Long-Term Care Planning: It's Not Just an Insurance Decision

"What happens if one of us needs care?"

Roughly seven out of ten people turning 65 today will need some form of long-term care in their lifetime, according to the U.S. Department of Health and Human Services. That's not a scare tactic—it's a planning assumption. And how you address it matters far more than whether you buy a specific product.

Long-term care planning is a coordination problem—one that touches your income plan, your tax strategy, your estate documents, and your family. Here's what that coordination looks like in practice.

In Indiana, the median cost of a private room in a nursing home is nearly $10,000 a month—over $115,000 a year, according to Genworth's 2024 Cost of Care Survey. Assisted living runs about $5,000 a month. A home health aide—someone helping with daily tasks like bathing and dressing—costs roughly $5,500 a month. These numbers have been climbing faster than general inflation, with assisted living rising 10% and private nursing home rooms increasing 9% nationally in the most recent survey year.

For clients across the country, these figures vary by state, but the trajectory is the same: care costs continue to outpace what most people expect. What does a three-year care need look like financially versus a five-year one? What if care starts at home and later shifts to a facility? Running these scenarios with real numbers turns a vague worry into something you can plan around.

Consider a couple with a mix of traditional IRAs, a Roth, a taxable brokerage account, and a family business. One spouse suddenly needs full-time care costing $120,000 a year. The question isn't just "can we afford it?"—it's "which asset do we draw from first, and what does that trigger?"

Selling business assets under pressure can mean unfavorable terms. Liquidating investments during a down market locks in losses. And pulling $120,000 from a traditional IRA in a single year could, depending on filing status and other income, push a couple into a significantly higher tax bracket—adding thousands to their tax bill on top of the care cost itself.

Coordination means looking at all of these pieces together—not in separate conversations with separate professionals, but as a single, connected strategy. That's the difference between reacting to a crisis and managing through one.

A hybrid policy might appeal if you want coverage that doubles as a death benefit when care is never needed—but premiums can be substantial, and the math only works if you're healthy enough to qualify. Traditional LTC insurance offers dedicated coverage but comes with the risk of premium increases over time. And for clients with substantial assets, self-funding often makes sense—but only if the portfolio is structured to absorb a six-figure annual expense without derailing income, lifestyle, or legacy goals.

There's no single right answer. What matters is evaluating each option against your specific financial picture and family situation, not defaulting to what a neighbor or colleague chose.

This is also where one of the most common misconceptions comes up: many families assume Medicare will cover extended care. It typically doesn't. Medicare may cover short-term skilled nursing after a hospital stay, but it was not designed for the kind of ongoing custodial care—help with bathing, dressing, eating—that most long-term care involves. That gap surprises families every day.

Medicaid eligibility rules are complex and vary by state. For families where Medicaid may be part of the plan, working with legal counsel early—while remaining compliant with current rules—can help preserve flexibility and options before a health event forces rushed decisions.

Say you need $100,000 a year to cover care costs. If that money comes entirely from a traditional IRA, it's taxed as ordinary income—potentially pushing you into a higher bracket, increasing the taxable portion of Social Security benefits, and triggering IRMAA surcharges that raise your Medicare premiums. That can turn a $100,000 expense into something meaningfully larger through taxes and premium adjustments alone.

The alternative is sequencing. Drawing from Roth accounts, after-tax brokerage holdings, and tax-advantaged sources in the right order can help manage that exposure. This kind of withdrawal planning is where coordination between your financial strategy and your tax strategy becomes especially important.

But there's another dimension here that often gets overlooked: the spouse who doesn't need care. If one partner requires expensive long-term care, what happens to the other's financial security? Will they have enough to maintain their lifestyle? Can they stay in the home?

These questions deserve explicit answers in the plan—not assumptions that it'll work out.

Balancing care funding with gifting strategies, trust structures, and beneficiary planning helps preserve the outcomes that matter most to your family. Good care comes first. But care decisions and legacy decisions work better when they're made together.

Raising these questions now, before a health crisis forces them, gives everyone more options and less stress. You don't need all the answers yet. You just need to start asking.

The first step is simple: raise the question. With your spouse. With your parents. With the professionals who see your full financial picture. That's where coordination begins.

Does Medicare cover long-term care?

Generally, no. Medicare may cover short-term skilled nursing care after a qualifying hospital stay, but it was not designed for the ongoing custodial care—help with daily living activities—that most long-term care involves. Medicaid, which has separate eligibility requirements, is the primary government program for extended care.

How much does long-term care cost in Indiana?

According to the Genworth/CareScout 2024 Cost of Care Survey, the median cost of a private nursing home room in Indiana is over $115,000 per year. Assisted living averages about $60,000 annually, and home health aide services run roughly $66,000 per year. Costs vary by region and have been increasing faster than general inflation.

What's the difference between traditional long-term care insurance and a hybrid policy?

Traditional LTC insurance provides dedicated coverage for care expenses, but premiums can increase over time and there's no benefit if care is never needed. Hybrid policies combine life insurance with long-term care coverage—if you need care, the policy pays for it; if you don't, it provides a death benefit to beneficiaries. Each approach has tradeoffs depending on your financial situation and health.

When should I start planning for long-term care?

Most financial professionals suggest beginning the conversation in your mid-50s to early 60s. Starting earlier generally means more options—particularly for insurance, where health status and age affect both eligibility and cost.

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Disclaimer: This article is for educational purposes only and should not be considered financial, legal, or tax advice. No strategy assures success or protects against loss. Please consult a qualified financial professional for guidance tailored to your individual situation.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Long-term care cost data referenced from the Genworth/CareScout 2024 Cost of Care Survey. Lifetime care need statistics from the U.S. Department of Health and Human Services.

Copyright © 2026 Anthony S. Owens. All rights reserved.