Summary: The Long-Term Care Conversation
Insurance, Alternatives, and Why Having This Talk at 55 Is Easier Than at 75
Eleanor is 72 and can no longer bathe herself safely. Her daughter Karen, now 51, quit her job to provide full-time care. Karen’s husband moved out. Her retirement savings are depleted. Eleanor has $80,000 left. A nursing home in their area costs $116,000 per year. No one planned for this.
Approximately 70 percent of people turning 65 will need some form of long-term care before they die. The average need is about three years, but one in five will require more than five. According to Genworth’s 2024 Cost of Care Survey, a full-time home health aide runs roughly $68,400 per year. Assisted living averages $64,200. A private nursing home room costs a median of $116,000, and these costs rise 3 to 5 percent annually.
The most dangerous assumption in retirement planning is that Medicare will cover long-term care. It will not. Medicare covers skilled nursing only following a three-day hospital stay, only for skilled (not custodial) care, and only for up to 100 days with copays starting after day 20. The help Eleanor needs, assistance with bathing and dressing every morning for years, is custodial. Medicare does not pay for it.
Five options exist to pay for care, none perfect. Traditional long-term care insurance has contracted dramatically; many insurers left the market, and those remaining have raised premiums by 40 percent or more. Hybrid policies combining life insurance with a long-term care rider offer premium predictability but require significant upfront investment. Self-insuring works for the wealthy but requires setting aside $300,000 to $500,000. Medicaid covers care only after assets are spent down to near-poverty levels, typically $2,000 or less, and strategic Medicaid planning requires an elder law attorney and at least five years of lead time due to look-back rules. Family caregiving, the default when no plan exists, costs 53 million Americans their wages, savings, health, and relationships.
The conversation at 55 is awkward and abstract. The conversation at 75, when someone is already declining, is concrete and devastating. The options available at 55 are not available at 75. Choose the awkward conversation. The cost of avoiding it is what Karen is paying now.