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What Is Long Term Care and How Do You Pay for It

As we age, many of us require help with the activities of daily living such as; bathing, dressing, eating, or using the bathroom. When you receive assistance for these activities, this is called long-term care. Understanding what is long term care, what it includes and how to pay for it is essential to plan a secure and dignified future.

Long-Term Care

Long-term care (LTC) refers to a wide range of services and supports that help people with chronic illnesses, disabilities, or aging-related conditions. Unlike acute medical care that treats illness or injury, LTC focuses on personal care rather than a cure.

Long-term care can include:

• Help with Activities of Daily Living (ADLs): bathing, dressing, toileting, eating, transferring, and continence.
• Skilled nursing care in a facility
• In-home care and personal care aides
• Adult day programs
• Assisted living facilities
• Memory care for individuals with Alzheimer’s or dementia

Who Needs Long-Term Care

According to government estimates, about 70% of people turning 65 today will need some form of long-term care during their lifetime. The need may appear gradually due to aging or suddenly after a stroke, fall, or medical event.

Long-Term Care Cost

Please note; costs vary widely based on location and the type of care, but here are national averages (as of 2025):

• In-home care aide: $33/hour
• Assisted living facility: $6,077/month
• Nursing home (semi-private room): $9,555+/month

As you can see, these services are expensive and can quickly deplete savings, making it critical to understand the options for covering them.

Paying For Long-Term Care

Medicare

Medicare does not cover most long-term care. It may pay for short-term, skilled nursing care or rehab (up to 100 days following a hospital stay), but does not cover custodial care (help with dressing or bathing).

Medicaid

Medicaid is the largest payer of long-term care services, but it’s needs-based. You must meet strict income and asset limits to qualify. Some states offer Medicaid waiver programs that allow people to receive care at home instead of in a facility.

Helpful tip: Planning ahead can help individuals spend down assets legally and qualify for Medicaid when needed.

Long-Term Care Insurance

LTC insurance helps cover costs in various settings; home, assisted living, or nursing facilities. These policies vary by coverage and price, and premiums are lower if purchased earlier (typically in your 50s or early 60s).

Some modern alternatives include:

• Hybrid life/LTC policies: Combine life insurance with long-term care benefits
• Critical illness or short-term care plans

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Veterans Benefits

Eligible veterans may qualify for Aid and Attendance or other VA programs that help pay for in-home care or facility care.

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Personal Savings and Assets

Many people use retirement savings, home equity (via reverse mortgage or sale), or income to pay for care out of pocket. This is often the first source of funding before qualifying for Medicaid.

Family Support

Informal caregiving from family members is common, although it can be emotionally and financially draining. Some states offer compensation for family caregivers under Medicaid waiver programs.

Long-term care is an important but often overlooked part of retirement planning. Understanding what services may be needed and exploring funding options early can protect assets, ensure quality care, and reduce the emotional burden on loved ones.

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If you’re helping clients or preparing for your own future, consider speaking with a financial advisor, insurance professional, or elder law attorney to explore your options and build a solid plan.

Exploring Alternatives to LTC Plans

Long-Term Care (LTC) insurance is designed to help cover the cost of services such as home care, assisted living, and nursing home care. However, traditional LTC insurance isn’t always the right fit for everyone. Whether it’s due to affordability, underwriting requirements, or changing needs, many people are looking for alternatives to LTC plans to prepare for future care costs.

Here’s a look at some viable alternatives to traditional LTC insurance agents can suggest to clients as an affordable option.

Hybrid Life Insurance with LTC Riders

What it is: A life insurance policy (usually whole or universal life) that includes a rider allowing policyholders to use part of the death benefit to pay for long-term care expenses.

Pros:

• If the policy holder never needs care, beneficiaries still receive the death benefit.
• Premiums are often guaranteed and cannot increase.
• Easier to qualify for than standalone LTC insurance.

This is a good choice for Individuals who want both life insurance and LTC protection in one plan and are concerned about “use-it-or-lose-it” LTC premiums.

Annuities with Long-Term Care Benefits

What it is: Some annuities offer enhanced payouts if the owner needs long-term care, effectively doubling or tripling the monthly income benefit for a specific period of time.

Pros:

• Guaranteed income stream.
• Fewer underwriting requirements.
• Can use qualified or non-qualified funds.

These annuities are an option for people with savings they want to protect or grow, who worry about future care expenses but don’t want traditional insurance.

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Short-Term Care Insurance

What it is: Short-term care policies cover care needs for a limited time; typically not more than 360 days. They are easier to qualify for and are more affordable when compared to traditional LTC policies.

Pros:

• Lower cost.
• Often no medical exam required.
• Quick benefit payout.

Clients who may not qualify for traditional LTC insurance or those seeking a more budget-friendly option to cover a temporary care gap should consider short-term insurance coverage.

Self-Funding with Investments

What it is: Creating a personal plan to save and invest funds specifically designated for possible long-term care expenses.

Pros:

• Complete control over assets.
• No underwriting or monthly premiums.

Cons:

• Requires discipline and adequate income.
• May be insufficient if care is needed sooner than expected or costs exceed projections.

Best for: High-net-worth individuals or financially savvy clients who prefer autonomy over their funds.

Medicaid Planning

What it is: Strategic financial planning to qualify for Medicaid coverage of long-term care. This might include asset protection strategies such as irrevocable trusts and gifting.

Pros:

• Medicaid is the largest payer of long-term care in the U.S.
• Can help preserve some assets for heirs.

Cons:

• Requires strict adherence to look-back periods and asset limits.
• Planning must be done well in advance.

This may be an option for those with limited assets or those with time to plan ahead using an experienced elder law attorney or Medicaid planner.

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Start the Conversation Early

The key to successful long-term care planning is starting early. Many of these alternatives become less viable with age or declining health. For agents, it’s important to offer a well-rounded view of options so clients can make informed decisions based on personal needs, health, and finances.

Remember: LTC planning isn’t one-size-fits-all. By exploring these alternatives, clients can have peace of mind; even if traditional long-term care insurance isn’t a viable option.

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Agent looking to expand your portfolio with LTC alternatives should consider contracting with carriers that offer hybrid products. It also helps to work with financial planners to create a comprehensive care funding strategy for your clients.