Long-Term Care Planning: What to Know Before You Need It

Long-term care is an issue that affects millions of Americans. It becomes important when illness, disability, or age prevents someone from managing their daily activities independently. The cost is high, the need is widespread, and most families are unprepared for it. 

What is Long-Term Care?

Long-term care means regular help with personal needs when a person cannot handle them alone for a long period. These needs include eating, dressing, bathing, using the toilet, moving between a bed and a chair, and keeping continence. They are referred to as Activities of Daily Living, or ADLs. There are also Instrumental Activities of Daily Living, or IADLs. These include shopping, preparing meals, taking medications, cleaning the house, managing money, and using transportation.

The U.S. Department of Health and Human Services (HHS) states clearly that Medicare and standard health insurance do not cover most long-term custodial care. Medicare may cover short stays in skilled nursing facilities following a hospitalization, but this coverage is limited to 100 days and is only available if the individual meets specific requirements. However, ongoing assistance with daily activities should be planned separately.

Who Needs Long-Term Care?

Anyone can end up needing long-term care. The risk rises with age, but accidents, strokes, or chronic conditions can cause the need at younger ages as well. According to the Administration for Community Living (ACL), about 70% of Americans who reach age 65 will require some form of long-term care.

Chronic illnesses such as diabetes, heart disease, and dementia increase the likelihood. Mobility limitations, arthritis, or vision impairment also contribute to this condition. Even people who lead healthy lifestyles face the possibility that a sudden injury or illness can change their independence overnight.

It is important to recognize that long-term care is not only an issue for older people. Adults of all ages may need care after car accidents, workplace injuries, or disabling diseases. The main lesson is that health can change quickly, and long-term care is not just for the very old. Planning is the only way to make sure resources are ready. 

What Types of Long-Term Care Services are There?

Long-term care includes a spectrum of services, ranging from occasional support at home to full-time residential care in medical facilities. Each type addresses different levels of need.

Home Care

Home care allows people to remain in their homes while receiving help. Services may include visits from nurses, physical or occupational therapists, or home health aides who assist with activities such as bathing, dressing, and administering medication. Homemaker services, including cleaning, cooking, and shopping, may also be provided.

Many people prefer home care because it allows them to preserve their independence and maintain familiarity. It can be provided for a few hours a week or around the clock, depending on the person’s needs. The median hourly cost of a home health aide is about $33 nationwide. Twenty hours a week adds up to roughly $34,000 per year. Around-the-clock home care, however, can exceed $200,000 annually, making it as expensive as or more expensive than a nursing home.

Community and Residential Care

When home care is insufficient, community or residential services may be necessary.

• Adult day programs provide daytime supervision, meals, and activities. These programs are especially helpful for people with dementia, as they provide safe environments while giving family caregivers a break.
• Assisted living facilities provide housing, meals, and help with personal care. Residents maintain some independence but receive support for ADLs as needed. These facilities also offer social activities and health monitoring.
• Memory care units are specialized facilities for people with Alzheimer’s disease or other dementias. Staff are trained in managing cognitive decline, and facilities are designed to prevent wandering.
• Nursing homes, also known as skilled nursing facilities, provide the most intensive level of care. They deliver 24-hour supervision, medical monitoring, rehabilitation services, and full assistance with ADLs.

Three Facts About Long-Term Care You Might Not Know

Here’s what most people often overlook:

Most People Will Need It

Nearly 70% of adults over 65 will need long-term care. It is not a rare occurrence, but a normal part of the aging process.

The Cost is High

Long-term care is expensive everywhere. In 2025:

• A private nursing home room averages $131,580 per year.
• A semiprivate room averages $115,000.
• Assisted living averages $57,000 per year.
• Part-time home health aide services cost about $34,000 per year.

Costs are higher in large cities. For example, nursing homes in New York City average more than $180,000 annually. These figures highlight how quickly elder care costs can drain family resources, especially when care is needed for several years.

Insurance Does Not Cover It

Health insurance and Medicare do not cover custodial long-term care. Medicare covers limited rehabilitation, typically for no more than 100 days, following a hospital stay. Medicaid covers long-term care but only for those who meet strict income and asset limits. In many states, individuals must have less than $2,000 in countable assets to qualify. Some states also cap home equity at $1,071,000.

How do people pay for long-term care?

Families usually pay for care through a combination of government programs, personal savings, and insurance.

Government Programs

Medicaid pays for most long-term care in the U.S. It covers nursing homes and, in many states, home- and community-based care. To qualify, you must meet strict limits on income and assets. States also review financial records from the past five years to make sure no assets were transferred to qualify. After death, states may recover costs from estates. Rules differ by state, and details are available at Medicaid.gov.

Veterans Affairs (VA) provides benefits for eligible veterans and spouses through Aid and Attendance or Housebound allowances. These benefits provide additional monthly payments to those who need help with daily activities. Information and application forms are available at va.gov.

State programs are also expanding. Washington State has WA Cares, a publicly funded long-term care insurance program supported by payroll deductions. Starting in 2026, residents who qualify will receive a lifetime benefit of up to $36,500 to use toward approved long-term care services. This model may spread to other states over the coming decade.

Out-of-Pocket Payments

Many people use personal savings, retirement accounts, or home equity to pay for care until they qualify for Medicaid. This option allows maximum freedom of choice but can quickly deplete resources. For example, three years in a nursing home at $130,000 per year totals nearly $400,000, which can exhaust even well-funded retirement accounts. Families relying on this method should prepare for how quickly savings can vanish.

Long-Term Care (LTC) Insurance

Long-term care insurance is designed to cover these expenses. Policies vary in terms of benefit amount, duration, and inflation protection. According to the American Association for LTC Insurance, in 2025, a healthy 55-year-old man can expect to pay around $950 per year for a policy with a $165,000 benefit pool. Adding 3 percent compound inflation protection raises the premium to around $1,750. Women pay more due to longer life expectancy, with premiums averaging $1,500 to $2,800 annually for the same coverage.

One challenge is that many insurers have left the market, and those that remain sometimes raise premiums significantly. In some cases, premiums on older policies have increased by over 300 percent in a decade. Buyers should review whether policies offer guaranteed premiums and whether they are tax-qualified under federal law, which allows deductions within IRS limits.

Hybrid Insurance Policies

Hybrid policies combine life insurance or annuities with long-term care benefits. If you need care, you can draw on the policy’s benefits. If you never need care, your heirs receive the death benefit. This structure eliminates the “use it or lose it” concern associated with traditional long-term care insurance. These policies often require higher upfront payments but guarantee that money will be used either for care or as a legacy. 

How to Plan for Long-Term Care

The following steps create a reliable plan for the future and help families with planning for long-term illness or sudden disability: 

Research Long-Term Care Insurance

Get quotes from different insurers. Compare benefits, waiting periods, coverage length, and inflation protection. Use the National Association of Insurance Commissioners (NAIC) to check insurer ratings and complaints. Apply while you are healthy, as acceptance becomes harder with age.

Consider Hybrid Life Insurance

Hybrid policies combine life and long-term care coverage. If you never need care, your heirs get the death benefit. If you do, the policy covers it.

Research Medicaid Planning

Check your state’s rules at Medicaid.gov. Learn the asset limits, income caps, and five-year look-back period. Consult an elder law attorney for strategies like Medicaid Asset Protection Trusts.

Create a Health Savings Account (HSA)

If you have a high-deductible health plan, contribute to an HSA. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical and long-term care expenses are tax-free.

Talk to Your Family

Discuss your care preferences, how you will pay for them, and who will make decisions if you cannot. Share where your documents are stored.

Create a Legal Plan

Work with an elder law attorney to set up powers of attorney for health care and finances, advance directives, and wills or trusts.

Estimate Future Care Costs

Use tools such as the Cost of Care Tool to calculate projected expenses in your state. Compare the results to your income, savings, and insurance.

Explore Employer or Retirement Benefits

Some employers and unions offer group long-term care insurance or voluntary benefits. Retirement plans may include long-term care riders. Programs like WA Cares show how states are expanding options.

Work with a Financial Advisor

Select an advisor with experience in retirement and long-term care planning. They can help you balance savings, insurance, and estate planning.

Common Myths and Misconceptions About Long-Term Care

Several misconceptions prevent people from planning effectively:

• Believing Medicare will cover long-term custodial care.
• Assuming the family will always be able to provide care without financial or emotional strain.
• Thinking that being healthy now means long-term care will never be necessary.
• Believing insurance is unnecessary or unaffordable without calculating the actual costs of care.
• Assuming Medicaid will be available without considering strict eligibility rules and estate recovery.

Final Thoughts: Don’t Wait Until it’s Too Late

Long-term care planning is not just for older people. It is for anyone who wants to maintain control, protect assets, and reduce family stress. Costs are high, coverage is limited, and eligibility rules are strict. By planning early, you secure better options, reduce financial risks, and protect your dignity.

Government resources such as Medicare.gov, Medicaid.gov, VA.gov, and ACL.gov provide reliable information. Use them to learn eligibility rules, available benefits, and planning tools. Consult professionals where necessary, and most importantly, involve your family in discussions.

By acting now, you ensure that care will reflect your preferences and financial strategy rather than being dictated by crisis and limited choices.