Long-Term Care Planning
Roughly 70% of adults who turn 65 will need some form of long-term care during their lives, and the cost, whether from home care, assisted living, or a nursing facility, can quickly erode a lifetime of savings. Long-term care planning decides in advance how that risk is funded, through insurance, a hybrid policy, or earmarked assets, so an extended health event does not fall entirely on your family or your portfolio.
The Reality of Long-Term Care
Long-term care includes assistance with daily activities like bathing, dressing, and eating, whether at home, in an assisted living facility, or in a nursing home. Medicare covers very little of these costs, and Medicaid requires you to spend down most of your assets before qualifying. Planning ahead is the only way to protect your family and your wealth.
Key Statistics
- Nearly 70% of adults turning 65 will need some form of long-term care, much of it unpaid family care; about 56% will need significant care, help with two or more daily activities or due to severe cognitive impairment. (HHS Administration for Community Living, LongTermCare.gov; HHS ASPE, 2022)
- The U.S. spent about $564 billion on long-term services and supports in 2023, roughly 14% of all personal health-care spending, with Medicaid the largest payer at about 42%. (Congressional Research Service, from CMS National Health Expenditure data, 2023)
- On average, a 65-year-old needs about three years of long-term care, with women needing longer than men, though only about 0.8 year of that is typically paid care; families provide most of the rest. (HHS ASPE, 2022)
How We Help Plan for Long-Term Care
We help you evaluate your risk, explore insurance options (including hybrid policies that combine life insurance with long-term care benefits), and build a plan that protects your assets without sacrificing your quality of life. Start the conversation today.
Learn more about the Firm we use for insurance and annuity implementation →
Who This Is For
- Realists who understand that a health issue can beset even the healthiest of us
- Families who want to protect assets from the cost of a long-term care event
- Those evaluating hybrid policies that combine life insurance with long-term care benefits
- People who understand that Medicare covers little and Medicaid requires spending down assets
- Anyone who wants a plan in place before a health event, not after
- People convinced they will stay healthy and then go quickly, and unwilling to plan for any other scenario
- Those relying on Medicare to cover long-term care; it covers very little
- Anyone unwilling to plan ahead, when options are widest and least expensive
- Plans where the risk is better addressed through other means
Risks, Costs, and What to Weigh
- Medicare covers very little long-term care, and Medicaid generally requires spending down most assets before qualifying.
- Traditional standalone long-term care insurance can carry premiums you lose if you never need care; hybrid policies address that but cost more upfront.
- The right approach depends on your assets, family situation, and risk tolerance; there is no one-size-fits-all answer.
- Whitwell helps you evaluate the risk and options; insurance implementation is handled through the affiliated firm, Living Prepared, LLC, where commissions are earned.
Three Ways to Fund Long-Term Care
How three long-term care funding approaches compare on cost and outcome if care is never needed.
| Approach | How it is funded | If care is never needed | Cost predictability | Typical fit |
|---|---|---|---|---|
| Traditional standalone LTC insurance | Ongoing premiums for a dedicated long-term care policy | Premiums are generally not recovered | Unpredictable: premiums can rise substantially and unexpectedly, even on existing policies. Insurers have historically struggled to price this risk, and many have raised rates well beyond their original projections | Wants dedicated coverage at the lowest upfront cost |
| Hybrid / asset-based (life or annuity with an LTC benefit) | Larger upfront or limited-pay premium, often from earmarked assets | Pays a death benefit instead, so premiums are not lost | Predictable: you fund more upfront, but the total cost can be lower than other approaches, especially if care is never needed and often even if it is | Wants LTC coverage without the use-it-or-lose-it concern |
| Self-funding (earmarked assets) | Setting aside your own assets to pay for care directly | Assets stay in your estate | Unpredictable: you bear the full cost and timing risk, and a long event can be large | Substantial assets and willingness to self-insure; Medicaid is only a spend-down backstop |
Educational only, and any insurance guarantees are subject to the issuing insurer's claims-paying ability.
Written by: Rosemary Wright, CFP®
Reviewed by: Stefan Whitwell, CFA®, CIPM
Last updated:
Sources (verified):
- HHS ASPE, Long-Term Services and Supports for Older Americans: Risks and Financing, 2022
- HHS Administration for Community Living, LongTermCare.gov
- Congressional Research Service, Who Pays for Long-Term Services and Supports? (from CMS National Health Expenditure data, 2023)