Long-Term Care Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on July 06, 2023

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What Is Long-Term Care Planning?

Long-term care planning is the process of making arrangements for your future care needs, particularly in the event that you become unable to care for yourself due to aging, illness, or disability.

This may involve identifying potential care options, estimating care costs, and considering ways to finance those costs.

Long-term care planning is a proactive approach to prepare for the possibility of needing assistance with activities of daily living or medical care in the future.

The goal of long-term care planning is to ensure that you receive the necessary care while reducing the burden on yourself and your family.

Long-term care planning is an ongoing process, and it is important to regularly review and update your plan as your circumstances and care needs may change over time.

Types of Long-Term Care Services to Plan For

  • Home Care: Professional assistance provided in the individual's home, including personal care, meal preparation, and health monitoring.

  • Assisted Living: Residential facilities offering personal care services, social activities, and limited medical care.

  • Nursing Homes: Facilities providing 24-hour skilled nursing care, rehabilitation services, and assistance with daily living activities.

  • Adult Day Care: Programs offering daytime supervision, socialization, and therapeutic activities for seniors who require daily assistance.

Type of Long-Term Care Services

Long-Term Care Planning Process

Assess Personal Needs and Preferences

Evaluate personal and family preferences, health status, and potential care needs to determine the most suitable long-term care options.

Evaluate Financial Resources

Assess income, savings and investments, real estate, and retirement funds to determine the financial resources available for long-term care expenses.

Identify Potential Funding Sources

  • Personal Savings: Utilizing personal financial resources to cover long-term care expenses.

  • Health Insurance: Some health insurance policies may cover certain long-term care services.

  • Government Programs: Medicaid provides long-term care coverage for eligible individuals with limited resources.

  • Veterans Benefits: Some veterans may be eligible for long-term care benefits through the Department of Veterans Affairs.

  • Reverse Mortgages: Converting home equity into cash to cover long-term care expenses.

    Long-Term Care Planning Process

Insurance and Long-Term Care Planning

Types of Policies

  • Traditional LTC insurance: Standalone policies that provide benefits specifically for long-term care services.

Key Features and Considerations

  • Benefit Amount and Duration: The daily or monthly benefit amount and the maximum duration of benefits.

  • Inflation Protection: An optional feature that increases the benefits of keeping pace with inflation.

  • Elimination Period: The waiting period before benefits begin, often ranging from 30 to 90 days.

  • Benefit Triggers: Criteria that must be met for benefits to be payable, typically based on the inability to perform activities of daily living (ADLs) or cognitive impairment.

  • Exclusions and Limitations: The policy may not cover certain conditions or services.

Cost of Long-Term Care Insurance

  • Factors Influencing Premium Rates: Age, health status, benefit amount and duration, inflation protection, and elimination period.

  • Strategies for Reducing Costs: Selecting a longer elimination period, reducing the benefit amount or duration, and forgoing inflation protection.

Evaluating and Selecting an Insurance Provider

Research and comparing various insurance providers, considering financial strength, reputation, customer service, and policy offerings.

The Relationship Between Estate Planning and Long-Term Care Planning

Importance of Legal Documents

  • Power of Attorney: A legal document that grants a designated person the authority to make financial and legal decisions on your behalf.

  • Living Will: A written statement outlining your medical treatment preferences in case you cannot communicate your wishes.

  • Health Care Proxy: A document that designates a trusted individual to make medical decisions on your behalf if you become incapacitated.

Trusts for Long-Term Care Planning

  • Revocable Living Trusts: Trusts that can be changed or revoked during the grantor's lifetime, allowing for flexibility in managing assets.

  • Irrevocable Living Trusts: Trusts that cannot be changed or revoked once established, providing more protection from creditors and potential Medicaid eligibility.

  • Special Needs Trusts: Trusts designed to provide financial support for disabled individuals without jeopardizing their eligibility for government benefits.

Strategies for Preserving Assets

  • Asset Transfer: Transferring assets to a spouse, family member, or trust to protect them from potential long-term care costs.

Family Involvement and Long-Term Care Planning

Discussing LTC Preferences with Family Members

Openly discuss your long-term care preferences and expectations with family members to ensure they understand your wishes.

Sharing Information on Financial Resources

Inform family members about the financial resources available for long-term care, including savings, insurance policies, and government benefits.

Identifying and Assigning Caregiving Roles

Determine which family members will be involved in providing care and support and establish clear roles and responsibilities.

Addressing Potential Conflicts

Discuss potential areas of disagreement among family members and develop strategies for resolving conflicts.

Monitoring and Adjusting a Long-Term Care Plan

Periodic Review of LTC Plan

Regularly review and update your long-term care plan to ensure it remains aligned with your needs and circumstances.

Adapting to Changing Circumstances and Needs

Adjust your long-term care plan as needed, considering factors such as changes in health, financial resources, or family dynamics.

Coordinating With Financial and Legal Advisors

Consult with financial planners, attorneys, and other professionals to ensure your long-term care plan is comprehensive and up-to-date.


Long-term care planning is a critical process that involves preparing for future care needs that may arise due to aging, illness, or disability.

It involves identifying suitable care options, such as home care, assisted living, nursing homes, and adult day care.

It also evaluates financial resources and potential funding sources, including personal savings, health insurance, long-term care insurance, government programs, and reverse mortgages.

Legal and estate planning documents, such as powers of attorney, living wills, health care proxies, and trusts, play a key role in protecting individuals' preferences and assets.

Long-term care insurance is an important consideration, with various policy types, features, and cost factors to evaluate.

Family involvement and open communication are essential for discussing preferences, assigning caregiving roles, and addressing potential conflicts.

Periodic review and adaptation of the long-term care plan, in coordination with financial and legal advisors, ensure that the plan remains relevant to changing circumstances.

By proactively engaging in long-term care planning, individuals can secure their future well-being and minimize the burden on themselves and their loved ones.

Long-Term Care Planning FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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