The Growing Need for Long-Term Care
Many Americans mistakenly believe they will never need long-term care. However, according to an April 2019 report from the U.S. Department of Health and Human Services titled "What Is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?", 70% of adults who survive to age 65 develop severe long-term care needs before they die.
Even if a spouse or adult children are willing to provide care, there are limits to what they can do. Families often reach a point where professional care is the only viable option.
I’ve worked with many families over the years, where a spouse or an adult child was the primary caregiver for an aging spouse or parent. However, their care eventually reached the point where they were no longer able to provide the care they needed.
For example, a colleague of mine shared that her mom was the primary caregiver for her dad. However, when he would fall, she could no longer lift him and so he would lie on the floor until either she or her husband could come over from work to help lift him. When it reached the point that they could no longer physically assist in helping him bathe, dress or lift him, they had no choice but to employ a home health aide and then eventually place him in a skilled nursing facility.
And far too often, one spouse ends up suffering an injury themselves, such as a broken hip, while trying to provide care for their aging spouse resulting in them also needing care.
The need for care varies, ranging from home health aides to assisted living to full-time skilled nursing home care. With the average cost of a nursing home exceeding $10,000 per month, these expenses can quickly drain a lifetime of savings.
Many people also mistakenly believe Medicare covers long-term care costs. However, Medicare only covers up to 100 days of skilled nursing care following a qualifying hospital stay—and even then, it does not cover custodial care such as home health aides or assisted living.
So, how do you pay for it? One option is long-term care insurance. But is it worth it?
What Is Long-Term Care Insurance?
Long-term care (LTC) insurance is designed to help cover the costs of extended care, including home health aides, assisted living, and nursing homes. Policies vary widely in terms of coverage, payout limits, and eligibility requirements.
Pros of Long-Term Care Insurance
- Helps Cover Long-Term Care Costs – If you qualify and maintain your policy, LTC insurance can help pay for home care, assisted living, or nursing home costs, reducing the burden on your savings.
- Preserves Assets – Instead of paying for care out-of-pocket, LTC insurance helps protect your home and retirement funds.
- Reduces Burden on Family – Having insurance can ease the stress on loved ones, ensuring they don’t have to bear the full financial and caregiving responsibility.
- Hybrid Policies Exist – Some newer policies combine life insurance with long-term care benefits, allowing unused funds to pass to heirs.
Cons of Long-Term Care Insurance
- Not Everyone Qualifies – If you have pre-existing health conditions, you may not be eligible for coverage.
- High and Rising Premiums – Even if you qualify, LTC insurance can be expensive, and premiums tend to increase over time.
- Coverage May Be Inadequate – Policies may have daily or monthly limits that don’t fully cover real-world costs. For example, some policies cover $4,000 per month for two years, but if nursing home costs in your area are $11,000 per month, you’ll still be responsible for a large portion of the bill.
- Many Drop Policies Before Use – As premiums increase, many retirees on fixed incomes cancel their policies just before they need them most.
A Real-Life Example
A client once told us she had long-term care insurance, so she didn’t think she needed additional planning. When we reviewed her policy, we discovered it only covered up to $4,000 per month for a maximum of two years.
The average cost of a nursing home in her area was $11,000 per month, and the average length of stay for a woman was 3.7 years. That meant:
- For two years, the policy would cover $4,000 per month, but she would have to pay $7,000 per month from her savings.
- After two years, the policy would be exhausted, and she would need to pay the full $11,000 per month from her assets.
Without additional planning, she risked depleting her life savings and potentially losing her home. We put a plan in place for her that provided greater protection for her home and savings then what her policy provided her.
Should You Consider Alternatives?
Long-term care insurance can be one piece of the puzzle, but it is not always the best or only solution. Long-term care planning with an elder law attorney can help protect your home and savings, with or without LTC insurance.
Long-Term Care Planning Strategies
- Medicaid Asset Protection Trusts (MAPTs) – Legally protect assets while qualifying for Medicaid benefits.
- Irrevocable Trusts – Shield assets from nursing home costs while maintaining some level of control.
- Annuities & Financial Strategies – Convert assets into income streams to meet Medicaid eligibility.
- Hybrid LTC & Life Insurance Policies – These may be preferable to traditional LTC insurance for some families.
- Spousal Planning – Strategies to protect a healthy spouse from financial ruin if the other requires long-term care.
So, Is Long-Term Care Insurance Worth It?
It depends. The right approach varies based on your health, finances, and personal preferences.
- If you qualify for an affordable policy with strong benefits, LTC insurance may be a helpful tool.
- If you can’t afford or qualify for coverage, planning with an elder law attorney can help protect your assets.
- If you already have a policy, reviewing it with a professional ensures you understand what it covers—and where gaps may exist.
Example: I worked with a client a few years ago that had a long-term care insurance policy in place that had good coverage. However, his premiums were over $15,000 a year and rising. He elected to do long-term care planning with us that provided even greater protection for his home and savings than his policy did, at a rate that was less than one year of premiums for his long-term care policy, and would allow him to drop his policy saving him thousands of dollars each year.
Take Action to Protect Your Home and Savings
Long-term care planning is about ensuring you and your loved ones receive the care you need while preserving your hard-earned assets.
Schedule a Consultation
If you want to protect your home and life savings from long-term are and nursing home costs, call our Florida office today at (941) 909-4644 or our Minnetonka, Minnesota office at (763) 420-5087 to schedule your consultation. Or, you can fill out the contact form on this page and a member of our team will reach out to you to schedule your consultation.
If you are not yet ready to schedule a consultation, but would like to discover more, here are some resources for you:
Don’t wait until it’s too late—put a plan in place today!
