Most families don't think seriously about long-term care costs until a parent falls, a diagnosis arrives, or a doctor mentions that living alone is no longer safe. By that point, the financial decisions feel urgent. The good news is that there are real options — and understanding them early makes all the difference.
What Most People Get Wrong About Medicare
Medicare covers short-term skilled nursing care after a qualifying hospital stay, typically up to 100 days. It does not cover ongoing help with bathing, dressing, meals, or other daily activities — which is what most long-term care actually involves. This surprises many families who assumed Medicare would handle it, and it is one of the most common and costly misconceptions we see in financial planning.
The Four Main Ways Families Pay
Personal savings. For many families, retirement savings, investment income, and Social Security form the foundation of a care budget, especially in the early stages. Home care may be manageable for a period with these resources alone, particularly if needs start light and grow gradually over time.
Medicaid. Medicaid covers long-term care for those with limited income and assets, but qualifying requires meeting strict financial thresholds that vary by state. In New Hampshire, a single applicant must have assets under $2,500 and income under $2,982 per month. In Massachusetts (MassHealth), a single applicant must have assets under $2,000, with nearly all monthly income required to go toward care costs. Most states also apply a five-year look-back period on asset transfers, meaning gifts or transfers made within five years of applying can delay eligibility. For many families, Medicaid is a last resort rather than a preferred path, and it is not the right solution for everyone. Working with an elder law attorney is important to make sure any planning is done correctly and in full compliance with state rules before taking any steps in this direction.
Long-term care insurance. Purchased in your 50s or early 60s while still in good health, these policies can cover home care, assisted living, and nursing facilities. Premiums are lower when purchased earlier, and qualifying becomes more difficult as health changes. Hybrid policies that combine life insurance with long-term care benefits have become a popular option in recent years, since they offer value back to the family even if long-term care is never needed.
Home equity. Homeowners 62 and older may be able to access equity through a reverse mortgage to help cover care costs. This can be a useful option for those who want to stay at home longer, though it reduces the equity available to heirs and comes with its own costs and requirements worth discussing with a professional.
What Care Actually Costs Around Here
Nationally, assisted living averages around $4,800 per month and a private nursing home room runs close to $9,600. In New England, costs are consistently higher. Some facilities in New Hampshire and Massachusetts run well above $12,000 to $15,000 per month, or $150,000 to $180,000 per year. Home care costs vary widely depending on how many hours of support are needed each week — a part-time aide a few days a week looks very different financially from full-time live-in support.
Understanding local costs is an important starting point. National averages can underestimate what families in our region will actually face, which is exactly why planning with real, local figures in mind makes a difference.
The Five-Year Look-Back: Why Timing Matters
If Medicaid is part of the conversation, timing is everything. Most states review all financial transactions made in the five years before a Medicaid application. Asset transfers, gifts to children, or other financial moves made during that window can result in a penalty period during which Medicaid will not cover care costs. This is one of the most misunderstood rules in long-term care planning, and one of the most consequential. Families who want to explore Medicaid as a future option should begin that conversation with an elder law attorney years before a care need arises, not after one is already in front of them. Having key legal documents in place before they're needed is one of the most important steps families can take while there's still time to plan calmly.
Where to Start
- A care plan does not need to be complicated to be useful. A few practical starting points:
- Review your income sources and savings to understand what is available and for how long
- Look into whether long-term care insurance still makes sense at your current age and health status
- Talk with an elder law attorney if Medicaid planning is relevant to your situation
- Research care costs in your specific area, not just national averages
- Have an honest conversation with family members before a decision has to be made quickly
Long-term care touches legal, medical, and financial decisions all at once. Having the right team in place — a financial planner, an elder law attorney, and a care manager — means those decisions can be made thoughtfully rather than under pressure. The earlier that team is in place, the more options a family has.
A Quick Overview to Keep in Mind
Long-term care is one of the most significant expenses families face in retirement, and most people are underprepared for it. Nearly 70% of people over age 65 will need some form of long-term care in their lifetime. In New England, costs are consistently higher than national averages — some facilities run $150,000 to $180,000 per year. The four main ways families pay are personal savings, Medicaid, long-term care insurance, and home equity. Medicare covers very little. The earlier a family builds a plan around these realities, the more options they have when the time comes.
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