Planning for Care If You Can No Longer Care for Yourself
Long-term care as you age is expensive and, for most of us, inevitable. Making arrangements now, while you can, is a gift to those you love.
Editor’s Note: This article is the third in a five-part special report exploring the connection between your money and your health. Other stories in the series look at 15 ways to lower your healthcare costs, how your finances affect your physical and mental health, managing the costs of mental health treatment and what’s new in Medicare this year.
In 2019, Thomas Jefferson Trombino, then 93, moved from his home in New Jersey to an assisted-living facility in Temecula, Calif., near his son Dennis and daughter-in-law Kelly. The $4,390 a month he received from Social Security and benefits earned as a World War II veteran covered the bulk of his costs, and the younger Trombinos were happy to pay for incidentals, such as toiletries, laundry service and snacks.
But as the older Trombino’s health declined, the cost of care grew, leaving Kelly and Dennis to pick up an increasing share of the bills. By the time Thomas passed away at age 98 in 2024, the couple, who own a pension-plan consulting business, were spending about $3,000 a month.
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Their total outlay for Thomas’s long-term-care needs over the four and a half years he needed help: more than $50,000, with two of Dennis’s siblings chipping in an additional $31,000.
"My father-in-law was a really nice guy, but he never planned for retirement or his health needs as he got older, and he never expected to live so long, either," says Kelly, 65. "He thought he was going to be fine on Social Security and Medicare."
Like the Trombinos, millions of Americans have found themselves thrust into the role of physical or financial caregiver — or both — for family members who didn’t expect to need long-term-care assistance, put off planning, incorrectly assumed Medicare would cover the costs or simply never had the financial means to save for their future health needs.
Expectations, meet reality.
Eight in 10 people age 65 and older will need long-term-care help during their lives, most commonly with tasks such as managing their finances, transportation, housekeeping, meal prep, organizing medication and dealing with health care providers, according to the Center for Retirement Research at Boston College (CRR).
About 40% will require more intense assistance for a year or longer with two or more activities of daily living, such as bathing, dressing, eating or going to the bathroom, or will have cognitive issues, such as dementia.
Yet fewer than half have savings set aside to assist with the cost of this care, and only 15% have long-term-care insurance to help pay the bills. Even people who have planned may be unprepared for the full cost.
Only about four in 10 households correctly estimate nursing home fees, and far fewer know the price tag for home care or assisted living, CRR research shows.
It’s lofty: The median monthly cost of nonmedical home care (44 hours a week) ran $6,673 last year; $6,200 for assisted living; and $9,581 for a semi-private nursing home room, according to the CareScout Cost of Care Survey.
"No one likes to think about the physical, cognitive and emotional challenges of aging," says Melissa Brennan, a certified financial planner in Plano, Texas. "Procrastination, though, usually results in relying on family members to be caregivers, morphing a one-generation problem into a two-generation problem and having a potentially devastating impact on family relationships and finances."
While the Trombinos could handle paying for long-term care for Dennis’s father without dramatically changing their lifestyle, they did cut back on vacations, dining out and even saving for retirement during this period to help foot the bills.
For many families managing long-term care for an older loved one, the impact is more painful. More than half have had to cut back on basic household spending; four in 10 have drained their savings; a third have gone into debt; and one in three have delayed retirement, according to a study by KFF, a health policy research nonprofit.
To avoid that fate for your family, be proactive about planning for your potential long-term-care needs now — before you require help. “The right strategy depends on how much risk you can afford to take on, how strongly you prioritize legacy versus lifestyle, and how much certainty you want around future health care costs," says New York City CFP Georgia Lord.
From traditional long-term-care insurance to newer alternatives to self-funding, here's a look at your options.
Long-term-care insurance
Just as auto or homeowners insurance can help keep a collision or a house fire from draining your savings, a long-term-care policy can help prevent your future health needs — say, a costly nursing home stay or extended care at home while you're recovering from an illness — from undermining your financial security or creating a burden for your family.
Traditional long-term-care policies usually provide coverage for a set period (say, three or five years) for care received in a nursing home, an assisted-living facility or adult daycare center, or for certain health services received at home.
Some policies provide unlimited or guaranteed lifetime payments, but a daily or monthly maximum amount toward care costs is more common, typically paid until the policy’s benefit is exhausted or the policyholder dies or gets better.
Benefits usually kick in, after a waiting period that may stretch 90 days or more, when you can no longer perform at least two activities of daily living without help, such as eating or getting dressed, or you become severely cognitively impaired.
The big sticking point is cost, both for policyholders and the insurers providing coverage. In fact, many insurers left the market in recent years as profits shrank, because they’d severely underpriced earlier policies based in part on faulty information about policyholders’ longevity and policy lapse rates.
The handful of companies that remained hiked premiums sharply on new policies and pushed state authorities to allow steep increases for existing policies as well. For instance, a survey of insurers conducted by the consulting firm Milliman shows that the average approved premium increase in 2024 was 28% for existing long-term-care policies.
Policies bought today are less likely to face the same steep premium hikes as in the past, as insurers now have more-accurate claims data on which to base premiums, industry experts say.
But insurers have also worked to limit losses by narrowing the types of health conditions and ages they’ll accept for coverage. For instance, you’ll likely be denied if you use a walker, have certain cancers, recently had a stroke, or have Alzheimer’s or Parkinson’s disease, according to the American Association for Long-Term Care Insurance (AALTCI), an insurance education group.
To help avoid being rejected for coverage and to lower premiums, many experts recommend you buy coverage before age 65, and ideally in your fifties, when you’re usually healthier. The price difference is huge: In 2025, a 55-year-old woman buying a long-term-care policy with $165,000 of coverage typically paid $1,500 a year in premiums, compared with $2,700 at age 65.
"The number-one mistake people make is waiting too long," says Jesse Slome, executive director of the AALTCI. "At age 70, half the people who apply are denied for health reasons."
You can also help keep costs down by forgoing inflation protection — a feature that increases the policy’s benefit by 1% to 5% a year to offset rising medical costs. A policy worth $165,000 in coverage for a 55-year-old man ran $950 annually last year, for example, but one with 2% inflation protection typically cost $1,750.
Similarly, opting for a set time period for benefits — on average, women need long-term care for 3.6 years and men need it for 2.5 years, data shows — is less expensive than a policy with lifetime or unlimited benefits. In general, experts advise, don’t plan for the worst-case scenario.
"If you try to buy a long-term-care policy that covers every single contingency and every single cost you might incur, you won’t be able to justify the premium, and you’re going to be leaving a lot of money with the insurance company," says Jerry Vanderzanden of the Life Insurance Consumer Advocacy Center.
Short-term insurance
Depending on where you live, short-term-care insurance, which typically covers care for up to a year, often with no waiting period, may be worth considering.
"One year may seem like nothing, but for many people, that’s all the coverage they’re going to need," Slome says. For instance, 43% of long-term-care claims made to Genworth Life Insurance Company end within a year.
The policies cover less than traditional long-term-care insurance, but they cost a lot less, too. For instance, a short-term-care policy might pay for $1,050 of home care a week for up to 52 weeks and $200 per day of nursing home care for a year. Typical cost for a 65-year-old: about $125 a month, according to AALTCI.
Short-term-care policies have unisex pricing, which helps women, who typically pay more for coverage than men. Insurers that offer the policies also accept much older applicants, often up to age 85, and have simpler medical underwriting, making it easier for those with health concerns to qualify. "Because of this, they may be someone’s only available insurance option, and some coverage is better than none," Slome says.
But accessing these policies can be challenging. Several states, including California, Florida, Massachusetts and New York, have banned their sale, primarily because their duration and benefits are considered too limited compared with traditional long-term-care policies. In other states, few insurance agents are well versed in these policies because the market for them is small, Slome says.
Your state insurance commission or the AALTCI may be able to help with identifying options. Or you can contact insurers that offer this coverage, such as Aetna and Wellabe, to see if the policies are sold in your area.
Hybrid policies
The more common alternative to traditional care insurance is a hybrid policy that combines long-term-care coverage with life insurance or, less often, annuities. Unlike most conventional long-term-care insurance, which is use it or lose it, these policies offer a return on the money you’ve sunk into coverage even if you don’t end up needing help.
Life insurance with a long-term-care benefits rider, for instance, pays a death benefit to your heirs if you don’t access care. If you do, the payout is reduced or eliminated. The maximum monthly care benefit typically equals a percentage of the death benefit, usually 2% to 4%, paid out over a two- to four-year period.
"Hybrid life insurance policies with long-term-care riders address the psychological hurdle of paying for something that might never be used," Lord says.
Alternatively, you could purchase an income annuity with a provision that will increase your payout for a set period if you need long-term care. A $100,000 fixed annuity with such a rider might provide, say, $200,000 to $300,000 worth of care benefits for up to five years. If you don’t need care, the annuity continues paying as usual.
Hybrid policies can also be easier to qualify for than traditional long-term-care insurance because they have less-stringent medical qualifications, and the annuity version may be accessible to people up to age 80, Vanderzanden says.
The other big draw of hybrids: No premium surprises. With these policies, you typically pay one lump sum or a fixed annual amount spread over a set period rather than ongoing monthly premiums.
But their dual purpose and promised payout translate to higher premium costs than stand-alone policies charge. A 55-year-old male would pay a lump sum of about $53,000 for a hybrid life insurance policy with $180,000 in long-term-care benefits and a minimum death benefit of $120,000, according to the AALTCI.
While hybrid policies generally have the same claim eligibility and similar waiting periods as traditional policies, they tend to offer lower maximum daily or monthly care payouts than similarly priced traditional policies. They can also place more limits on the services or expenses that are covered, Slome says. In addition, they often provide smaller death benefits than traditional life insurance policies do or reduce an annuity’s standard payout.
They can be a good solution, though, if you may not qualify for traditional care insurance, are concerned about possible premium increases or dislike the idea of paying for a product you may never use.
Self-funding care coverage
Millions of Americans, especially higher earners and those over age 65, plan to pay for long-term-care themselves, should the need arise, rather than relying on insurance, KFF data shows.
The big question: Can you actually afford it?
Consulting firm Milliman estimates that the average 65-year-old would need to set aside $135,000 for future long-term-care needs, assuming an average annual investment return of 4.35%. CRR notes you should "increase that number if you live in a high-cost state, have a family history of dementia or other illnesses that may require a long period of assistance, or if you do not have family members who could help."
Personalizing that estimate to your circumstances is key. Start by researching the prices for different forms of care, such as a nonmedical caregiver or a room in a nursing home, in your local area (you can find a useful tool at carescout.com/cost-of-care). Assume those costs will rise by 3% to 5% a year until you hit your early to mid eighties, the most common time people begin needing paid care.
Next, consider your other resources. Do you have a healthy spouse, children who live nearby, close friends or other loved ones who would help out? asks Dick Weber, also of the Life Insurance Consumer Advocacy Center. Families typically provide at least half of all care hours, according to CRR.
Moving or tapping your home equity are also common contingency plans for managing long-term-care costs. "A lot of households think of their home as a kind of insurance, so that if something bad happens in retirement or they need a lot of care, they can use their equity,” says Anqi Chen, associate director of savings and household finance at CRR.
One thing to keep in mind about self-funding is that it is not very tax-efficient, Vanderzanden says. "You’re going to owe federal and, in most places, state tax on money you take out of retirement plans or when you sell stocks, property or other assets. So to get that one dollar of care you need, you’re going to burn through $1.50 or more."
In contrast, benefits from a long-term-care insurance policy aren’t generally taxed.
Government programs
Among those age 65 and older, 45% mistakenly believe Medicare will pay for their own or a loved one’s time in a nursing home, KFF found. This incorrect assumption is a big reason why people under prepare for this expense, says Chen.
In fact, Medicare will cover up to 100 days of care in a skilled nursing facility after hospitalization, and it may provide limited home health care, such as skilled nursing or therapy, if you’re homebound. But the program doesn’t generally pay for long-term-care services.
Medicaid, the government health insurance program for low-income families with few assets, does cover some long-term care. Six in 10 people with $100,000 or more in investments think spending down their savings to qualify is a viable backup option if they cannot afford long-term-care expenses on their own, CRR has found.
But eligibility is more challenging than many realize, and only 15% will actually end up accessing Medicaid for that purpose, CRR says. That’s because 70% of these households earn too much from Social Security and pensions to make the income cutoff. Although each state has its own rules, you typically wouldn’t be eligible in 2026 if your monthly income exceeds $2,982 and you have more than $2,000 in assets, excluding your home, a vehicle and personal belongings.
If you meet the criteria, state Medicaid administrators will review your financial history going back 60 months prior to your application to be sure you didn’t recently give away assets or sell them for less than fair market value to qualify. Should Medicaid find a prohibited transfer, a penalty period will be imposed and you won’t be eligible for benefits during that time.
Medicaid generally doesn’t cover room and board at an assisted-living facility, but it will typically pay for nursing and personal care services provided there, as well as for adult daycare and home health needs.
While nursing home care is usually covered, only certain facilities accept it, says Chad Karl, a CFP in Janesville, Wis., noting, "Many facilities are also already booked with Medicaid patients, which may require family members to look farther away for care."
Bottom line: "Medicaid should be the option you’re left with only if you have no other options," Weber says.
No matter what path you choose, once you’ve put a long-term-care plan in place, make sure to communicate it to your family and anyone else in your support network. That way, they’ll know what you want and how to access the insurance or assets you’ve set aside for the purpose, and they won’t stress about making related medical and financial decisions on your behalf without the benefit of your guidance.
Says Los Angeles CFP Joon Um, "The ultimate goal is to prevent long-term care from overwhelming your family."
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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