Your Guide for a Long-Term Care Plan


According to Morningstar, approximately half of the people who are at the age of 65 will need some sort of long-term care. Additionally, Morningstar states that “Women will need 3.7 years of care, on average, while males will need an average of 2.2 years. The cost of nursing-home care in a private room has passed the $100,000/year mark, and in major urban areas, the cost of care runs even higher than that.” Since the long-term care costs are on the rise, many people postpone planning for long-term care. (Benz)

Through a survey conducted by The Associated Press-NORC Center for Public Affairs Research, 65% of responses who are at the age 40 or older stated that they’ve done limited, or no, planning for long-term care. One of the main reasons that people do not plan long-term care is because they do not know how much the federal government offers for long-term care. Even if the government offers long-term care, you should consider the costs and other implications that follow long-term care. If you plan on using your own resources or purchase insurance for long-term care, you should be logical about it. This article will give you a step-by-step guide on how to plan for long-term care. (The Associated Press-NORC Center for Public Affairs Research)

How To Create An Action Plan for Long-Term Care

There are six main steps that you should follow for long-term care. You should know the probability of long-term care. If you are still in your prime, then you can afford to postpone plans for long-term care. However, if you can afford it or if it is necessary, then it is time to think about it. Long-term care is not free, which means that you need to consider the costs associated with long-term care. Make sure you look through all the available resources that you can access for long-term care. You should ensure that you can afford the long-term care and choose whichever fits your current financial situation. Once you complete your action plan, you should create a long-term care fund. The long-term care fund should include all of the long-term care costs associated with it.

Additionally, you should think about the type of assistance you want for long-term care. You can select either through government assistance or through insurance. Whichever you choose, there are more things to think about. For insurance, you should find out which is better for you: a stand-alone policy or a hybrid policy. If you want to consider government welfare assistance, then you should consider the conditions and ramifications.

Step 1: Find Out How Probable Need For Long-Term Care

The first step to an action plan for long-term care is finding out the probability of someone needing long-term care. To find out the probability of needing long-term care, learn about the facts of long-term care. About half of us need some sort of paid long-term care in our lifetime, which means, about half need not concern themselves with the possibility of long-term care. It makes sense to consider your future, but it can still be unconvincing. (No one really thinks about long-term care, if they are still young and healthy. Let future you worry about long-term care, right?) Not everyone needs to purchase insurance for long-term care. However, you should consider the full range of coverage options, in case you need it in the future.

You never know when you’ll need long-term care so you should consider the possibility of needing long-term care, even if it does not seem likely. Medical expenses can pile up quickly, so it’s a good idea to plan ahead. You can never be too careful when it comes to your health, present and future. Make sure that you have everything you need so that you are ready for any surprises.

Step 2: Find Out Everything About Long-Term Care Costs

How much does long-term care actually cost? You should spend some time figuring that out and customizing it to your preferences. It mostly depends on where you live, which determines the type of long-term care that you need.  There are some people who need to remain in a nursing home for care, but there are others who prefer to receive long-term care in their homes. With in-home care, you will find it to be less costly than receiving long-term care in a facility. You should keep in mind other household expenses will probably increase with in-home care. But, the cost of long-term care received in a facility will combine all of them together.

If you are part of a married couple, then you should keep in mind that it is possible for one spouse to require long-term care and the other spouse remains healthy. In that case, you and your spouse’s financial resources should cover the costs of long-term care and household expenses. Additionally, keep in mind that inflation is a major factor when it comes to long-term care costs. So, you should not forget to add that to your calculations. Once you figure out the long-term costs and whether you prefer a facility or a home, then you can find the right resources for your long-term care.

Step 3: Evaluate The Available Resources You Can Access For Long-Term Care

Once you find out how much long-term care could potentially cost, you can return to your total in-retirement portfolio. Will your portfolio cover all of your household expenses and the additional long-term costs? Additionally, can you cover all of the expenses with an appropriate withdrawal rate strategy? If you can say yes, then you can probably cover long-term care without assistance. However, if you say no, then you should consider some form of insurance. It might be a bit expensive, but that is pretty much the right way to go forward. In case your in-retirement budget cannot cover long-term care and you cannot afford insurance, then you should consider public resources. Medicaid can provide long-term care.

There are three different types of available resources that can provide long-term care. Those three options are: government-funded resources, insurance policies, and self-funded long-term care. If you can afford paying for long-term care on your own, then that’s great! However, if you cannot, then you should consider an insurance policy. Additionally, if it is too much for you, then maybe you should look for government resources to help pay off long-term care costs.

Step 4: Establish a Long-Term Care Fund With All Expenses Included

In the case that self-funding long-term care is the way to go, you should start planning now. Once you find out how much you need for long-term care, then you can add the additional funds to your retirement-accumulation goal. Also, you should recalibrate your savings target accordingly. You can automatically add your contributions through an automated investment plan at your brokerage company and mutual fund firm. This will allow you to commit to the process of establishing a long-term care fund.

Once you start preparing and entering the retirement phase of your life, you should separate any assets that are earmarked for long-term care needs. Make sure that your long-term care funds are set aside from your spendable assets. This will mean that you can guarantee that your long-term care funds will still be there when you need it. You should consider where you hold your assets that are reserved for long-term care. Should you hold them in a health savings account or in a traditional IRA? A health savings account sounds like the right idea. But, if you keep your long-term care funds in a health savings account, then you cannot deduct those expenses on your tax return. Make sure you consider that before you add the funds to your health savings account.

Step 5: If Insurance is What You Need, Find Out Which Makes Sense: a Stand-Alone or Hybrid Policy

If you cannot afford funding your own long-term care, you should consider purchasing insurance coverage for long-term care. There are two options for long-term care insurance. These options are: “hybrid” life/long-term-care and stand-alone long-term-care insurance policies. For the stand-alone policies, you need to compare the costs and benefits of these plans. Also, you can check up on the financial health for the policy’s insurance agency. You might think you are choosing the right insurer, but end up regretting your choice. Premiums could increase and you will be forced to choose between paying more and reducing your insurance benefits. Currently, there are limited choices of insurers that offer long-term care products.

If you decide that you do not want to pay premiums for stand-alone policies, then you should think about hybrid life\long-term care. These insurance policies are growing since stand-alone policies are dropping. You will receive a lot of multitasking quality premiums, in the case that you do not need long-term care after all. Also, the hybrid policy is less stringent about their health screenings than stand-alone policies. You can buy hybrid policies in lump sum, which means that you do not have to worry about premiums increasing. Since you are paying for the policy upfront, you do not have to consider the growth rate of premiums.

Step 6: If You Want To Consider Government-Welfare Care, You Need to Consider the Conditions

If you cannot afford long-term care and you cannot afford insurance, you should consider government resources. In case you decide to go with government resources, you should understand the eligibility requirements and conditions to qualify for long-term care. Especially if you are part of a married couple, either you, or spouse, might need care while the other remains at home. There are many key issues that you need to consider. This includes how to qualify for Medicaid long-term care, and the community spouse resource allowance.


In conclusion, it’s never too soon to start an action plan for long-term care. It is better to be safe than sorry. This means that you should create a long-term care fund and find out the available resources that you can afford. There are three different types of available resources, which are: self-funded long-term care, government resources, or insurance policies. You can define which long-term care options you can afford based on your financial situation.

Works Cited

Benz, Christine. An Action Plan for Long-Term Care. 04 08 2021. 16 10 2021 <>.

The Associated Press-NORC Center for Public Affairs Research. LONG-TERM CARE IN AMERICA: AMERICANS WANT TO AGE AT HOME. 05 2021. 16 10 2021 <>.

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