What is Your Long-Term Care Plan?

financial advisor

By Joe Globensky, RFC®

long-term care plan

What is Your Long-Term Care Plan? November is Long-Term Care Awareness Month and I want to get you thinking about this important question. This subject is too important not to have a plan. Because the chances that you’ll need care are very real.

Who Will Need Care?

The world’s population is aging at a faster rate than ever before, and people are living longer.  Every day until 2030, 10,000 Baby Boomers will turn 651, and 7 out of 10 people will require long-term care in their lifetime.2

And that care comes with a price.  Based on the 2020 Genworth Cost of Care Survey3, the following table outlines the 2020 national median rates for the various types of care settings:

Care Setting

Annual National Median Cost

Change from 2019

Assisted Living Facility



Homemaker Services



Home Health Aide



Nursing Home (Private)



Nursing Home (Semi-Private)



Adult Day Care



So, what is your long-term care plan if you need care at significant costs that are rising every year?


Many people think that Medicare will cover their long-term care needs.  Unfortunately, Medicare only fully covers the first 20 days in a skilled nursing facility.  The next 80 days come with a co-pay of $185.50 per day in 2021.  After 100 days, Medicare offers no coverage.  And this is only if you qualify per Medicare rules.  And while a Medicare Supplement Plan can help with these costs, the benefits are still limited to 100 days.

According to the 2004 National Nursing Home Survey, the average length of stay for current residents is 835 days.  Therefore the personal financial responsibility can grow to a sizeable amount.  This sizeable financial responsibility is one reason why Medicaid is the country’s largest payer for nursing home care.

And while this may sound like an encouraging fallback plan, it is important to be aware that Medicaid is a means-tested program.  This means that persons must meet strict financial guidelines to qualify, so an applicant’s income and financial assets are closely analyzed and must meet certain requirements before acceptance into the program.

Retirement Savings

Your long-term care plan may be to self-fund your potential cost of care by using your accumulated retirement savings.  The duration and level of long-term care will vary from person to person.  On average, women need care for 3.7 years and men need care for 2.2 years.  However, 20% of today’s 65-year-olds will need it for longer than 5 years.2   This could mean long-term care expenses could amount to between $250,000 – $500,000.

While you may have that amount accumulated, how would it affect your spouse’s standard of living if you need to use that for long-term care? And what about any money that you were intending to leave to other loved ones?  What if there is a drop in the market right before you need to access these funds for your long-term care expenses?  These are some of the risks you take on when using retirement funds as your long-term care plan.

Family and Friends

When considering a long-term care event, most of us would like to spend as much time in our homes and with our loved ones as possible, rather than being confined to a facility.  But who will provide your care?  A caregiver can be your family member, partner, friend, or neighbor who helps care for you while you live at home.

About 80% of care at home is provided by unpaid caregivers and may include an array of emotional, financial, nursing, social, homemaking, and other services. On average, caregivers spend 20 hours a week giving care.  And more than half (58%) have intensive caregiving responsibilities that may include assisting with a personal care activity, such as bathing or feeding.4

If this is your long-term care plan there are several things to consider.  Do you have caregivers close by that can devote this time to your care?  Can your caregiver’s family maintain their standard of living if their income is reduced during this time?  What about the emotional toll this might take on your caregiver(s)?  It’s simple to say, “My son or daughter will take care of me,” but what if they are unable?

Long-Term Care Insurance

If the options above don’t sound ideal, you might want to explore including long-term care insurance in your long-term care plan.  Gone are the days of only having traditional long-term care policy options with annual premiums, regular and/or large premium increases, and use-it-or-lose-it benefits.

While traditional policies are still available, and now more accurately priced, there are other types of policies available. These policies may provide benefits to you or someone you love if you end up not needing long-term care.  And they come on life insurance and fixed or variable annuity products so you can tailor the policy to the risk you are willing to take.

But just like all long-term care policies, the earlier you implement this as part of your plan the less expensive the premiums, the more leverage you get for your premium dollars, and the better chance you have of getting approved from a health standpoint.  And remember, it doesn’t cost anything to explore your options.  You might be surprised how affordable it can be, especially when considering what long-term care expenses might be if you need them.

If you would like help in crafting your long-term care plan, we can help.  You work hard to provide for your family and the personal risk management options available through Connections Financial Advisors can help you continue caring for them when unexpected events happen. 

During Long-Term Care Awareness Month, give us a call at (217) 605-8130, send us an e-mail, or use our online calendar to schedule a free, no-obligation conversation.  There’s no time like the present to plan for your future.

1 “2020 Census Will Help Policymakers Prepare for the Incoming Wave of Aging Boomers” (www.census.gov).

2 2020 U.S. Department of Health and Human Services (https://acl.gov/ltc/basic-needs/how-much-care-will-you-need).

3 Genworth Cost of Care Survey, conducted by CareScout®, August 2020.

4 2020 U.S. Department of Health and Human Services (https://acl.gov/ltc/basic-needs/who-will-provide-your-care).


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