Financial Planning for Long-Term Care: What Families Need to Know

Long-term care is among the largest unplanned expenses most families will face. According to the U.S. Department of Health and Human Services, someone turning 65 today has a nearly 70 percent chance of needing some form of long-term care in their lifetime — yet most families do little planning until care is urgently needed.

Understanding what insurance pays — and what it doesn't — is foundational. Medicare covers short-term skilled nursing after a qualifying hospital stay, but it does not cover custodial long-term care (help with activities of daily living). Medicaid does cover long-term care but only after a person's assets are largely spent down, and the application and planning process is complex.

Long-term care insurance, purchased while the applicant is still healthy, can cover home health, assisted living, and nursing home costs. Premiums have risen significantly in recent years, and not everyone qualifies medically. Hybrid life insurance policies with long-term care riders have become popular alternatives.

Medicaid planning is a legitimate legal strategy — working with an elder law attorney to structure assets in ways that preserve some family wealth while qualifying for Medicaid benefits. Look-back periods and complex eligibility rules make professional guidance essential.

Veterans and their surviving spouses may be eligible for VA benefits including Aid and Attendance, which provides substantial monthly payments toward care costs. The application process is involved, but the benefit is significant.

Family caregivers themselves deserve financial consideration. If a family member reduces work hours or leaves employment to provide care, this affects future Social Security benefits and retirement savings. Caregiver agreements — formal arrangements where the care recipient compensates a family caregiver — are sometimes appropriate and legally sound.

Use platforms like www.FamilyCare.Help to keep financial documents, insurance information, and benefit details organized and accessible to your care team. Consulting with a certified financial planner specializing in eldercare (NAPFA.org) is worth the investment.