Long Term Care

What is long term care?

Long term care is help with the daily activities of life when age, illness, or cognitive decline makes them hard to do alone. Bathing, dressing, eating, using the bathroom, and moving from a bed to a chair are called activities of daily living. When someone cannot do two or more of them, or has a severe cognitive impairment such as dementia, they need care.

Care can happen at home, in an assisted living community, or in a nursing home. It is usually not medical treatment. It is personal care, supervision, and support, often for months or years.

How likely are you to need it?

More likely than most people think. According to the U.S. Department of Health and Human Services, almost 70 percent of people turning 65 today will need some type of long term care in their remaining years. Men need care for an average of about 2.2 years. Women need care for an average of about 3.7 years. Around 20 percent of people who need care will need it for five years or longer.

This is not a rare catastrophe. It is a common part of a long life, and it is the expense most retirement plans forget to include.

What does care cost?

Care is expensive, and the cost rises nearly every year. The figures below are national medians from the CareScout 2025 Cost of Care Survey, the most widely cited benchmark in the country. Half of providers cost more than these figures and half cost less. Costs vary by state and city.

• Non medical caregiver at home: $35 an hour. At 40 hours a week, that is about $72,800 a year.
• Assisted living community: $6,200 a month, or $74,400 a year.
• Nursing home, semi private room: $9,581 a month, or $114,975 a year.
• Nursing home, private room: $10,798 a month, or $129,575 a year.
• Adult day health care: $95 a day, or about $24,700 a year for five days a week.

Put those numbers against an average need of about three years, and the scale becomes clear. Three years in a private nursing home room at the national median is nearly $390,000. Three years in assisted living is more than $220,000. Even care at home, which most people prefer, can run more than $70,000 a year for full time help.

The U.S. Department of Health and Human Services estimates the average lifetime cost of paid long term care at about $120,900 per person, and that is only the paid part. The unpaid care provided by family members is valued at about $204,000 on average, time and effort that usually falls on a spouse or an adult child.

Why it is the biggest expense in retirement

Most retirement plans answer one question: how do we replace the paycheck? They rarely answer the second question: how do we pay for care? A lifetime of saving can be drained by a single care episode, and the cost often lands on the healthy spouse, who then faces retirement with far less than planned.

Long term care planning is not a separate product decision. It is a portfolio decision. The same dollars that fund retirement income, protect the family, and leave a legacy are the dollars care consumes first if there is no plan. Setting aside a piece of the portfolio for care protects everything else in it: the income, the home, and the legacy.

What Medicare and Medicaid do, and do not, cover

Many people assume Medicare will cover long term care. It does not. Original Medicare covers only short stays for skilled care after a qualifying hospital stay, not the ongoing custodial care most people eventually need. Medicare Advantage does not change that.

Medicaid does pay for long term care, but only after you have spent down most of your assets to qualify. Planning for care is how you keep control of your savings and your choices instead of spending down into eligibility.

How people pay for care

There are four common ways, and many families use more than one:

• Self funding. Paying from savings and income. This works if the savings are large enough to absorb years of care and still leave the spouse secure. For most families, it is the riskiest option, because the cost is open ended.
• Traditional long term care insurance. A standalone policy that pays a daily or monthly benefit when you need care. Premiums can rise over the life of the policy, and if you never need care, the premiums are not returned.
• Hybrid life insurance with long term care benefits. A permanent life insurance policy with a long term care benefit built in. If you need care, it pays for care. If you never need care, your family receives the death benefit. If you change your mind, many contracts return part or all of your premiums. This answers the use it or lose it worry that keeps many people from planning.
• Living benefits on a life insurance policy. Many modern life policies let you access part of the death benefit during your life for a chronic or critical illness. It is not a full long term care plan, but it can be a meaningful piece of one.

The right answer depends on your age, your health, your savings, and your family. That is what the Wealth Architecture Review is for.

What to look for in coverage

• Benefit amount. How much will it pay per day or per month, and does that match the cost of care where you live?
• Benefit period. How long will it pay? Two years, three years, five years, or longer?
• Elimination period. How long do you pay out of pocket before benefits begin?
• Inflation protection. Care costs rise nearly every year. A benefit that grows over time is worth more than a fixed one.
• Where care is covered. Home, assisted living, and nursing home, or only some of those?
• What happens if you never need care. With a hybrid policy, the death benefit or a return of premium answers that question.

When should you plan?

In your 50s and early 60s, while you are healthy and insurable. Long term care coverage is priced on age and health, so waiting costs more twice: the premium rises, and the chance of becoming uninsurable rises with it. The best time to plan for care is before you need it, when you still have every option.

Common questions

Does Medicare cover long term care?

No, not the ongoing custodial care most people need. Medicare covers only short skilled care after a hospital stay. Medicaid covers long term care only after you spend down most of your assets.

What if I buy coverage and never need care?

That is the most common worry, and it is why hybrid policies exist. With a hybrid life insurance policy, unused benefits become a death benefit for your family, and many contracts offer a return of premium. The money is not lost.

Can I receive care at home?

Yes, if your coverage includes home care. Most people prefer to stay home, and most modern policies cover care at home, in assisted living, and in a nursing home. Check the contract before you buy.

What about my spouse?

Care for one spouse is often the largest unplanned expense the other spouse faces. A plan that covers both spouses, or that protects the healthy spouse’s retirement, is one of the most caring things a couple can do for each other.

Is long term care insurance expensive?

It can be, and the cost rises with age and health. That is why planning early matters. Compare the premium with the cost of care it protects against: a private nursing home room at the national median is nearly $130,000 a year. A plan that costs a fraction of that each year is protecting a far larger risk.

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Content on this page is for education only and does not constitute financial, tax, or legal advice. Please consult your tax advisor or attorney regarding your specific situation.

Sources: CareScout 2025 Cost of Care Survey; U.S. Department of Health and Human Services, Administration for Community Living.