Long Term Care in your Financial Plan

Key Takeaways

• Medicare and Medicare supplements do NOT cover long-term care—they only cover skilled care up to 100 days (often just 20-25 days if non-skilled care is needed), making long-term care insurance essential for most retirees
• Long-term care benefits trigger at just 2 out of 6 activities of daily living (bathing, dressing, transferring, toileting, continence, eating), meaning coverage begins relatively early in the care journey
• Medicaid has become a poverty-level program with strict medical triggers (3-6 out of 6 ADLs depending on state) and long lookback periods; it's not a viable planning tool for middle to high-net-worth individuals due to asset protection loss and tax complications
• Self-funding long-term care is approximately 90% more expensive than purchasing insurance because investment withdrawals are taxable, tied-up capital loses growth potential, and insurance provides tax-free benefits with inflation protection
• Changing family dynamics (solo agers, dispersed families, blended families, dual-income households) mean adult children cannot reliably provide care, making professional care planning and funding a critical gift to protect your family's financial future