Should You Plan for Long-Term Care? (The Answer is Yes)

There are some things in life where you’ll be fine to “wing it.” Unfortunately, paying for long-term care isn’t one of them. Recent data on the rising cost of care underscores why it’s critical to put a plan in place now. Here’s what to know and how to prepare yourself painlessly. 

Long-Term Care Costs Are Outpacing Inflation 

Genworth Financial conducts an annual Cost of Care Survey. The 2024 survey, which was released this year, shows the cost of long-term care continues to skyrocket, outpacing inflation with year-over-year increases in some categories as high as 10%. Here’s a look at the median annual costs in 2024: 

• Home Health Aide (assists with bathing, dressing, eating): $77,792 

• Homemaker Services (assists with cooking, cleaning, running errands): $75,504 

• Assisted Living Community: $70,800 

• Nursing Home, Semi-Private Room: $111,325 

• Nursing Home, Private Room; $127,750 

Further adding to the peril, the Center for Retirement Research at Boston College reports only 3% of adults in the U.S. (15% for those 65 and older) have long-term care insurance.  

Lack of Awareness, Confusion About Medicare 

If this is news to you, you’re not alone. In interviews with over 500 adults between the age of 48-78, the Center for Retirement Research found long-term care affordability is low on the list of retirement concerns. 

That may be, in part, because many people mistakenly believe long-term care costs are covered by Medicare. In fact, Medicare only covers up to 100 days of skilled nursing facility care per benefit period after a qualifying hospital stay.  And it’s worth noting that only days one through 20 are covered 100%; the remainder are subject to daily coinsurance.  

Why You Shouldn’t “Wing It”   

Unfortunately, standard private health insurance doesn’t cover long-term nursing home care, either. Which means how you’ll cover the cost is… out of your own pocket.  

BUT that’s only the case if you’re “winging it.” With a little bit of planning now, you can avoid this scenario. And we’re not talking about long-term care insurance; though yes, that can be an option. For many, however, the cost is either prohibitive, or they don’t qualify due to pre-existing conditions.  

Fear not. There is one more option. 

Consider an Asset Protection Trust 

Here’s where your forward thinking pays off. Meet the asset protection trust.

An asset protection trust is a legal strategy that protects your assets from long-term care costs. Assets such as your home, and investments are transferred into an irrevocable trust, which can shield your assets from creditors and the nursing home. Down the line, should you need nursing home care, it may help you qualify for Medicaid coverage. But, in order to be eligible, your assets must have been in the trust at least 5 years or more. That’s why it’s so important to consider this strategy now.  

We’ll Help Point You in the Right Direction 

Ultimately, you have options for how to protect yourself against long-term care costs, and we can help you evaluate them. One of the many tools you’ll receive in your personalized Roadmap for Retirement is a Legal Protection Plan, developed specifically for your individual circumstances. Learn more here. Best of all, it’s completely complementary… not to mention infinitely better than “winging it.” 

Disclaimer: Numbers are for illustrative purposes only. Consult a professional for personalized advice.