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Navigating the Costs of Senior Care: Tips for Preparing for Long-Term Care

June 14, 2023

Navigating the Costs of Senior Care: Tips for Preparing for Long-Term Care


Navigating the costs of senior care can take time and effort. With so many types of long-term care available, it's hard to know where to start. Fortunately, you can take steps to ensure you’re prepared for the financial challenges associated with caring for an aging loved one or yourself. From understanding your options and researching costs to exploring insurance policies and government programs that may help pay for care, this guide will provide tips on navigating senior care costs efficiently and effectively.



There are various types of long-term care available.

Regarding long-term care (LTC), various options are available. Depending on the level of care needed and the amount you can afford.

The most common type of long-term care is in-home assistance. This could include having a nurse or other healthcare professional come into your home for regular checkups or providing help with everyday tasks such as bathing, dressing, meal preparation, laundry, and more. In some cases, family members may be able to provide this type of support without any additional cost; however, if extra help is needed, then hiring an agency may be necessary.

Another option is assisted living facilities which offer both medical assistance and social activities for seniors who need more supervision than they can receive at home but do not require 24/7 nursing services offered by skilled nursing facilities. Assisted living communities typically offer meals prepared onsite along with transportation services and recreational activities like arts & crafts classes or outings for residents. Depending on how much assistance is needed, there are various service levels within assisted living communities.

Finally, skilled nursing facilities provide the highest level of long-term care for those who need around-the-clock medical care and supervision. These facilities are typically more expensive than other types of long-term care since they offer 24/7 nursing services and physical therapy, occupational therapy, and recreational activities.

Exploring the Costs of Nursing Homes, Assisted Living Facilities, and In-Home Care

The long-term expenses associated with nursing home care hinge on various factors, e.g., geographical location, chosen provider, intended duration of stay, and any specialized services required. Facilities offer all-inclusive rates in some instances, whereas others may impose additional fees for specific services, encompassing physical therapy, speech therapy, and memory care.


Nursing home rates have recently experienced a significant surge, a pattern expected to persist over the next several years.

If projections prove accurate, the monthly expense for a semi-private room in a nursing home will exceed $10,000 by 2030, reflecting an increase of approximately one-third. As for private rooms, anticipated annual costs have surpassed the $100,000 threshold. To understand this trend better, consider a comparison of historical, contemporary, and projected annual expenses:

Below are some national average costs for long-term care in the United States (as of 2020).

  • $119 a day, or $3,628 per month for care in an assisted living facility (for a one-bedroom unit)
  • $20.50 an hour for a health aide
  • $20 an hour for homemaker services
  • $68 per day for services in an adult day health care center

These are national averages. In some more expensive states (like New Jersey), actual costs can be significantly higher.

Source: Administration for Community Living, 2023.

Paying for Long-Term Care: Understanding the Limitations of Medicare, Medicaid, and Supplemental Health Care Insurance for LTC

Unfortunately, Medicare does not cover most long-term care services. While it does cover some short-term nursing facility stays, it usually does not cover the cost of residential or community-based programs such as assisted living facilities. However, Medicare may pay for some of these services if you have a chronic health condition and require daily medical or nursing care.

Most supplemental health care plans also do not cover long-term care, as this type of coverage is often excluded from these policies. If you are considering purchasing a supplemental health insurance policy, carefully review the policy to determine what types of services are covered and for how long.

In addition, some states offer Medicaid programs that may cover the cost of long-term care for those who cannot afford their healthcare costs. However, it is essential to note that you must meet specific eligibility criteria, such as income and asset limitations subject to a 5-year look back, to qualify for Medicaid coverage. Additionally, Medicaid only covers services in certain qualified facilities, which can vary from state to state. Therefore, it is essential to research your state’s program before assuming you are eligible.

Ultimately, understanding the limitations of Medicare and supplemental health care insurance for long-term care is critical to making an informed decision about your options. Researching the various programs available in your state can help you determine the best way to pay for these services. Additionally, exploring government assistance programs such as Medicaid may be beneficial if you meet the eligibility criteria. Finally, speaking with a financial advisor or other professional can provide valuable insight into which long-term care options are best for you and your family.


Paying for Long-Term Care: Insurance Options

Private insurance policies can provide a way to ensure funds are available when it matters most. Here, we look at just some of the insurance options that may help alleviate the costs associated with long-term care.

Traditional Long-Term Care Insurance

The traditional LTC policy has been around since the 1970s. These policies can cover a wide range of services, including in-home care, nursing homes, and assisted living facilities, for those who want to mitigate the financial impact of LTC needs. These policies usually pay out a fixed benefit for a fixed amount of time.

As the population lives longer, healthier lives, traditional LTC policies have become very expensive, with premiums that can increase significantly over time. Since you may never need the coverage these policies provide, you or your loved ones may ultimately end up with nothing to show for the tremendous amount of premiums paid.

Please remember that, as with other types of LTC insurance, the policy you purchase - or are sold - may not align with your actual needs or costs by the time the coverage is needed.

Increased cost and risk have caused many insurers to exit the traditional LTC market. In place of these products, many insurers now offer life insurance and annuity products that can include some benefits for LTC needs.

Hybrid Long-Term Care Insurance

This type of policy combines life insurance with long-term care coverage so that if you don’t use your policy to pay for long-term care services, your beneficiaries receive a death benefit from the life insurance portion when you die.

Standalone Accelerated Death Benefit Riders

These riders are attached to permanent life insurance policies, allowing you to access some or all of your death benefits early to pay long-term care expenses without surrendering the underlying policy.

Annuities with a Long-Term Care Rider Attached

Some annuity products offer an optional rider allowing you access to up to 50% of its value tax-free should you need it for long-term care costs later in life.

Short-Term Care Insurance

These policies cover shorter periods than traditional plans, typically three to 12 months or more, depending on the policy terms and conditions.

Ultimately, researching the elements of each type of long-term care insurance can help you decide which option is best for your situation and budget. I'd like to point out that comparing policies from different providers alongside an experienced financial advisor may also prove beneficial in identifying the policy that fits your needs.

When is the Best Time to Start Planning for Long-Term Care

Long-term care can be costly for those who need it, so planning for it early on can help alleviate worries later. Generally, it's better to consider long-term care in your 50s or early 60s before health issues arise that could make it more difficult or expensive to obtain coverage.


But when exactly is the best time to start planning for long-term care? As with most financial planning topics, the answer is simple: now (or as soon as possible). No matter your age or current health, it's never too early - or too late - to start thinking about your future and how you want to be taken care of if you can no longer care for yourself. With the cost of long-term care on the rise, developing a plan can give you peace of mind and help ensure you have the financial resources to pay for it when it comes.

Preparing for Long-Term Care Expenses

  • Start conversations early: Discuss your long-term care wishes with family and other loved ones, and consider speaking with a financial professional who understands the choices with extended-care services.
  • Work with your attorney and financial advisor: Your financial advisor and an attorney can help establish an estate plan, including your needs and desires for LTC. These can include establishing trusts, if applicable, and establishing or updating your health care proxy, general durable powers of attorney, and other estate documents.
  • Organize important documents: Keep financial records, insurance policies, and legal documents current. Consider showing family members how to access the documents if you become incapacitated.
  • Explore your financial options: Work with your financial advisor to develop a plan for how you will cover the cost of LTC. Whether through self-funding, the purchase of insurance, or some other method or combination, having a plan will ensure that a long-term care need will not produce financial hardship for your family.


It is never too early - or too late - to start thinking about your future and how you want to be taken care of if you can no longer care for yourself. Long-term care planning requires careful consideration, but with guidance from a qualified financial professional, you’ll have peace of mind knowing that all aspects are covered should an unexpected need arise.

By taking steps now to prepare for long-term care expenses, such as having conversations with family members, organizing important documents, and exploring various available financial options, you can ensure that any potential costs will not produce undue hardship on those who matter most in life.