If you’re wondering how you or a loved one would pay for long-term care, you’re asking the right question at the right time. The earlier you plan, the more options you have — and the less likely a care need becomes a financial emergency. As Americans live longer, more families are facing the realities of long-term care and the costs that come with it. According to the Administration for Community Living, nearly 70% of people over age 65 will need some form of long-term care in their lifetime. Yet most people don’t plan for it until a need is already in front of them — often a parent’s fall, a spouse’s diagnosis, or a sudden decline that makes independent living unsafe. We believe a little planning now goes a long way toward protecting both your savings and your peace of mind.
What Counts as Long-Term Care?
Long-term care refers to the support people need when they can no longer fully manage everyday activities on their own. This includes help with bathing, dressing, eating, meal preparation, transportation, and medication management. It’s different from medical treatment aimed at curing an illness — it’s ongoing, practical support that helps someone live safely and comfortably.
This kind of care can be provided in several settings, each with its own cost structure and trade-offs:
- At home, with the help of a family caregiver or a hired home health aide
- In an assisted living facility, which offers housing plus help with daily activities
- In a nursing home, which provides round-the-clock skilled nursing care
- Through adult day programs, which give caregivers a break while keeping loved ones engaged and supported
Most families end up using a combination of these over time, often starting with home-based support and moving to a higher level of care as needs increase.
How Much Does It Cost?
Long-term care is one of the most underestimated expenses in retirement planning. According to the Genworth Cost of Care Study, current national averages are:
- Home health aide (44 hours per week): $5,148 per month
- Assisted living facility: $4,774 per month
- Nursing home (private room): $9,584 per month
These are national figures. If you live in the Northeast — especially New England — costs are often considerably higher. Some nursing homes in our region run $180,000 to $190,000 per year. That’s not a typo, and it’s one of the main reasons we encourage clients in New Hampshire and surrounding states to plan with local cost data in mind rather than national averages alone.
Costs vary widely by location, facility quality, and level of care needed. A family in a rural area may pay far less than one near a major metropolitan center. This variability is exactly why early planning matters: it gives you time to research options in your area, compare costs, and build a realistic budget before a decision has to be made quickly.
How to Pay for Care
There’s no single solution that covers long-term care for everyone. Most families end up using a mix of these approaches:
Medicare. Medicare covers short-term, skilled care following a hospital stay, such as rehabilitation after surgery. It does not cover ongoing custodial care — the day-to-day help with bathing, dressing, and similar needs that most long-term care typically involves. Take a look at the following Medicare updates to stay on top of any recent changes.
Medicaid. Medicaid covers long-term care for people with limited income and assets, but qualifying isn’t simple. In 2025, the asset limit is about $2,000 for individuals and $3,000 for couples, though exact rules vary by state. Applicants must meet strict financial criteria, and most states apply a five-year “look-back” period on asset transfers, meaning gifts or transfers made within five years of applying can delay eligibility. Because the rules are complex and state-specific, Medicaid planning often benefits from guidance by an elder law attorney.
Long-Term Care Insurance (LTCI). LTCI can help cover costs if purchased well in advance, typically in your 50s or early 60s while you’re still in good health. Policies vary, but many pay for home care, adult day care, assisted living, and nursing facilities. Hybrid policies that combine life insurance with long-term care benefits have become increasingly popular, since they offer some value back to your family even if long-term care is never needed.
Reverse mortgages. Homeowners age 62 and older may be able to tap into home equity to help pay for care. This can be a useful tool, but it should be used carefully and typically only after other options have been explored, since it reduces the equity available to heirs and comes with its own costs and requirements.
Personal savings and investments. For many families, a combination of retirement savings, investment income, and Social Security forms the foundation of a care budget, especially for the early stages of care needs.
Create a Care Budget
Even if a care decision isn’t on the horizon yet, it’s worth thinking ahead. Building a caregiving budget now helps you understand what’s affordable, where the gaps are, and what steps could close them. Here’s how we recommend starting:
- Review all sources of income and savings, including pensions, Social Security, investments, and retirement accounts
- List potential care expenses, such as home modifications (grab bars, ramps, stair lifts), transportation and mobility support, in-home care or adult day programs, and medical equipment and supplies
- Explore benefits and assistance programs through local senior centers, veteran programs, and state resources, which may offer support you didn’t know was available
- Talk with family members early, so everyone understands the plan and their role in it before a crisis forces a rushed decision
A care budget isn’t a one-time exercise. Revisiting it every few years — or whenever your health, family situation, or finances change — keeps the plan realistic and useful.
Build Your Care Team
Because long-term care decisions often overlap legal, medical, and financial considerations, it helps to have more than one type of professional in your corner. A financial planner can help you understand what you can afford and how care costs fit into your broader retirement plan. An elder law attorney can guide you through Medicaid eligibility, asset protection strategies, and necessary legal documents like powers of attorney. A geriatric care manager can help assess care needs and coordinate services as they evolve. Having this team in place before a crisis hits means decisions can be made calmly and thoughtfully, rather than under pressure.
Frequently Asked Questions
- Does Medicare pay for nursing home care? Medicare only covers short-term, skilled nursing care following a qualifying hospital stay — typically up to 100 days, with cost-sharing after day 20. It does not cover ongoing custodial or long-term nursing home care.
- At what age should I consider long-term care insurance? Most people purchase long-term care insurance in their 50s or early 60s, while premiums are lower and health qualification is easier. Waiting too long can mean higher costs or disqualification due to health changes.
- Will I have to sell my home to pay for long-term care? Not necessarily. Options like long-term care insurance, personal savings, and careful Medicaid planning can sometimes help you avoid selling a home. A reverse mortgage is another option for accessing home equity without an outright sale, though it comes with trade-offs worth discussing with a professional.
- How does the Medicaid five-year look-back period work? States review financial transactions made in the five years before a Medicaid application. Gifts or asset transfers made during that window can result in a penalty period during which Medicaid won’t cover care costs, so any asset transfers should be planned well in advance with professional guidance.
- What’s the difference between assisted living and a nursing home? Assisted living provides housing along with help with daily activities like bathing, dressing, and medication reminders, for people who are largely independent. Nursing homes provide round-the-clock skilled nursing care for people with more significant medical or care needs.
- Can family caregivers be paid for their time? In some cases, yes. Certain Medicaid programs and veteran benefit programs allow for paid family caregiving arrangements. Rules vary by state and program, so it’s worth asking a care manager or elder law attorney what’s available in your area.
- How much should I set aside for long-term care in my retirement plan? There’s no single number, since it depends on your health, family history, location, and care preferences. A financial planner can help you model different scenarios — home care versus facility care, for example — so you have a realistic range to plan around rather than a guess.
Final Thoughts
Long-term care is more than a financial decision — it’s a family decision. Planning ahead helps protect not only your savings but also your peace of mind, and it gives your loved ones clarity at a time when emotions often run high. Because care needs touch legal, medical, and financial areas all at once, assembling the right team of professionals early can make all the difference. With the right planning and support in place, families can focus on what truly matters: quality care, comfort, and dignity for the people they love.
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