Long-term care costs money you may not have set aside, and planning now makes the difference between having choices later and scrambling when you need help
Long-term care — help with daily tasks like bathing, dressing, medication, or meals — can cost anywhere from a few thousand dollars a year for in-home help a few hours a week to $100,000 or more annually for a nursing home. The amount depends on where you live, what kind of care you need, and how long you need it. Most people do not plan for this until a health event forces the decision, which means they pay out of pocket, move in with family, or run through savings faster than expected.
Planning ahead means understanding what care might cost in your area, what your current savings can cover, and what options exist to bridge the gap — whether that is long-term care insurance, Medicaid, family support, or a combination. You do not need to have all the answers now, but knowing the real numbers and your own situation lets you make decisions on your timeline, not in a crisis.
Key Takeaways
- Long-term care costs vary widely by location and type of care; a nursing home in one state may cost half what it costs in another, and in-home care is usually cheaper than facility care but requires more planning.
- Most people pay for long-term care out of pocket until savings run low, at which point Medicaid may cover nursing home or assisted living costs if you meet income and asset limits.
- Long-term care insurance is most affordable when you buy it in your 50s or early 60s, but it is not right for everyone; a financial advisor or elder law attorney can help you decide.
- Talking with family members about your preferences — where you want to receive care, who might help, what you can afford — prevents confusion and conflict later.
- Your state's Medicaid program, your local Area Agency on Aging, and the Eldercare Locator (1-800-677-1116) can tell you what services and costs to expect in your region.
What Long-Term Care Actually Costs in Your Area
The cost of long-term care depends on the type of care, where you live, and how much help you need. A home health aide working 40 hours a week costs less in rural areas than in cities, and assisted living in Florida costs differently than in New York. The only way to know what you are planning for is to look up real numbers for your own region.
Start with your state's Department of Health or Medicaid office, which publishes average costs for nursing homes, assisted living, and home care. You can also call your local Area Agency on Aging — there is one in every county — and ask what typical costs are for the services you think you might need. The Eldercare Locator (1-800-677-1116) will connect you to your local agency. Ask specifically about costs for the type of care you are most likely to use: full-time nursing home care, assisted living with some nursing support, or in-home care a few hours a day.
Once you have a number, think about how long you might need care. Some people need help for a few months after surgery; others need support for years. Your doctor cannot predict this, but your family history and current health give you a rough sense. If you are healthy now and your parents lived into their 90s, you might plan for a longer period than someone with a serious chronic illness.
How Medicaid Covers Long-Term Care
Medicaid is the program most people rely on to pay for long-term care once their own money runs out. It is not the same as Medicare, which covers hospital and doctor visits but not long-term care. Medicaid is a joint federal and state program, so the rules vary by state, but the basic idea is the same: if your income and assets fall below your state's limits, Medicaid will pay for nursing home care, assisted living in some states, and some in-home services.
The catch is that Medicaid looks at your assets — savings, property, investments — and in most states you must spend those down to a very low amount (often $2,000 or less) before Medicaid will pay. There are some assets Medicaid does not count, like your primary home (in most cases), one car, and personal items. Your spouse's income and assets are treated differently depending on your state. This is where an elder law attorney becomes useful: they know your state's rules and can help you structure your finances so you do not lose everything to care costs before Medicaid kicks in.
Medicaid also has a five-year "look-back" period, which means if you give away money or assets to your children or others within five years before you explore, Medicaid may penalize you by delaying coverage. This is another reason to plan ahead and talk to a lawyer before making large gifts or transfers.
Long-Term Care Insurance: Who It Makes Sense For
Long-term care insurance is a policy you buy while you are healthy that pays a daily or monthly benefit if you later need nursing home care, assisted living, or in-home care. The benefit usually covers a set amount per day (for example, $150 or $200) for a set number of years or for your lifetime, depending on the policy you choose.
The cost of the premium depends on your age when you buy it, your health, and how much daily benefit you want. A 55-year-old in good health might pay $1,500 to $3,000 a year for a policy that covers $150 a day for three years; a 70-year-old would pay much more, and someone with diabetes or heart disease may not be able to buy it at all. Premiums can increase over time, and some people find they can no longer afford them later in life.
Long-term care insurance makes the most sense if you have significant assets you want to protect, you are in good health now, you are in your 50s or early 60s, and you can afford the premiums without strain. If you have little savings, Medicaid will eventually cover your care anyway, so insurance may not be worth the cost. If you are already in your 80s or have serious health problems, the premiums are usually too high or you cannot buy a policy at all. A financial advisor or elder law attorney can help you think through whether it makes sense for your situation.
Other Ways to Pay for Long-Term Care
Insurance and Medicaid are not your only options. Some people use a combination of strategies to cover long-term care costs.
Home equity is a resource many older adults have. If you own your home outright or have paid down the mortgage, you can borrow against it through a home equity line of credit or a reverse mortgage. A reverse mortgage lets you borrow against your home's value without making monthly payments; the loan is repaid from your estate after you die or move out. This works if you want to stay in your home and pay for in-home care, but it reduces what you leave to your heirs and requires careful review of the terms.
Life insurance with a long-term care rider is another option. Some life insurance policies let you access the death benefit early if you need long-term care, which can help pay for care while you are alive. This only works if you already have life insurance or are willing to buy it now.
Family help is how many people manage. Adult children or a spouse may provide care themselves, hire help part-time, or contribute money. This works best when everyone agrees on the plan ahead of time and understands what is realistic. If you expect your daughter to be your full-time caregiver, tell her now so she can plan her career and finances around it.
Veterans benefits may cover long-term care if you are a veteran or the surviving spouse of a veteran. The VA Aid and Attendance benefit can help pay for in-home care or assisted living. Contact your local VA office or call 1-800-827-1000 to learn what you may be may have access to to.
Having the Conversation With Family
Planning for long-term care is not just about money — it is about making sure your family knows what you want. Do you want to stay in your home as long as possible, even if it means paying for in-home care? Would you move to assisted living if you could not manage at home? Do you have strong feelings about nursing homes, or would you accept one if that was the best option? These are hard questions, but answering them now prevents your family from guessing later.
Write down your preferences and share them with the people most likely to be involved in your care — your spouse, adult children, or a trusted friend. You do not need a formal document, though some people do create a care plan or add a section to their will. The goal is to make sure at least one person knows what matters to you and what you can afford.
Also talk about money. If you expect your children to help pay for care, tell them. If you have set aside savings for long-term care, let them know where the money is and how to access it. If you are planning to rely on Medicaid, explain that so they understand why you are not leaving them a large inheritance. These conversations are uncomfortable, but they are far easier to have now than in a hospital or nursing home when decisions have to be made fast.
Documents and Steps to Take Now
You do not need to do everything at once, but a few steps now will make planning easier. First, gather information about costs in your area by calling your local Area Agency on Aging or your state Medicaid office. Write down what nursing homes, assisted living, and in-home care cost where you live. This takes an hour and gives you a real number to plan around.
Second, review your current savings and assets. How much do you have set aside? If you needed care tomorrow, how long would your savings last at the costs you just looked up? This tells you whether you have a gap to fill.
Third, talk to a financial advisor or elder law attorney if you have significant assets or a complex situation. You do not need to do this if you have modest savings and plan to rely on Medicaid, but if you own a home, have investments, or want to protect assets for your heirs, professional information is worth the cost. An elder law attorney can also help you understand your state's Medicaid rules and set up documents like a power of attorney or healthcare proxy so someone can make decisions for you if you cannot.
Fourth, write down your preferences for care and share them with family. You can do this in a letter, a conversation, or a formal care plan — the format does not matter as much as making sure someone knows what you want.
Frequently Asked Questions
Does Medicare pay for long-term care?
Medicare covers some short-term skilled nursing care after a hospital stay, but it does not pay for long-term custodial care — help with bathing, dressing, meals, or medication over months or years. You pay for that yourself, through insurance, or through Medicaid once your assets are spent down.
What if I cannot afford long-term care insurance?
Many people cannot, and that is okay. If you have modest savings, Medicaid will eventually cover nursing home or assisted living costs once you spend down your assets. If you want to stay in your home, look into whether you may have access to for Medicaid home care services in your state, or plan to rely on family help or hire care part-time.
Can I protect my home from being sold to pay for care?
In most states, Medicaid does not force you to sell your primary home while you are alive, even if you are in a nursing home. After you die, Medicaid may try to recover costs from your estate, which can mean the home is sold to repay the program. An elder law attorney can explain your state's rules and help you plan if this is a concern.
How do I know if I should buy long-term care insurance?
If you are in your 50s or early 60s, in good health, have significant assets, and can afford premiums without hardship, it may make sense. If you are older, have health problems, or have little savings, it probably does not. A financial advisor can help you run the numbers for your situation.
What if my family cannot help with care?
Many families cannot, and that is realistic. Plan to pay for professional care — either in-home help, assisted living, or a nursing home — using savings, insurance, or Medicaid. Talk to your local Area Agency on Aging about what services are available and what they cost in your area.