As we age, the likelihood of needing assistance with daily activities increases. Long-term care includes nursing homes, assisted living facilities, and home health aides—services that support people who can't fully care for themselves. Planning for these potential needs protects your finances and ensures you receive quality care when you need it.
Long-term care is expensive, and most families are unprepared. Understanding costs, funding options, and planning strategies helps you make informed decisions.
Understanding Long-Term Care
Long-term care differs from medical care. It's assistance with activities of daily living (ADLs)—bathing, dressing, eating, transferring, toileting, and continence. People need long-term care when health conditions or aging make these activities difficult or impossible independently.
About 70% of people over 65 will need some form of long-term care. The average need is about three years, though some require care for much longer. Dementia patients, in particular, often need years of progressively intensive care.
Care settings range from part-time home aides to round-the-clock nursing facility care, with assisted living and memory care facilities in between. Costs vary significantly by setting and location.
The Cost Reality
Long-term care is expensive. National averages in 2024: nursing homes cost 0,000-10,000 annually for a private room; assisted living averages 4,000; home health aides cost 7-0 per hour (potentially 5,000+ annually for significant hours).
Costs vary dramatically by location—metropolitan areas often cost 50-100% more than rural areas. Some regions exceed 50,000 annually for nursing home care.
These costs can quickly deplete savings. Without planning, families may exhaust lifetime savings in just a few years of care.
How Long-Term Care Is Paid
Most people assume Medicare covers nursing home care. Medicare only covers skilled nursing facility care after hospitalization, and only for limited periods—up to 100 days, with copays starting after day 20. Medicare doesn't cover custodial long-term care.
Private payment from savings is common initially. Many families pay out-of-pocket until savings are exhausted.
Long-term care insurance covers care costs if you purchased it before health declined. Medicaid covers nursing home care for those who qualify financially—but requires spending down assets first.
Long-Term Care Insurance
Long-term care insurance pays daily benefits toward care costs when you need assistance with ADLs or have cognitive impairment. Policies vary in benefit amounts, duration, inflation protection, and qualifying conditions.
Purchasing while healthy (typically ages 50-65) is essential—preexisting conditions may disqualify you later. Premiums can be substantial and may increase over time.
Hybrid policies combine life insurance with long-term care benefits—if you don't need care, death benefits go to beneficiaries. These address concerns about paying premiums for coverage never used.
Medicaid Planning
Medicaid is the payer of last resort for long-term care. Qualifying requires meeting strict asset limits—typically under ,000 for the individual needing care. Proper planning can protect assets for a spouse and heirs while qualifying for benefits.
Planning strategies include converting countable assets to exempt assets, certain trust arrangements, and spousal protection rules. These must be implemented correctly and—ideally—well before care is needed due to look-back period rules.
Crisis planning when care is already needed is possible but more limited. Working with an elder law attorney maximizes protection even in difficult circumstances.
Other Planning Considerations
Create advance directives specifying your care preferences and designating decision-makers. Healthcare powers of attorney ensure someone can make medical decisions if you cannot. Living wills express preferences about life-sustaining treatment.
Consider where you want to receive care. Many people prefer aging in place at home, but homes may need modifications. Evaluate whether your home can accommodate care needs.
Communicate with family about preferences, potential care roles, and financial realities. Surprises during health crises create conflict and poor decisions.
Veterans Benefits
Veterans and surviving spouses may qualify for VA benefits that help pay for long-term care. The Aid and Attendance pension supplements income for those needing assistance with ADLs. These benefits can significantly offset care costs for eligible veterans.
Getting Legal Help
Long-term care planning involves legal, financial, and healthcare considerations. An elder law attorney helps evaluate your situation, develop appropriate strategies, create necessary documents, and coordinate with financial planners. Planning well in advance provides the most options. Waiting until care is needed limits choices and increases costs. Professional guidance ensures you're prepared for whatever the future holds.