Paying for long-term care often means relying on a combination of personal savings, government benefits, and insurance. As the cost of care continues to rise, understanding your options can help you prepare and feel more confident about future decisions.
Long-term care is a topic many people tend to avoid until it becomes urgent, but exploring your options now can make a real difference. Whether you’re planning for your own needs or helping a loved one, knowing the available resources may make care decisions more manageable.
How Much Does Long-Term Care Cost?
Long-term care can cost anywhere from a few thousand dollars to more than $10,000 per month, depending on the level of care and where you live.
In 2025, the national median costs for care are:
- Home health aide: Around $6,500 per month
- Assisted living facility (private room): About $6,000 per month
- Nursing home (private room): Nearly $11,000 per month
On average, you can expect to spend about $115,000 per year to cover a semi-private room in a nursing home. Even part-time care, such as adult day care services or in-home aides, can cost several thousand dollars a month.
Many people use a combination of care types as their needs change, for example, starting with in-home help a few days a week, then moving to a skilled nursing facility. That means you or your loved ones may need a financial strategy that covers multiple years and various care settings. This makes early financial preparation an important part of long-term care planning.
What Are the Most Common Ways to Pay for Long-Term Care?
Most people pay for long-term care using a combination of personal savings, government benefits, and private insurance options. Each funding method has its pros and cons, and the right mix depends on your income, assets, and care preferences.
Can You Use Personal Savings to Pay for Care?
Many families begin paying for long-term care by using their own funds to cover the costs. However, with annual costs being so expensive, it’s often not sustainable without additional support over the long term.
Some common sources of personal funds include:
- Retirement accounts, like 401(k)s, IRAs, or pensions
- Investment income from dividends, interest, or asset sales
- Home equity from downsizing or using a reverse mortgage
- Emergency or high-yield savings accounts
- Proceeds from selling valuables, like collectibles or your home
Planning ahead can help you estimate how long your assets and income, as well as current savings, might last and whether you’ll need to explore other options for funding these costs.
How Can Medicaid and Medicare Help with Costs?
Government programs may help cover some long-term care expenses, but it’s important to understand their requirements and limitations. Medicare and Medicaid each play a different role and have specific eligibility rules.
- Medicaid: If you meet income and asset limits, Medicaid may cover long-term care. It’s the largest public funder of long-term care, but eligibility rules vary by state and may require careful financial planning and spending down assets to avoid penalties.
- Medicare: Medicare only covers short-term skilled care, typically up to 100 days after a qualifying hospital stay. It doesn’t cover ongoing medical long-term care.
How Does Long-Term Care Insurance Work?
Long-term care insurance is designed to help pay for services like home care, assisted living, and nursing homes. Policies often have daily or monthly benefit caps and waiting periods. Some may offer inflation protection or shared benefits for couples.
Coverage and costs vary based on:
- Your age and health when applying
- The benefit amount and length of coverage
- Optional features, like inflation riders
Long-term care insurance can offer additional financial support if your personal savings aren’t enough to cover your needs or you don’t yet qualify for government programs. It may be worth exploring if you’re looking for more flexibility and control over where and how you or your loved one receives care.
What Other Funding Options Could Help?
If personal savings, Medicaid, or insurance don’t cover your expenses, there are other strategies that may help bridge the gap. Exploring additional options may help you find other ways to manage your expenses and find other sources of funding.
- Hybrid policies: Combine life insurance or annuities with long-term care benefits.
- VA benefits: These may be available to eligible veterans and their spouses.
- Health savings accounts (HSAs): Funds can be withdrawn from these tax-free for qualified care expenses.
- Accelerated death benefits: Some life insurance policies let you access part of the death benefit early to help pay for care.
What Are Some Tips for Funding Long-Term Care?
Starting early and reviewing your plan regularly can help make managing the costs of long-term care easier. Even if you’re still years away from needing support, early preparation may help you access better coverage options and reduce financial strain down the road.
Here are some helpful strategies:
- Explore coverage before retirement: Applying for long-term care insurance while you’re younger and healthier may mean lower premiums and better options.
- Use tax-advantaged tools: Contributions to an HSA can grow tax-free and be used later for qualifying care expenses.
- Speak with loved ones: Discuss expectations now to help avoid confusion and ensure everyone is aligned if care is ever needed.
- Consult professionals: A financial advisor or elder care professional can help coordinate care planning with your broader retirement, estate, and tax strategies.
- Review your plan frequently: Life changes, inflation, and new policy options may impact your care strategy over time, so try to revisit it yearly.
Early planning won’t completely remove the emotional aspects of making difficult decisions about care, but it can give you more choices and confidence if the need arises later in life.
How Can a Retirement Planning Professional Help You?
A retirement planning professional can help you understand your options, evaluate costs, and create a plan that aligns with your financial goals and care preferences.
You may need to navigate Medicaid eligibility, compare insurance policies, and plan how to use your savings strategically. But long-term care funding involves more than just crunching numbers; having someone who understands your concerns can go a long way.
A financial professional can help you:
- Estimate potential long-term care expenses based on your health, location, and family history.
- Compare funding strategies, like insurance, annunities, and hybrid products.
- Understand Medicaid rules and how to plan for eligibility if needed.
- Coordinate with estate planning tools, such as powers of attorney or healthcare directives.
- Facilitate family conversations around expectations and caregiving roles.
Having an advisor by your side can help make this process feel less overwhelming and more personalized to your unique situation.
What’s the Best Way to Prepare for Long-Term Care Costs?
Understanding the costs and planning ahead can help you feel more confident about your long-term care options. With expenses on the rise and care needs often evolving over time, a flexible strategy that includes personal savings, insurance, and professional guidance may offer the best support.
Key Takeaways to Remember
- Long-term care can cost several thousand dollars per month, depending on where and how it’s delivered.
- Common payment sources include personal funds, Medicaid, and long-term care insurance.
- Planning early may help improve your choices and reduce stress on your family later.
- A retirement planning professional can help tailor a plan to your needs and goals.
Even if you’re not sure what the future holds, exploring your options today may help you feel more prepared for whatever comes next.
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Bankers Life is not affiliated with or endorsed by the U.S. government or the federal Medicare program.
