What retirees and pre-retirees should know about protecting their assets, preserving their choices, and planning for the possibility of long-term care.
September 13th-19th is National Assisted Living Week—a time to recognize the communities, professionals, caregivers, and families who help older adults maintain quality of life and independence.
It is also a good opportunity to have a financial conversation that many people would rather postpone: How would you pay for long-term care if you eventually needed it?
For some retirees, the answer may involve personal savings and investments. Others may rely on family support, Medicaid if eligible, or a combination of resources. Some may consider long-term care insurance as part of their broader retirement strategy.
But is long-term care insurance actually worth it?
The right decision depends on your age, health, financial resources, family circumstances, retirement goals, tolerance for insurance premiums, and the type of care you would want if you could no longer live completely independently.
For individuals who have spent decades building significant wealth, the question is often less about whether they can pay for care and more about how they want to fund it—and what they want their assets to accomplish.
What Is Long-Term Care?
Long-term care refers to services and support that help people with ongoing health or personal-care needs.
Unlike traditional medical care, long-term care is often focused on helping someone with everyday activities rather than treating an acute medical condition.
This can include assistance with:
- Bathing
- Dressing
- Eating
- Using the bathroom
- Transferring or moving around
- Managing certain daily activities
- Supervision related to cognitive impairment
Long-term care may be provided at home, in an assisted living community, in an adult day setting, or in a nursing facility.
The need for care can arise from aging, an accident, a disability, cognitive decline, or another condition that affects someone’s ability to live independently.
According to the Administration for Community Living, recent research suggests that most Americans who reach age 65 will need some type of long-term care services during their lives. However, the amount and duration of care can vary significantly from one person to another.
That uncertainty is one of the reasons long-term care planning can be difficult.
You are essentially planning financially for an event that may never happen—or may last for years if it does.
Does Medicare Pay for Long-Term Care?
One of the most common misconceptions about long-term care is that Medicare will cover it.
Generally, Medicare does not pay for long-term custodial care simply because someone needs assistance with daily living.
Medicare may cover certain medically necessary services and, under specific circumstances, skilled nursing facility care. But Medicare and Medigap generally do not cover ongoing custodial long-term care, whether that care takes place in a nursing home or in the community.
That distinction matters.
For example, someone may receive Medicare-covered care after an illness, surgery, or hospitalization while also eventually needing ongoing assistance with everyday activities that Medicare does not cover.
Understanding the difference between medical care and long-term custodial care is an important part of retirement planning.
What Does Long-Term Care Insurance Do?
Long-term care insurance is designed specifically to help pay for qualifying long-term services and support.
Depending on the policy, benefits may be available for care provided in different settings, including a person’s home, an assisted living community, or a nursing facility.
A policy typically specifies:
- A daily or monthly benefit amount
- A maximum benefit period or pool of benefits
- An elimination period
- Eligibility requirements for receiving benefits
- Covered care settings and services
- Whether benefits can increase over time
- Inflation protection provisions
- Whether the policy is tax-qualified
- Premiums and potential premium increases
- Other limitations, exclusions, and conditions
Because policies can differ substantially, the details matter.
Two policies with similar premiums may provide very different levels of protection.
So, Is Long-Term Care Insurance Worth It?
For some people, it can be. For others, self-funding may make more sense.
And for still others, a combination of strategies may be appropriate.
The important question is not simply:
“Will I get my money’s worth from the policy?”
Insurance does not work that way.
You purchase insurance to transfer some of the financial risk associated with an uncertain event.
You may pay premiums for decades and never file a claim. If that happens, you may reasonably feel that you “lost” money—but the purpose of the policy was to help provide protection against a potentially significant financial risk during the years you owned it.
The better question may be:
“What would happen to my financial plan if I needed several years of care?”
That is where the conversation becomes more meaningful.
1. Consider How a Long-Term Care Event Could Affect Your Retirement Plan
For affluent retirees, paying for care out of pocket may appear straightforward.
But a long-term care event can affect more than one line item in a financial plan.
Consider a hypothetical retiree who has accumulated a substantial portfolio and expects to use that portfolio to:
- Generate retirement income
- Maintain a desired lifestyle
- Support children or grandchildren
- Fund charitable giving
- Preserve a legacy
- Cover unexpected expenses
If significant assets must eventually be redirected toward long-term care, those other objectives could potentially be affected.
That does not automatically mean insurance is the right solution. It does mean that long-term care deserves to be included in the larger retirement-income conversation.
2. Think About the Type of Care You Would Want
Long-term care is not synonymous with nursing-home care.
Many people would prefer to remain at home for as long as reasonably possible. Others may prefer an assisted living community that provides housing, meals, social activities, and varying levels of support.
Long-term care insurance may provide benefits in multiple settings, depending on the policy.
This makes it important to think beyond the question, “How much nursing home care can I afford?”
Instead, ask:
Where would I want to receive care, and what kind of support might I need?
Your answer could influence the amount and type of coverage worth considering.
3. Understand Your Family’s Role
Family caregiving is another important part of the equation.
Family members frequently provide unpaid support to older adults, sometimes alongside professional caregivers and other services.
For some families, providing care is a meaningful responsibility they are willing and able to take on.
For others, geography, employment, health, family dynamics, or other responsibilities may make extensive caregiving difficult.
If you have adult children, consider whether your retirement plan assumes they will eventually provide unpaid care.
If so, it may be worth asking whether that is actually the outcome you want.
A long-term care strategy can be about more than protecting your portfolio. It can also be about preserving choices for yourself and your family.
4. Don’t Assume Your Assets Automatically Make Insurance Unnecessary
This is particularly important for high-net-worth households.
Having substantial assets can certainly give you more options for paying for care, but the ability to self-fund does not necessarily mean self-funding is the best strategy.
Imagine two retirees with similar net worth.
One is comfortable spending a significant portion of the portfolio if care becomes necessary.
The other strongly prioritizes leaving assets to heirs and maintaining a specific lifestyle regardless of future care needs.
Their ideal strategies may be very different.
The first person may conclude that insurance is unnecessary.
The second may decide that transferring some long-term care risk to an insurer is worth considering.
Net worth alone does not determine whether long-term care insurance makes sense.
5. Pay Attention to Inflation
One of the biggest risks in long-term care planning is assuming that today’s care costs will remain today’s care costs.
They won’t.
The amount you may need decades from now could be substantially different from what comparable care costs today.
That can make inflation protection an important feature to evaluate when comparing policies.
A policy with a higher initial benefit may not necessarily provide better protection if its benefits do not keep pace with rising costs.
When evaluating coverage, ask how the policy’s benefits may change over time and what inflation protection options are available.
6. Understand That Premiums Can Change
Another important consideration is premium stability.
Depending on the policy and applicable state regulations, insurers may seek approval for premium increases on existing policies.
The National Association of Insurance Commissioners (NAIC) specifically provides consumer resources addressing long-term care insurance, including policy features and the possibility of rate increases.
Therefore, don’t evaluate a policy solely by looking at its initial premium.
Consider whether you could reasonably afford the premiums if they increase in the future.
You should also understand what options may be available if a premium increase occurs.
7. Consider Your Health and Age
Timing can matter.
Long-term care insurance generally becomes more expensive as people get older, and health history can affect eligibility and underwriting.
Waiting indefinitely may therefore have consequences.
At the same time, purchasing coverage prematurely can mean paying premiums for many additional years.
There is no universally “perfect” age to buy coverage.
Instead, the decision should be evaluated within the context of your overall financial plan.
If you are considering coverage, working through the decision while you are still healthy enough to have meaningful options may be worthwhile.
What About Taxes?
There may be tax considerations associated with qualified long-term care insurance.
For 2026, the IRS limits the amount of eligible long-term care insurance premiums that may be treated as medical expenses under Internal Revenue Code Section 213(d)(10), based on the insured person’s age.
For taxable year 2026, the limits are:
| Age at the end of the tax year | 2026 eligible premium limit |
| 40 or younger | $500 |
| 41–50 | $930 |
| 51–60 | $1,860 |
| 61–70 | $4,960 |
| Over 70 | $6,200 |
These are limits on eligible premiums, not guarantees that a taxpayer can deduct the listed amount.
Whether premiums ultimately provide a tax benefit depends on factors including the taxpayer’s circumstances, the policy, applicable medical-expense deduction rules, and whether the taxpayer itemizes deductions.
The IRS also provides specific rules concerning benefits received under qualified long-term care insurance policies.
Because tax rules can change and individual circumstances vary, consult a qualified tax professional before making a decision based on potential tax treatment.
What Are the Alternatives to Long-Term Care Insurance?
Long-term care insurance is only one potential way to address future care expenses.
Other strategies may include:
Self-Funding
Some households may choose to dedicate a portion of their assets to potential long-term care expenses.
This provides flexibility and avoids insurance premiums, but it also means accepting the risk that care could cost substantially more—or last substantially longer—than anticipated.
Life Insurance With a Long-Term Care Rider
Certain life insurance policies may offer riders that allow part of a death benefit to be used for qualifying long-term care expenses.
The exact mechanics vary by policy. The NAIC notes that these riders may reduce the death benefit available to beneficiaries when benefits are used for long-term care.
Medicaid
Medicaid is a major payer of long-term services and supports, but eligibility is generally based on financial and other requirements that vary by state.
It should not be assumed that someone with significant assets will automatically qualify.
Medicaid planning can also involve complicated rules concerning income, assets, transfers, and eligibility.
For individuals with substantial assets, decisions involving Medicaid should be discussed with qualified legal and financial professionals rather than treated as a simple fallback strategy.
A Better Way to Think About Long-Term Care Insurance
Instead of asking whether long-term care insurance is “worth it,” consider asking these five questions:
- What type of care would I want if I could no longer live independently?: Would you prefer to remain at home? Would assisted living be appealing? Would you consider a continuing care retirement community?
- How would I pay for that care today?: Look at your income, investment assets, insurance coverage, and other resources.
- What would happen to my financial plan if care lasted several years?: Would you need to reduce spending, sell investments, alter your legacy plans, or change your lifestyle?
- How much risk am I comfortable retaining?: Some people are comfortable self-insuring. Others prefer to transfer at least part of the risk to an insurance company.
- What role do I want my family to play?: Would you want your children to provide hands-on care? Financial support? Neither?
These questions can reveal more than a simple premium-versus-payout calculation.
Long-Term Care Planning Is Part of Retirement Planning
National Assisted Living Week is a reminder that aging is about more than accumulating assets.
It is also about preparing for the years when your needs—and your priorities—may change.
Long-term care planning can help you think through those possibilities before a crisis forces your family to make decisions under pressure.
For some people, that may lead to purchasing long-term care insurance.
For others, it may mean building a dedicated reserve, incorporating other insurance products, adjusting an investment strategy, or simply confirming that their existing portfolio is capable of absorbing potential care expenses.
There is no one-size-fits-all solution.
The most important step is to make long-term care part of the conversation before you need it.
Final Thoughts
Long-term care insurance can be a valuable tool for some retirees and pre-retirees, but it is not automatically appropriate for everyone.
The decision should consider your financial resources, retirement-income needs, health, age, family circumstances, desired care settings, insurance costs, policy provisions, and broader estate and legacy objectives.
For households with significant wealth, the question may ultimately be less about whether you could afford long-term care and more about how you want to use your wealth if care becomes necessary.
A thoughtful retirement plan should account for both the life you hope to live and the possibilities you cannot predict.
If you are approaching retirement, now may be the right time to review how a potential long-term care need could affect your income, investments, and legacy goals.
Contact Agemy Financial Strategies for a complimentary consultation.
This article is provided for educational and informational purposes only and should not be construed as individualized investment, insurance, tax, or legal advice. Long-term care insurance policies, benefits, premiums, underwriting requirements, exclusions, and eligibility provisions vary by insurer and state. Insurance products involve costs, risks, and limitations, and coverage is subject to the terms of the applicable policy and contract. Tax treatment depends on individual circumstances and may change in the future. Consult your financial, tax, insurance, and legal professionals regarding your specific situation before making financial or insurance decisions.
