Long-Term Care Planning: What You Need to Know Before You Need It
What Is Long-Term Care?
Long-term care encompasses a variety of services and support for individuals who can no longer care for themselves due to age-related impairments or disabilities. Unlike traditional medical care, long-term care primarily focuses on assistance with basic personal tasks of everyday life, known as Activities of Daily Living (ADLs).
The Six Activities of Daily Living:
1. Bathing – Assistance with showering or bathing
2. Dressing – Help getting dressed
3. Using the toilet – Support with toileting needs
4. Transferring – Help moving to or from bed or chair
5. Caring for incontinence – Managing bladder or bowel control issues
6. Eating – Assistance with feeding
When someone cannot independently perform two or more of these activities, they typically qualify for long-term care services.
How Likely Are You to Need Long-Term Care?
According to the National Institute on Aging, seniors who are 65 years old today have a nearly 70% chance of requiring long-term care services in the future.[^1]
However, the need for care varies significantly:
- About one-third of people will never need long-term care
- 20% will need care for more than five years
How Long Will You Need Care?
Data from the Administration for Community Living shows significant gender differences:[^2]
- Women need long-term care for an average of 3.7 years (approximately 44 months)
- Men need long-term care for an average of 2.2 years (approximately 26 months)
Women generally require care for longer periods, primarily because they tend to outlive men and face higher rates of chronic conditions in later life.
The Estimated Cost of Long-Term Care
Long-term care is expensive, and costs continue to rise. According to current data, the median monthly costs in Maryland are:
- Home Health Aide: $6,483 per month
- Assisted Living (Semi-Private Room): $9,277 per month
Based on the average duration of care and current costs, here are the estimated total lifetime expenses:
For Women (3.7 years of care)
- Home health aide: $285,000 - $408,000
- Nursing home care: $408,000+
For Men (2.2 years of care)
- Home health aide: $168,000 - $241,000
- Nursing home care: $241,000+
The Medicare Gap
Medicare does NOT cover long-term care expenses for custodial care (assistance with ADLs). Medicare only covers skilled nursing or rehabilitation services for a limited time following a hospital stay.
This means families must find alternative ways to cover these substantial costs, which can significantly disrupt retirement plans.
Age-Based Planning Strategies
The best approach to long-term care planning depends on your current age, financial situation, and health status.
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Strategy: Save money and invest properly.
If you're younger than 50, you have time on your side. Focus on:
- Building wealth through disciplined saving and investing
- Contributing to retirement account s (401(k), IRA, Roth IRA)
- Creating a diversified investment portfolio aligned with your long-term goals
- Establishing an emergency fund separate from retirement savings
The compound growth over 15-20+ years can create a substantial nest egg that may cover future long-term care cost.
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At this age, traditional long-term care insurance premiums are still reasonable, but hybrid policies offer advantages:
Why Hybrid Life Policies Work Better:
1. No Reimbursement Required
- Unlike traditional long-term care policies, you don't need to submit receipts
- Benefits are paid directly when you qualify
- Easier claims process reduces stress during difficult times
2. Guaranteed Benefit
- If you never need long-term care, your beneficiaries receive a death benefit
- No "use it or lose it" scenario like traditional LTC insurance
- Provides peace of mind regardless of whether you need care
3. Predictable Premiums
- Premiums are typically fixed and won't increase over time
- Can be paid as a single premium, limited-pay (10 years), or lifetime
- More budget certainty than traditional LTC insurance
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By age 67 and beyond, long-term care insurance—whether traditional or hybrid—becomes expensive or may be unavailable due to health conditions.
Your Options:
1. Self-Insure with Dedicated Assets
- Set aside $200,000-$400,000+ in liquid assets specifically earmarked for potential care needs
- Keep this money separate from other retirement funds
- Use conservative investments to protect principal
2. Medicaid Planning (with Caution)
- Medicaid can cover long-term care costs, but requires spending down assets to qualification levels
- Each state has different asset and income limits
- Five-year lookback period: Medicaid examines all financial transactions made in the previous 5 years before application
- Gifting assets or transferring property to qualify can result in penalties and delayed coverage
- Work with professionals to understand proper Medicaid planning strategies
Don't Forget: Where Will You Receive Care?
Having sufficient funding is only half the equation. You also need to consider where you'll receive care—a decision that significantly impacts both cost and quality of life.
Your Care Location Options:
1. Aging in Place (At Home)
Many people prefer to stay in their own homes with hired caregivers.
Advantages:
- Familiar environment and comfort
- Maintain independence and routines
- Often less expensive than facility care
- Stay close to family and friends
2. Assisted Living Communities
Advantages:
- Social activities and community engagement
- Professional staff available 24/7
- Meals, housekeeping, and maintenance included
- Can upgrade services as needs change
3. Nursing Homes / Skilled Nursing Facilities
Provides the highest level of medical care and assistance.
Advantages:
- Around-the-clock medical supervision
- Appropriate for complex medical needs
- Comprehensive care in one location
4. Returning to Your Home Country (For International Clients)
Some individuals consider returning to their country of origin for care.
Advantages:
- Potentially lower costs
- Cultural and language familiarity
- Closer to extended family
Start researching your options now, but don't make final decisions too early. Here's why:
- Your health status may change
- Your financial situation may evolve
- New care facilities open, while others close or change quality
- Your family circumstances may shift (children move, spouse's health changes)
- Your preferences may change as you age
Flexibility is valuable.
Sources and Additional Resources
[^1]: National Institute on Aging. "What Is Long-Term Care?" https://www.nia.nih.gov/health/caregiving/what-long-term-care
[^2]: Administration for Community Living. "How Much Care Will You Need?" Long-Term Care Statistics. https://acl.gov/ltc/basic-needs/how-much-care-will-you-need
Cost Data Sources:
- Genworth Cost of Care Survey 2024 (Maryland data)
- U.S. Department of Health and Human Services, LongTermCare.gov
For More Information:
- Medicare.gov – Understanding what Medicare does and doesn't cover
- Medicaid.gov – State-by-state Medicaid long-term care eligibility
- AARP Long-Term Care Calculator – Estimate your potential costs
- National Association of Insurance Commissioners – Guide to Long-Term Care Insurance
Disclaimer: This article is for educational purposes only and does not constitute tax, legal, or investment advice. Long-term care planning is complex and varies based on individual circumstances. Please consult with a qualified financial advisor or other appropriate experts to develop a personalized plan suitable for your specific situation.
