Long-term care planning means working out where you’d get help with daily life, what it would cost and which money would pay for it. Your 50s and early 60s are a good time to do it, while you still have the most options.
Someone turning 65 has almost a 70% chance of needing some long-term care, according to the Administration for Community Living. Assisted living now costs a median $74,400 a year. Medicare doesn’t pay for most of it.
What Is Long-Term Care?
Long-term care is help with everyday activities when illness, injury or cognitive decline makes them hard to manage alone. The National Institute on Aging lists bathing, dressing, eating and taking medications. Supervision to keep someone safe counts too.
Most of it is custodial care, meaning personal help with daily tasks. That label decides who pays. Medicare and health insurance cover medical treatment and leave most custodial care to you.
Long-term care happens in four main settings:
- At home, from family, friends or paid aides
- In the community, through adult day programs
- In assisted living, which adds housing, meals and personal care
- In a nursing home, for people who need care around the clock
Most care at home comes from family, friends or neighbors, according to NIA. That help has a cost of its own, since caregiving can set back a family caregiver’s own retirement plans.
How Likely Are You to Need Long-Term Care?
Someone turning 65 today has almost a 70% chance of needing some type of long-term care, according to ACL. Some people need a few weeks of help after a fall or surgery. Others need years of it.
Women need care longer on average, 3.7 years compared with 2.2 years for men. About 20% of people will need it for more than five years. A dementia diagnosis can stretch care across years, and the first legal and money steps after a diagnosis can’t wait.
You can’t know which group you’ll land in. Plan for a few years of care, and know your fallback if it runs longer.
How Much Does Long-Term Care Cost?
Long-term care runs from about $25,000 a year for adult day programs to almost $130,000 for a private nursing home room. Those are 2025 national medians from the CareScout Cost of Care Survey. CareScout, a Genworth subsidiary, has run the survey since 2004.
National median cost of long-term care, 2025
| Type of care | Median rate | Annual cost | Change from 2024 |
|---|---|---|---|
| In-home care (non-medical caregiver) | $35 an hour | $80,080 at 44 hours a week | +3% |
| Adult day healthcare | $95 a day | $24,700 at five days a week | −5% |
| Assisted living | $6,200 a month | $74,400 | +5% |
| Nursing home, semi-private room | $315 a day | $114,975 | +2% |
| Nursing home, private room | $355 a day | $129,575 | +1% |
Source: CareScout, 2025 Cost of Care Survey. National medians; data collected July to November 2025.
Assisted living rose 5% in a year, the fastest increase of any setting. Price growth like that is why long-term healthcare costs need their own growth rate in a retirement plan.
Prices vary by state and metro area. CareScout’s online tool shows median costs by area, so you can plan with local prices. A continuing care retirement community takes a different approach. You pay an entry fee for housing that includes care later on.
Does Medicare Cover Long-Term Care?
Medicare doesn’t cover long-term care. It pays for custodial care only when you need medical care at the same time, according to Medicare.gov. Medicare Supplement (Medigap) plans don’t pay for it either.
Medicare does cover a short stay in a skilled nursing facility for rehab or nursing care. You first need a medically necessary inpatient hospital stay of at least three days in a row. Time under observation or in the emergency room doesn’t count toward those three days.
What you pay for a skilled nursing facility stay under Medicare, 2026
| Days in the facility | What you pay |
|---|---|
| Days 1 to 20 | $0 each day after the $1,736 Part A deductible |
| Days 21 to 100 | $217 each day |
| Day 101 and beyond | All costs |
Source: Medicare.gov, Skilled nursing facility care. 2026 amounts.
A stay that runs the full 100 days adds up to $17,360 in daily coinsurance. After that, Medicare is done. Long-term care needs its own line in your plan, apart from the healthcare costs you’ll pay in retirement for premiums and medical bills.
How Does Medicaid Pay for Long-Term Care?
Medicaid pays for long-term care, including nursing home care, for people who meet its income and asset limits. Each state sets its own rules within federal guidelines, so your Medicaid eligibility limits depend on where you live.
Many people qualify only after spending most of their savings on care. Giving money away to qualify early can backfire. Medicaid looks back 60 months at transfers of assets. A gift or below-value sale in that window can trigger a penalty period when Medicaid won’t pay. Under federal rules from the Deficit Reduction Act, that penalty starts once you’d otherwise qualify and are receiving care.
Some states run Long-Term Care Partnership programs. With a qualifying Partnership policy, you can keep assets equal to what the policy paid if you later need Medicaid. In Washington’s program, a policy that pays $200,000 lets you keep $200,000.
Medicaid rules are detailed, and a mistake can cost months of coverage. Talk with an elder law attorney before you move or give away assets.
How Can You Pay for Long-Term Care?
Most people pay for long-term care with a mix of savings, insurance, home equity and government programs. The mix that fits you depends on your assets, your health and how much you want to leave to heirs.
Ways to pay for long-term care
| Option | How it works | Best fit | What to watch |
|---|---|---|---|
| Savings and income | You pay as you go from investments, pensions and Social Security | People with enough assets to cover several years of care | A long stay can drain what a surviving spouse lives on |
| Traditional long-term care insurance | Pays a daily or monthly benefit for covered care | Healthy people in their 50s and early 60s with assets to protect | Premiums can rise, and you may not need the benefits |
| Hybrid life or annuity policy | Life insurance or an annuity with a long-term care benefit | People who want money to go to heirs if they don’t end up needing care | Higher cost up front |
| Home equity | Sell, downsize, borrow or take a reverse mortgage | Homeowners with substantial equity | A reverse mortgage can come due if you move out |
| Medicaid | Pays for care once income and assets fall below state limits | People with modest savings | A 60-month look-back on asset transfers |
| VA benefits | VA pension with added Aid and Attendance payments | Eligible veterans and surviving spouses | Income, asset and service rules apply |
| Family caregiving | Relatives provide some or all of the care | People with family nearby who can help | The cost to caregivers’ own jobs and savings |
Source: Boldin. Medicaid look-back: HHS guidance on the Deficit Reduction Act of 2005.
Insurance draws the most debate. The pros and cons of long-term care insurance turn on your wealth. People with modest savings may end up on Medicaid anyway. People with plenty of assets can pay their own way. Long-term care insurance cost also climbs with the age you buy and the benefit you choose.
If premiums don’t fit your budget, hybrid policies and annuities are among the alternatives to long-term care insurance. A qualified longevity annuity contract can start guaranteed income as late as 85, when care becomes more likely.
Eligible veterans and surviving spouses can put the VA’s Aid and Attendance benefit toward nursing home or assisted living care. Some retirees get creative. Hotel stays, cruises and shared homes are among the less expected ways to get help with daily living.
If family will provide some of your care, talk about it now. Who would help, where would you live and would they be paid?
Using home equity to pay for long-term care
Your home may be your largest asset. Home equity can fund in-home care or a move to assisted living. You can sell and move somewhere with care on site, downsize and keep the difference, or borrow against it.
A HUD-insured reverse mortgage, called a Home Equity Conversion Mortgage (HECM), turns equity into cash with no monthly loan payments. That cash can pay for care at home. Homeowners 62 and older can apply. You still owe property taxes, insurance and upkeep. The loan comes due when the last borrower moves out or dies. A care facility stay of more than 12 months in a row can count as moving out, according to the Consumer Financial Protection Bureau. A co-borrower or an eligible spouse still living in the home can delay repayment.
That makes a reverse mortgage a better match for care at home than for a permanent move. Whether the house pays for care at all is one of the questions in deciding home equity’s role in retirement. A reverse mortgage calculator shows how much you could borrow at your age and home value.
What Tax Breaks Help Pay for Long-Term Care?
Premiums for a tax-qualified long-term care policy count as medical expenses, up to a limit that rises with your age. In 2026 that limit runs from $500 for people 40 or under to $6,200 for those over 70.
2026 limits on long-term care premiums you can count as medical expenses
| Age by the end of 2026 | Premium you can count |
|---|---|
| 40 or under | $500 |
| 41 to 50 | $930 |
| 51 to 60 | $1,860 |
| 61 to 70 | $4,960 |
| Over 70 | $6,200 |
Source: IRS, Revenue Procedure 2025-32. Limits apply per person to premiums for tax-qualified long-term care policies.
The limit applies to each person. If you itemize, you can deduct medical expenses above 7.5% of your adjusted gross income, per IRS Publication 502. Payments for qualified long-term care services count as medical expenses too. They need to be for a chronically ill person and follow a plan of care from a licensed practitioner.
A health savings account can pay qualified premiums tax-free, up to the same age-based limits, per IRS Publication 969. And benefits from a policy that pays a set daily amount are tax-free up to $430 a day in 2026. If your actual care costs run higher, the tax-free amount rises to match.
When Do You Need to Start Planning for Long-Term Care?
Start planning for long-term care in your 50s or early 60s. You’re more likely to qualify for insurance while you’re healthy, and premiums cost less when you buy younger. A few steps cover most of the work:
- Decide where you’d want care: at home, in a community or in a facility
- Look up local prices for that kind of care
- Pick how you’d pay, plus a fallback if care runs longer
- Talk with your spouse and family about who would help
- Sign a durable power of attorney and a health care proxy, two of the core estate planning documents
Costs and your health will change, so revisit the plan every few years.
How Do You Build Long-Term Care Into Your Retirement Plan?
Add long-term care to your plan as an expense. Then test how each way of paying for it changes your outcome. The Boldin Planner includes long-term care costs by default.
Its default assumes you’d spend down your savings and then qualify for Medicaid. It models costs over the last 28 months of life, at $1,966 a month for 12 months and then $5,900 a month for 16 months. The total is $117,992 in today’s dollars, based on the 2024 national median for assisted living, as the Boldin Help Center explains. Those costs grow at your plan’s medical inflation rate, which you can adjust. To plan around the 2025 assisted living median of $6,200 a month or a local price, add custom long-term care costs under My Plan > Expenses > Recurring.
You can switch to other assumptions:
- A long-term care policy, with insurance covering 80% of costs and you covering 20% (you add the premium as a recurring expense)
- Care from family, which removes the cost from your plan
Save each approach as its own scenario and compare them. You’ll see what decades of premiums cost you next to the risk of paying for care yourself. If you plan to tap home equity, the Planner’s Home and Real Estate page lets you time a sale or a reverse mortgage.
Run those scenarios on your own numbers first. If you’d like a professional to look over the results, bring them to a free discovery session with Boldin Advisors.
Long-Term Care Planning FAQs
How much do I need to budget for long-term care?
Multiply a local monthly price by the years of care you want to cover. At the 2025 national median of $6,200 a month, three years of assisted living comes to about $223,000 before inflation. Prices where you live can move that total a long way in either direction.
Does Medicare pay for nursing home care?
Medicare covers short stays only. It pays for skilled nursing or rehab for up to 100 days after a qualifying hospital stay, with daily coinsurance starting on day 21. Once someone needs help with bathing, dressing or eating and no skilled care, Medicare stops paying, even in the same facility.
What is the Medicaid look-back period?
It’s the 60-month window Medicaid checks when you apply for long-term care coverage. Gifts to children, below-market sales and similar transfers inside it can delay your coverage. Some transfers are exempt, including most transfers to a spouse, so talk to an elder law attorney before moving money.
At what age do people start planning for long-term care?
Your 50s and early 60s leave the widest set of choices. Insurers review your health when you apply, so a diagnosis later can close that door. Starting then also gives you years to build savings, pay down a mortgage or plan a move with care in mind.
Can you use a reverse mortgage to pay for long-term care?
It can work for care at home. The loan lets you draw on the house while you stay in it, and you make no monthly loan payments. It fits a facility move less well, since a long stay away can make the loan due. HUD requires a session with an approved counselor before you take one out.
Are long-term care insurance premiums tax deductible?
They can be, within an age-based cap. The deduction helps only if you itemize and your total medical costs clear 7.5% of adjusted gross income. HSA withdrawals for qualified premiums skip that test, so they can be the simpler way to get a tax break.
What happens if you can’t afford long-term care?
Care often starts out of pocket and shifts to Medicaid once savings fall to your state’s limit. For married couples, Medicaid’s spousal rules let the spouse at home keep some income and assets. One partner’s care doesn’t have to leave the other with nothing. An elder law attorney can map out how that works in your state.
