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Nearly two out of every three Americans will need long-term care (LTC) assistance at some point in their lives. For a female turning 65, there is 80% probability that she will need long term care. Assistance includes basic activities of daily living (commonly referred to as ADLs) such as bathing, walking, dressing, and toileting. LTC is a variety of services and support to meet health or personal care needs over an extended period of time. Many associate LTC with nursing homes, but most care is actually provided in the community including at assisted living communities.

“At age 65, a typical married couple free of chronic disease can expect to spend $197,000 on remaining lifetime health care costs – excluding nursing home care – while it faces a 5-percent probability that these costs will exceed $311,000. Including nursing home care, the mean cost is $260,000, with a 5-percent probability of costs exceeding $570,000. Less than 15 percent of households approaching retirement have accumulated that much in total financial assets.” [Source: Webb & Zhivan, “What is the Distribution of Lifetime Health Care Costs from 65,” Center for Retirement Research (Boston College), March 2010, Number 10-4.]

The following services represent the average annual cost of care in 2019 per Genworth’s Cost of Care Survey 2019:

Service Florida
Skilled Nursing $8,547.00
Assisted Living $3,500.00
Home Health Aide $4,195.00

With the potential for so much of your retirement assets having to fund medical costs, what can you do? Depending on your age, assets, and objectives, there are things you can do to protect your assets from the rising costs, and likelihood, of needing to spend assets on medical needs.

There are a few ways to fund Long-Term Care:

  1. Self-funding/Pay as you go;
  2. LTC insurance (LTCi);
  3. Veteran’s Benefits; or
  4. Medicaid.

Self-funding/Pay as you go

If you have not planned for LTC and do not/cannot qualify for Medicaid, you may be faced with using a significant portion of your retirement assets to fund LTC. For those who choose to stay in their homes, they tend (statistically) to pay for at home care out of current assets such as stocks, bonds and mutual funds. To the extent a family member can assist with your needs then there may not be any additional financial costs incurred but the additional stress on the caregiver can be significant. The family caregiver may have a full-time job and/or a family of their own. Taking care of an older person or someone with a disability is not the same as taking care of an infant or toddler; the demand and stress is greater.


Purchasing a LTCi policy is in many ways similar to homeowner’s insurance. You purchase it to protect a valuable asset but hope you never use it. If you never use your homeowner’s insurance you do not get anything back from the insurance company; they keep your premium. LTCi provides needed protection against the increasing cost of long-term care. The premium you pay is largely dependent on your age and health at the time of purchase. Like buying a car, though, you can add options, which would increase the premium. Because many people do not consider purchasing a LTCi policy until later in life, the cost of the policy may be prohibitive. However, the cost of the LTCi policy should be evaluated against the likelihood the policy beneficiary will need LTC. For income tax purposes, a LTCi policy must be guaranteed renewable to receive favorable tax treatment.

Hybrid LTCi Policies

Concerned by the use it or lose it nature of a LTCi policy, insurers have developed alternative products to help fund LTC should it be needed. This form of insurance is exploding in popularity due the fact that if long term care is never needed there is a death benefit to the beneficiaries. Many carriers refer to this benefit as “living benefits” meaning that you can access the face value of the policy while you were alive for your care.


By far, the majority of nursing home costs are funded by Medicaid. Medicaid is a welfare program (i.e., means tested). The Medicaid recipient must essentially be destitute. “Medicare doesn’t cover long-term care (also called custodial care), if that’s the only care you need. Most nursing home care is custodial care.” (Source: If there is skilled nursing care involved, Medicare will pay the first 20-days in full. After the 100th day, Medicare does not pay anything. For more information on Medicaid, please see our Medicaid page.

Veterans Aid & Attendance (A&A)

A veteran who was honorably discharged from active military duty and who served during a war-time period may qualify for A&A. Unlike Medicaid, the look back period is 36-months as opposed to 60-months. There is also a net worth test. The veteran and/or the veteran’s spouse cannot have a combined net worth that exceeds $127,061.00 (2019). Net worth is defined to include both nonexempt resources and annual income. Annual income can be reduced, but not below zero, for reasonably anticipated unreimbursed medical expenses.

Note that if the veteran’s disability results in disability of 70% or more and is service-related, the veteran is entitled to free lifetime nursing care regardless of that person’s means.


“If you fail to plan, you are planning to fail,” said Benjamin Franklin. Society is living longer and medical technology continues to advance. The Social Security Act was signed by President Roosevelt on August 14, 1935. Life expectancy has certainly changed since 1935. You need to take action and plan for longevity. Consideration should also be given to who your caregiver may be and not just how you will pay for LTC.

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