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12 Must-Know Tips for Long-Term Care Financial Planning

These insights will guide you through understanding your specific needs, selecting the right insurance options, incorporating long-term care into your broader financial landscape, and communicating your wishes with your family.

12 Must-Know Tips for Long-Term Care Financial Planning

Edited by: Jonathan Michaels

August 17th, 2023

As you navigate the path towards retirement, it’s important to plan ahead for the potential of long-term care (LTC) needs. Long-term care refers to a range of care services you may need, whether due to aging, illness, or general disability. While often overlooked, LTC planning is a vital aspect of a comprehensive financial strategy, especially as you enter the later stages of life. This is because LTC is expensive for all but the wealthiest of individuals and families – currently averaging over $8,000/month across the US (Genworth).

The landscape of long-term care financial planning is complex and can be overwhelming. However, it is an essential endeavor, encompassing not just medical needs but your preferences, lifestyle, and unique personal circumstances. With effective planning, you can ensure that if the time comes when you need assistance with daily activities, you have the resources to provide for quality care without jeopardizing your financial security.

In this article, we'll explore 12 must-know tips for long-term care financial planning. These insights will guide you through understanding your specific needs, selecting the right insurance options, incorporating long-term care into your broader financial landscape, and communicating your wishes with your family. With a blend of practical advice and a personalized approach, you'll be well-equipped to build a plan that empowers you to face the future with confidence and peace of mind.

1. Understanding Your Long-Term Care Needs

This begins with an honest assessment of your health, lifestyle, family history, and personal preferences. Are there specific medical conditions or disabilities that you should prepare for? What kind of lifestyle do you envision as you age? These questions lay the groundwork for targeted planning.

Considerations about where you want to live and the kind of assistance you may need are vital as well. You may prefer in-home care or community-based assisted living. Identifying these preferences early ensures your plan resonates with your desires, enhancing your comfort and well-being.

Don’t hesitate to reach out to professionals who specialize in long-term care assessments. Their expertise can provide insights into your unique needs, aligning your planning with the reality of what long-term care could entail for you. Professionals may include “doctors, nurses, pharmacists, physician assistants, social workers, and many others'' who help to evaluate and manage geriatric care (American Geriatrics Society). The foundational understanding you gain from working with professionals will empower you to build a plan that truly aligns with your needs.

2. Incorporating LTC into Retirement Planning

Long-term care expenses are often underestimated or completely overlooked in retirement planning. Yet, they should be an integral part of your overall budget. By including these costs, you're preventing unwelcome surprises that can jeopardize your financial stability.

Consider various scenarios and how they might affect your retirement lifestyle. Will you need in-home care, or would you prefer a specialized care facility? What impact will these choices have on your other retirement plans and goals? By exploring these questions, you can build a holistic plan that honors all aspects of your life.

Finally, ensure that your retirement plan remains flexible to accommodate changes in your health and long-term care needs. Despite being in good health, “unexpected injury or medical complication can necessitate long-term care at any age,” so it is important to be prepared ( Regular reviews and updates can ensure that your plan stays aligned with your circumstances, empowering you to enjoy retirement with confidence and peace of mind.

3. Consulting with Financial Professionals

Financial planning for long-term care is a complex process, and seeking professional guidance can make a world of difference. A financial planner with expertise in LTC can assess your overall financial picture, helping you make informed decisions that align with your goals and risk tolerance. In general, financial planners help individuals “create a strategy to meet long-term financial goals,” and planning for long term care costs only hone the plans they help individuals to create (Investopedia).

These professionals can assist in weaving your LTC needs into your broader financial and retirement plans. By aligning these elements, they can help you create a cohesive strategy that ensures your long-term care needs are met without compromising other financial objectives.

Additionally, financial professionals can keep you informed about new products, legal changes, or other developments that could affect your plan. Regular consultations allow you to adapt and evolve your strategy, always keeping it relevant and effective. Leveraging this professional expertise ensures that your long-term care financial planning is not just robust but also resilient.

4. Evaluating State Partnership Programs

State partnership programs can be valuable assets in long-term care planning. These programs are designed to provide additional support for long-term care needs and are often integrated with private long-term care insurance. One example of these programs is the “California Partnership for Long-Term Care” which works with private insurance companies to educate people of California on long term care funding opportunities and the benefits of purchasing private long term care insurance (

The benefits and eligibility criteria vary by state, so thorough research is essential. These programs may allow you to keep more of your assets if you ever need to rely on Medicaid for long-term care. This means more financial security for you and potentially your heirs.

However, it's crucial to consult with a financial or legal professional familiar with your state's specific programs. They can guide you through the nuances and ensure that you take full advantage of the benefits available to you. State partnership programs can be a hidden gem, providing extra support when you need it most.

5. Exploring Insurance Options

Long-term care insurance is not a one-size-fits-all solution. Understanding the various options available allows you to select a policy that's tailored to your needs. Different policies offer different benefits, claim procedures, elimination (waiting) periods and cash distribution styles.

When exploring insurance options, pay close attention to factors like elimination periods, inflation protection, and daily benefit amounts. An elimination period is akin to a deductible, and inflation protection can “help protect against the rising costs of long-term care (LTC) services” by ensuring your benefits keep pace with rising costs (Nationwide Financial). The daily benefit amount is how much the policy pays per day for care, so it must align with anticipated expenses.

Lastly, it’s wise to consult with an insurance professional specializing in LTC. They can help you navigate the complexities of different policies, ensuring you find the one that best fits your situation. Remember, the right insurance policy can be a lifeline, providing critical financial support when you need it most.

6. Considering Hybrid Insurance Products

Hybrid insurance products, such as life insurance policies or annuities with long-term care benefits, offer an innovative approach to LTC planning. These products can provide the coverage you need while also including other financial benefits, such as a death benefit for your beneficiaries.

One advantage of these hybrid products is their flexibility. If you never need long-term care, the policy still provides value through life insurance or annuity benefits. This multi-purpose approach can make your investment in the policy more worthwhile.

However, hybrid life products are complex instruments, and professional guidance is often essential. An insurance or financial professional with experience in hybrid products can help you assess whether these options align with your overall financial strategy. With expert guidance, you can explore this innovative avenue with confidence and clarity.

7. Utilizing Health Savings Accounts (HSAs) and Other Tax-Advantaged Accounts

Health Savings Accounts (HSAs) and other tax-advantaged accounts can be potent tools in long-term care planning. With an HSA, for example, you can contribute pre-tax dollars, invest those funds, and then withdraw them tax-free for qualified medical expenses, including certain long-term care costs.

These HSA funds can be “used for long-term care insurance, as well as health care continuation coverage,” as both are considered to be part of medical expenses (Disability Insurance Services). Alternatively, the potential tax savings can significantly extend your financial resources. By planning and investing wisely in these accounts, you can create a cushion that makes long-term care more accessible and affordable.

However, understanding the rules and regulations of these accounts is critical. Consulting with a tax or financial professional can ensure you take full advantage of these benefits without unexpected tax liabilities. Utilizing tax-advantaged accounts strategically can be a game-changer in your long-term care financial planning.

8. Creating Appropriate Estate Planning Legal Structures

Estate planning isn’t just for the wealthy. Asset protection and assigning responsibility are two vital considerations for everyone. Trusts or other legal mechanisms can safeguard your assets, ensuring your money and property are used as you intend and providing a financial legacy for your loved ones.

For example, an irrevocable trust “eliminates the countable assets for Medicaid eligibility purposes,” potentially allowing you to qualify for assistance while preserving assets for your heirs (Ultra Trust). However, these legal structures are complex and come with specific rules and potential trade-offs.

It’s also crucial to assign medical and financial powers of attorney to at least one, or ideally more than one, person you trust. Typically a good power of attorney is your spouse or significant other, with secondary power of attorney being assigned to a child or grandchild. Power of attorney allows people you trust to manage your health and financial affairs should you become incapable of doing so yourself. Without power of attorney, the state may step in and make decisions for you. This is almost never a good outcome.

Consulting with an estate planning attorney or other legal expert specializing in estate planning is essential. They can guide you through the complexities, ensuring the legal structures align with your overall financial plan and personal wishes. Thoughtful asset protection not only safeguards your wealth but also brings peace of mind.

9. Exploring Community and Government Resources

Your community may have untapped resources that can support your long-term care needs. Local agencies, nonprofits, or government programs may offer services, financial assistance, or other support that can ease the burden of long-term care. Government resources include government provided insurance programs or benefits through the Department of Veterans Affairs, for those who served our country.

Start by researching and reaching out to local organizations that specialize in senior services or long-term care. They can provide information, referrals, and insights into available resources that you may not be aware of.

However, eligibility criteria, application processes, and benefits can vary widely. A local expert in senior services can assist you in navigating these resources, ensuring you take full advantage of what's available in your community. Community and government resources can be a lifeline, providing support that makes long-term care more accessible and humane.

10. Building an Emergency Fund

An emergency fund for long-term care acts as a financial safety net and can be used for “large or small unplanned bills or payments” ( Unforeseen medical expenses or changes in care needs can arise suddenly, and having a dedicated reserve ensures you can meet these challenges without compromising your overall financial stability.

Consider the types of emergencies you might face and calculate a reasonable amount to set aside. This isn't just about medical emergencies but changes in care needs or other unexpected costs related to long-term care.

Regularly review and adjust your emergency fund to keep it aligned with your evolving needs and financial situation. Having this fund in place is not just prudent financial planning; it's a commitment to your well-being, providing confidence and stability when you need it most.

11. Communicating with Family

Open communication with family about your long-term care preferences and financial strategies is essential. Sharing your plan and wishes ensures that everyone involved understands your intentions and can act accordingly if needed.

Start by having honest and empathetic conversations about your desires and concerns. These dialogues can foster understanding, collaboration, and emotional support within the family.

Documentation is also crucial. Formalizing your wishes and sharing relevant legal or financial documents ensures clarity and reduces potential conflicts. This communication builds a support system that respects your autonomy and honors your wishes, enhancing both your well-being and family harmony.

12. Reviewing and Updating the Plan Regularly

Your life and the world around you are continually changing, and you must review, and “when applicable, revise” as well (Thorough Care). Regular reviews and updates are not just about adapting to changes in your health or financial situation; they're about ensuring your plan remains aligned with your values and goals.

Consider scheduling regular reviews with your financial, legal, or other professional advisors. Their expertise can guide you through changes in laws, financial products, or other factors that may affect your plan.

Your plan isn't set in stone, and embracing this flexibility allows it to serve you best. By actively managing and updating your plan, you ensure it remains a living document that supports your life's journey, reflecting your evolving needs and wishes.


Long-term care financial planning is an essential, albeit complex, aspect of preparing for the future. It's about more than just numbers and insurance policies; it's about aligning your financial resources with your unique needs, desires, and values. The 12 tips explored in this article provide a high level guide to help you navigate this intricate landscape.

By understanding your potential long-term care needs, exploring various insurance and financial options, protecting your assets, assigning responsibility and maintaining open communication with family and professionals, you can create a plan that not only provides financial security but also respects your individuality and autonomy.

Remember, the process doesn't end once the plan is in place. Regular review and adaptation ensure your strategy remains relevant, resilient, and reflective of your life's evolving journey.

Whether you're just beginning to think about long-term care or are already in the midst of planning, these insights offer a roadmap to guide you. With thoughtful planning and commitment, you can face the future with confidence, knowing that you've laid a solid foundation to support your long-term care needs.

<a href="">Event illustrations by Storyset</a>
Jonathan Michaels profile image Jonathan Michaels
Jon Michaels is the founder and CEO of Stronghold Financial, a leading wealth management and Medicaid planning firm that is recognized for their involvement in their clients’ LTC planning journey.