Long-term care is a crucial consideration of financial planning that most individuals will need as they age or face various health challenges.  The need for extended care and decisions surrounding the care can be both emotionally and financially challenging for individuals as well as their families.  In this blog we will look at the importance of long-term care and strategies and options available to help cover the costs.

 What is Long-Term Care?

Long-term care includes services that aren’t covered by regular health insurance.  This can include medical and non-medical care for individuals who are unable to perform basic activities of daily living (ADLs).  The six standard ADLs are grooming, dressing, toileting, bathing, transferring, and eating.  This care can be provided in many different settings:

  • Adult Day Care:  Places that offer care, supervision and various social activities for adults needing assistance during the day.
  • Home Care: Care provided in an individuals’ residence by family members, friends, professionals caregivers, or some combination of the three.
  • Assisted Living: Facilities that offer assistance with the ADLs.
  • Nursing Home: Facilities that provide around the clock medical care and supervision for individuals with increased healthcare needs.
  • Hospice Care: More specialized care for individuals facing terminal diagnosis.  This care is focused on pain management and emotional support.

Who Needs Long-Term Care?

Long-term care is a pressing issue and many of us have seen the impact firsthand.  With our aging population and medical advances, the likelihood of needing long-term care at some point increases.  This care can be extremely costly and coordinating care can be emotionally draining for the family, further highlighting the importance of having a plan in place for long-term care.

How Do You Pay for Long-Term Care?

Long-term care can be expensive and varies widely depending on your location, type of care, and setting.  These costs continue to increase as the number of individuals needing care rises.  Below are some common strategies and options to help cover long-term care costs:

  • Long-term care Insurance: Purchasing long-term care insurance can be an effective way to plan for future care needs.  These policies are earmarked for long-term care and can be used to cover a portion of the expenses associated with various types of care and settings.  Most policies are accessible once the individual is unable to perform two ADLs.  There are two main types of long-term care insurance:
    • Traditional Long-term Care Insurance: Exclusively assists in covering long-term care expenses in your home or a facility.
    • Hybrid Life/Long-term Care Insurance: A life insurance policy with a long-term care insurance rider.  This gives you access to funds to cover care expenses or a death benefit if care is not needed. 
  • Personal Assets and Savings:  Many individuals use savings, investments, or the proceeds from asset sales to cover long-term care expenses.  Typically, when long-term care costs are rising other discretionary spending is declining (travel, dining out, new vehicles, etc).
  • Family Caregiving:  Some families decide to provide care themselves, either completely or with limited professional support to reduce costs.  It is important to consider the physical, emotional, and financial toll (time off work, injury etc.) this can have on the caregiver.
  • Reverse Mortgage: If you own your home, a reverse mortgage can provide a source of income to pay for long-term care.  This option is more complex. has many potential downsides and is typically seen as a last resort.
  • Medicaid: A joint federal and state program that can cover long-term care costs for individuals with limited income and assets.  Eligibility criteria varies by state and rules are complicated and strict.  It can also be difficult to find facilities and care providers who accept Medicaid.

Planning for long-term care is a vital part of a well thought out financial plan.  There is no one size fits all plan and often multiple strategies are combined to ensure the individual receives the care needed while preserving financial security.  Making these decisions today can provide peace of mind and pave the way for a more dignified and comfortable tomorrow.

If you have questions about long-term care or its impact on your financial plan, do not hesitate to reach out to our office.