Long-term care planning is one of those important financial conversations that is easy to postpone. Yet planning ahead can help protect your retirement income, preserve the financial security of a spouse or loved one, and keep an unexpected care event from disrupting your broader legacy goals.
I recently discussed this topic during my latest By Your Side Chat with Rick Stewart, a long-term care sales leader at Crump Insurance Services. One message stood out clearly: a need for care is difficult to predict, both in timing and duration. It may follow an accident or surgery, or it may develop over many years through frailty or cognitive decline. The goal is not to predict the future perfectly. It is to have a thoughtful plan for how care would be funded if and when it is needed.
Understanding the potential need
Long-term care can become necessary at nearly any stage of life, although claims more commonly occur later in retirement. Research cited in our conversation suggests that a significant share of Americans over age 55 will require some form of long-term care services or support during their lifetime.
The duration of care can vary widely. Some people may need limited help during recovery from an illness, injury, or procedure. Others may need support for years, particularly when cognitive impairment is involved. This range is why averages alone do not tell the whole story. A financial plan should account for the possibility that care may be more extensive or longer-lasting than expected.
What long-term care means in practice
Long-term care insurance generally becomes available when an individual cannot perform at least two activities of daily living without assistance, or when a severe cognitive impairment requires ongoing care. These everyday activities include bathing, dressing, eating, toileting, transferring, and continence.
Care can be delivered in several settings, including:
At home
In an assisted living community
In a nursing facility
For many families, remaining at home for as long as possible is the preferred outcome. However, home care can be costly—particularly if round-the-clock support is required.
The rising cost of care
In western Pennsylvania, current monthly care costs discussed in our conversation ranged from roughly $3,200 to $6,000 for assisted living or limited home health support, while nursing home care may range from approximately $11,000 to $13,000 per month. Those figures are current-dollar estimates and may rise over time.
Care inflation is especially important to consider. While some policy designs include inflation protection, the cost of home health care has been rising quickly, in part because demand for in-home services is high and qualified caregivers are in limited supply. A plan should consider not only today’s cost of care, but also what that care may cost decades from now.
Self-funding versus insurance
Whether to self-fund long-term care or use insurance is a personal decision that should be coordinated with a broader financial plan. In every case, it is helpful to identify where care costs would come from: income, investment assets, insurance benefits, real estate, government benefits, or some combination of these resources.
Self-funding may be appropriate for some families, but it can require selling investments at an inconvenient time or withdrawing from tax-deferred accounts. Insurance can create a separate pool of benefits dedicated to care, potentially reducing the need to liquidate assets during a difficult period.
As Rick Stewart noted, long-term care planning is not only a conversation for people with modest assets. Even high-net-worth families may use insurance as a way to reposition a portion of assets and help protect the larger estate, investment strategy, and family legacy. Conversely, for households with more limited resources, Medicaid planning may be a more appropriate area to explore.
Common policy structures to understand
There are several ways to structure long-term care coverage:
Traditional long-term care insurance: Annual premiums purchase long-term care coverage, generally without cash value or a death benefit.
Life insurance with a long-term care rider: This structure can provide benefits for qualifying care needs or a death benefit if care is not needed.
Long-term care annuities: These may be an option for older individuals or those with an existing annuity, allowing assets to be repositioned for enhanced long-term care benefits.
It is also important to distinguish between reimbursement and cash-indemnity policies. A reimbursement policy pays eligible care expenses after they are incurred. A cash-indemnity policy provides a monthly benefit payment once a qualifying claim begins, which may offer greater flexibility when family members or informal caregivers are providing support.
Not every policy that references illness, disability, or care provides true long-term care coverage. Some chronic illness riders, critical illness policies, or accident plans may have narrower benefit triggers. Before purchasing coverage, it is essential to understand the policy’s definition of eligibility, elimination period, inflation provisions, benefit duration, and limitations.
Health history and underwriting matter
An effective planning process considers both financial resources and personal circumstances. Family medical history, current health, lifestyle, and potential future care needs can all influence which carriers and policy structures may be most suitable.
Pre-underwriting can be especially valuable. It allows us to evaluate potential carrier options before a formal application and focus on solutions that may be more favorable for an individual’s health profile and planning goals.
Tax considerations
Tax treatment can also be part of the conversation. Qualified long-term care benefits are generally designed to be received tax-free, and certain long-term care premiums may be deductible depending on the taxpayer’s circumstances. Self-employed individuals, business owners, certain businesses, and Health Savings Account owners may have additional planning opportunities.
Because tax rules, eligibility, and deduction limits vary by situation and can change, these decisions should be reviewed with a qualified tax professional alongside your financial and insurance advisors.
When should you start the conversation?
The best time to begin discussing long-term care is before it becomes urgent. Rick Stewart identified ages 50 through 65 as a common planning window: individuals are approaching retirement, often seeing their own parents experience care needs, and may still have more favorable health and premium opportunities.
That said, planning is not limited to that age range. The right next step is simply to understand your options, evaluate the risk within your own financial plan, and decide whether a formal long-term care strategy makes sense for you.
Long-term care planning is not a one-size-fits-all decision. It is a way to bring clarity to an uncertain future—helping protect your choices, your family, and the financial life you have worked to build.