and equipment are often illiquid, so a care event can create pressure to sell assets at the wrong time if there's no cash reserve set aside. Working through this alongside your broader farm succession and retirement plan, rather than as a separate conversation, tends to produce a much better outcome.
Common Questions
How much does long-term care actually cost in South Dakota? Assisted living in the Brookings area typically runs $3,500 to $5,500 a month, while a private nursing home room can run $8,000 to $10,000 a month. Costs vary by facility and level of care needed, so it's worth getting current local quotes rather than relying on national averages.
Is long-term care insurance worth it if I'm already in my 60s? It can be, but premiums rise and underwriting gets stricter with age, so a hybrid life insurance policy with an LTC rider or a self-funding strategy may make more sense depending on your health and asset base. This is worth running through with your CPA alongside your retirement income projections.
Can veterans get help paying for long-term care? Wartime veterans and surviving spouses who need help with daily activities may qualify for the VA Aid and Attendance benefit, an addition to a standard VA pension. Eligibility depends on service history, medical need, and net worth, and the application can take several months to process, so it's worth starting early.
Are long-term care expenses tax deductible? A portion of long-term care costs can qualify as deductible medical expenses once they exceed 7.5% of adjusted gross income, and certain LTC insurance premiums are deductible up to IRS limits. The details are outlined in IRS Publication 502, and good record-keeping throughout the year makes claiming them much easier at tax time.
If you're trying to figure out how long-term care fits into your retirement or farm succession plan, we'd rather help you build that plan now than help you react to a crisis later. Reach out through our contact page and let's talk through what funding mix makes sense for your situation.
