Long-Term Care / Extended Care

The risk most retirement plans don’t survive.

Roughly 70% of people who reach age 65 will need some form of long-term care during their lifetime. Most retirement plans we review have a detailed answer for sequence-of-returns risk and no answer at all for a $120,000 a year care event that lasts three or four years. That’s the gap we want to close before it has to be solved under pressure.

What LTC actually covers

Long-term care isn’t medical care. It’s help with the things people stop being able to do on their own.

Coverage triggers when a licensed practitioner certifies that you cannot perform at least two of the six activities of daily living (ADLs) without substantial assistance, or you have a severe cognitive impairment such as Alzheimer’s or dementia. The six ADLs:

• Bathing
• Dressing
• Eating
• Transferring (getting in and out of a bed or chair)
• Toileting
• Continence

That definition is what unlocks the benefit on most modern policies. Care can be delivered at home, in adult day care, in assisted living, or in a skilled nursing facility, depending on the policy and the need.

The four legitimate strategies

There’s no universally right answer here. Each strategy has trade-offs.

• Traditional LTC insurance. Standalone policy, lowest cost per dollar of benefit. Premiums are not guaranteed and have historically been raised on older policy series. Use it or lose it: if you never need care, the premium dollars are gone.
• Hybrid life / LTC. Permanent life insurance with an LTC rider that lets you accelerate the death benefit for care expenses. Premiums are typically guaranteed. If you never need care, your beneficiaries receive the death benefit. Higher upfront cost than traditional.
• Asset-based LTC. A single-premium or limited-pay policy funded with a chunk of existing assets (often repositioned from a CD or non-qualified account). Provides a multiple of the deposit in LTC benefits, with the unused balance passing to heirs.
• Self-insure. Earmark a defined portion of the portfolio (commonly $400,000 to $750,000 in today’s dollars) to absorb a care event without breaking the rest of the plan. Works when liquid net worth is large enough that a worst-case care episode doesn’t compromise a surviving spouse’s lifestyle.

The right answer depends on liquid net worth, family history, cash flow, and how much of the plan’s spending you’re willing to put at risk.

What Medicare does NOT cover

This is the single most misunderstood point in retirement planning.

Medicare Part A covers up to 100 days of skilled nursing facility care following a qualifying hospital stay, and only if the patient continues to require daily skilled care. Days 1-20 are fully covered. Days 21-100 carry a daily coinsurance ($209.50 per day in 2025, indexed annually). After day 100, Medicare pays nothing.

Medicare does not cover:

• Custodial care (help with ADLs) when that’s the only care needed
• Assisted living facility room and board
• Home health beyond a skilled nursing or therapy need
• Adult day care

In other words, the long, slow, expensive part of long-term care, the part that depletes retirement assets, is the part Medicare never pays.

2025-2026 cost realities in Florida

Florida care costs are roughly in line with the national median, with Tampa Bay generally tracking the state average. Based on the most recent CareScout (formerly Genworth) Cost of Care Survey:

• Home health aide (full-time): roughly $5,000 to $5,700 per month
• Assisted living facility: roughly $4,750 to $5,500 per month median; higher-end communities $6,000 to $8,000+
• Nursing home, semi-private room: roughly $9,000+ per month
• Nursing home, private room: roughly $10,000+ per month

Care cost inflation has run 4-6% annually over the long run. An assisted living stay that costs $5,000 a month today is likely to cost $8,000 or more by the time someone now in their early 60s is in their late 70s. Any LTC plan that doesn’t account for inflation is undersized on day one.

When to plan

The sweet spot for putting a plan in place is late 50s to early 60s. Underwriting is still favorable, health events haven’t usually intervened yet, and the premium dollars compound across more years.

• Wait until late 60s and traditional LTC pricing rises sharply; many applicants are declined.
• Wait into the 70s and traditional LTC is usually off the table. Hybrid and asset-based policies can sometimes still be issued at older ages, but the leverage drops.
• Family history matters. Early-onset dementia or stroke patterns in the family bring the planning conversation forward by a decade.

Common pitfalls

• Assuming the kids will handle it. Most adult children have their own jobs, kids, and geography. The few who can step in usually pay a real cost in income and career.
• Assuming Medicaid is a plan. Florida Medicaid has a 60-month look-back period on asset transfers, strict income and asset limits, and Medicaid-bed waiting lists at many facilities. It’s a safety net, not a plan.
• Buying coverage that doesn’t keep up with inflation. A $150 daily benefit purchased in 2005 looks very different against 2025 facility costs. A meaningful inflation rider is usually worth the extra premium.
• Skipping the conversation entirely because it’s uncomfortable. The discomfort doesn’t go away. It just moves to the family.