What Is Long-Term Care Planning?

Long-term care planning involves preparing for the financial, medical and personal support needs that may arise as individuals age or face health challenges. It includes considerations such as funding options for in-home care, assisted living or nursing facilities, as well as ensuring access to services that maintain quality of life. By addressing potential long-term care needs early, individuals can explore options like long-term care insurance, savings strategies, and estate planning to help meet future expenses and preferences.

A financial advisor can help you plan for your long-term care needs or other medical expenses you may incur later in life. Connect with an advisor today.

What Is Long-Term Care?

Long-term care refers to a wide range of services that are necessary for people who suffer from debilitating health conditions or disabilities. These services can include help with personal tasks like bathing, dressing and meal preparation, as well as skilled medical care for chronic conditions or recovery from surgery. Long-term care is often provided in various settings, such as at home, in assisted living facilities or in nursing homes, depending on the individual’s needs and preferences.

This type of care is totally different from normal healthcare, such as doctor’s visits or medicine. Instead, long-term care covers custodial care, which involves aiding people with bathing, using the bathroom, eating and more.

While most who need this type of help are in their elderly years, long-term care can technically apply to anyone. So if you or a loved one simply isn’t able to care for themselves properly anymore, long-term care could be an option. Younger people who suffer accidents or diseases like multiple sclerosis often need a long-term care plan in place for them.

Types of Long-Term Care

There are several types of long-term care, which vary based on the level of support required:

Personal care: Assistance with daily activities like grooming, eating, and mobility, often provided by family members or paid caregivers.
Home health care: Medical services delivered at home by licensed professionals, such as nurses or physical therapists.
Assisted living: Residential facilities that offer a combination of housing, personal care, and limited medical services.
Skilled nursing care: 24/7 medical and custodial care provided in nursing homes for individuals with serious health conditions.
Adult day care: Structured programs offering supervision, activities, and medical care during the day.

Planning for Long-Term Care Services

Planning for long-term care services involves assessing potential future needs and creating strategies to manage costs and access the necessary support. This process typically begins by evaluating personal health risks, family medical history, and the likelihood of needing assistance with daily activities as one ages. Understanding these factors helps individuals anticipate the type of care they may require.

Financial preparation is a critical component of long-term care planning. Options include setting aside savings, purchasing long-term care insurance, or exploring government programs like Medicaid, which can cover certain types of care for eligible individuals. Additionally, considering how to protect assets while planning for care costs is an essential step in the process.

Legal planning is also vital when preparing for long-term care services. Documents such as powers of attorney, living wills, and advance healthcare directives can ensure that medical and financial decisions align with personal preferences if the individual is unable to make decisions independently.

Ways to Pay for Long-Term Care

Saving money is the most obvious way to pay for long-term care services. This is easier said than done, though, as many other costs come into play here. But if you have the extra income to begin putting a savings plan together, this puts all the control in you and your family’s hands.

One of the most common ways of planning for long-term care is through the purchase of asset-based long-term care insurance. These policies cover medical expenses that wouldn’t normally receive coverage through traditional health insurance. This will come in handy under many circumstances, including if you or a loved enters a nursing home.

However, nursing home care can be quite expensive. In 2023, the median cost of a semi-private room in a nursing home was nearly $8,700 per month, while a private room typically cost over $9,700 per month, according to Genworth, a long-term care insurance provider.

When it comes to long-term care insurance, coverage benefits typically kick in when the policyholder is unable to do certain daily activities, such as eat independently or bathe themselves. However, different policies cover different ranges of long-term care services. Certain hybrid policies allow you to collect life insurance benefits, should you not need long-term care. Medicare and Medicaid may also help cover certain costs. Unfortunately, the scope of these is weak, and individuals with a higher net worth are not eligible.

If you own a home and find yourself unable to cover the sometimes extreme costs of long-term care, a reverse mortgage could be your savior. You must be at least 62 years old to qualify for this type of loan, along with some other stipulations. But if you’re eligible, it will allow you to cash out on the equity you hold in your home, giving you a way to pay for the services you or your loved one needs.

Other Considerations for Your Long-Term Care Plan

There are several things you’ll need to take into account when it comes to deciding how to plan for long-term care. Insurance is a viable option, but make sure you have enough money to cover emergency expenses as well. You should also be familiar with what kinds of long-term care services the government might cover.

Should you require any of these services, another important factor will be deciding what to do with your home. People usually prefer to stay in their homes and have services come to them for as long as possible. However, moving to a nursing home and making long-term care more accessible will be less expensive. Selling your home can also help pay for any out-of-pocket expenses you may incur.

If you or a loved one becomes disabled and ends up needing long-term care, chances are that the person won’t be able to make proper decisions about their finances, assets and even medical wishes. Therefore, it pays to have a plan in place for their estate as well.

Be sure to discuss finances with your loved ones and dependents. If you haven’t already, you should work with a financial advisor or lawyer to create an advance directive too.

Bottom Line

Long-term care planning may not be the easiest topic to discuss. However, it’s incredibly important that you plan for it before you actually need it. Failing to plan for long-term care can have major financial and health-related consequences. Furthermore, you run the risk of not being able to properly meet certain needs. This could then force you to sell assets or property to cover those costs.

There are a plethora of viable ways to prepare for long-term care. Figure out if long-term care insurance is right for you and determine which government resources can help. While you’re at it, you should also build an advance directive or living will.

Tips to Help You Save for the Future

Many financial advisors specialize in helping people plan for long-term care needs. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Do your research when looking into long-term care insurance providers. You can start by checking out SmartAsset’s list of the best long-term care providers.