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How to Financially Plan for Long-Term Care

How to Financially Plan for Long-Term Care


While people over the age of 65 can rely on Medicare to cover many of their healthcare

long term care

costs, there are many circumstances where the federally issued insurance cannot cover all the costs of long-term care. Life expectancy is increasing globally and people often underestimate the amount of money they need to save. Certain long-term care options cost more, so those who want in-home assistance will need to save even more on top of their retirement savings. Yet, many Americans underestimate the cost of in-home long-term care by almost 50 percent.


Types of Long-Term Care


  • Assisted Living Facility – a residential care setting that combines housing with health care and support services for seniors. The national average monthly rate for one-bedroom housing in an assisted living facility is $3,500.
  • Continued Care Retirement Community – a residential care setting that allows a more independent lifestyle. Generally, the community provides services such as skilled nursing facilities for residents. Entry fees for CCRCs can range from the low to mid six figures and membership fees can be as much as $4,000 a month.


  • Nursing Home – a residential care setting that provides constant care for seniors who have health problems that prevent them from being able to care for themselves. Nursing homes can cost on average $225 to $253 a day. A private room costs an average $6,965 per month, while a semi-private room ran about $6,235 per month.
  • In-Home Care – an aging-in-place option that allows seniors to remain in the home while receiving help for fundamental activities of daily living as well or specialized health care. The national median rate for an in-home aide run around $3,861 per month. For homemaker care, expect to pay or $3,813 per month.


How to Financially Prepare for Long-Term Care


Medicare pays for a short stay in a nursing center, for hospice care, and, in some cases, for home health care, but it will not pay for the custodial care many seniors need. Knowing what kind of long-term care you prefer is a helpful start, but in the end, you have to have the funds to finance your decisions. Long-term care insurance is a popular choice for adults considering their future healthcare needs. The sooner you buy long-term care insurance, the lower the premiums will be. If you wait until you are older — and less healthy — the insurance company will ask you to pay more month-to-month to make up for the increased chance you will need long-term care.


It’s important to recognize that not every senior will need to pay the high costs of long-term care. For those who feel like purchasing long-term care insurance isn’t for them or those that do not qualify for it, there are other options. If you have an existing life insurance policy, it may be possible to add a rider that allows you to access early benefits if you are deemed terminally ill, diagnosed with a cognitive impairment, or meet other health-related criteria. You can also look into opening a health savings account that allows you to save funds for future care tax-free. Veterans are also eligible for benefits that can help cover long-term care costs, so if you served in the armed forces it pays to, check with your VA regarding options.


Finally, you can always self-insure by saving cash in a high-yield savings account that you can access when and if you need long-term care.


Many Americans are uneducated when it comes to the true costs of long-term care in their senior years. It can cost thousands of dollars a month to receive care in an assisted living facility, continued care retirement community, nursing home, or in-home. Long-term care insurance can cover costs Medicare cannot, but people who don’t qualify for long-term care insurance can look into health savings accounts or adding riders to their existing life insurance.