About 70 percent of people turning 65 today will need some form of long-term care during their lifetime, and roughly one in five will need it for more than five years. The financial exposure runs into six figures annually — between $75,000 and $130,000 depending on whether the care is delivered at home, in assisted living, or in a skilled nursing facility. For families without a funded plan, the default plan becomes a family member — most often a daughter or spouse who reduces work hours or steps away from a career to provide care. Caring for a chronically ill family member across years, rather than months, is itself a chronic-illness driver — sustained caregiving is consistently linked to elevated risk of depression, anxiety, and physical decline in the caregivers themselves.
Most households assume they will simply self-fund care if it is needed. The harder questions usually get skipped. Who decides which assets to liquidate, in what market, with what tax consequences? What happens to the surviving spouse’s income while care expenses peak?
A funded long-term care plan is not a replacement for retirement savings — it is a first line of defense that takes that decision pressure off the family at the moment they can least afford to absorb it. That is true whether self-funding the full event would be financially possible or not.
Current long-term care coverage answers the most common objection — what if we never need it? — by paying a tax-free death benefit to beneficiaries if care is never required. Premiums can be funded out of monthly cash flow, paid up over a defined window, or repositioned from an existing asset. Across the affordability spectrum, the principle that drives the conversation is straightforward: a meaningful baseline of protection is materially different from no protection at all.
The framing that drives most long-term care planning conversations is incomplete. The question is not “what if I need care” — by that point, the decision has already been made on someone’s behalf. The more useful question is “what does my family experience if I do” — which children step in, what happens to their work and their own families, and how siblings divide the responsibility. Long-term care planning addresses four interconnected problems at the same time.
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Once a household decides protection is worth funding, the practical question is how to fund it. Three primary funding paths exist, each suited to a different situation. The right path depends on age, health, available cash flow, and existing assets — and the underwriting standard tightens as the premium commitment shrinks.
Premiums are paid monthly or annually over the life of the plan, sized to match current cash flow rather than compressed into a defined window or repositioned from an existing asset. The per-payment commitment is the smallest of the three structures. Underwriting is the most stringent — full medical evaluation, the broadest set of disqualifying conditions, and the highest bar for applicants with meaningful health complexity. Premium structure is established at issue based on age and health, which means starting earlier — in the 40s or 50s — locks in the most favorable funding terms across the longest time horizon. This path fits applicants in good health who want the lowest per-payment commitment and the longest runway on premium pacing.
Coverage funded over a defined window — typically 5, 10, or 20 years — rather than open-ended payments across the life of the policy. Suited to applicants who want premiums completed before retirement begins, who prefer a defined funding schedule, or who have meaningful cash flow now but want to remove the obligation later. Premium structure is locked at issue. Underwriting is meaningfully more accommodating than flexible-pay — applicants whose health profiles fall outside flexible-pay’s criteria can often qualify here. The trade-off is per-payment outlay: meaningfully higher than flexible-pay, in exchange for the certainty of a defined end date and a wider underwriting window.
Coverage funded by repositioning an existing low-yield asset — cash, a CD, a comparable position — into an asset-based long-term care structure. Underwriting is by far the most accessible of the three paths — for most applicants who can’t qualify for flexible-pay or limited-pay, including those in their late 60s and 70s with health profiles that would otherwise close the door, an option typically exists at this level. Premium structure is locked at issue. Value is guaranteed whether care is needed or not — care funding if it’s needed, death benefit to beneficiaries if it isn’t, with the option to access the repositioned value if circumstances change. For households with assets sitting in low-yield positions and a desire to lock the long-term care decision in fully, this is often the cleanest answer.
The financial decision about how to fund long-term care coverage is not the same as the cost of coverage. Federal tax code treats premiums for qualified long-term care insurance as a deductible medical expense, with allowable amounts that increase substantially at age 61 and again at age 71. The practical effect is that the older the applicant, the larger the tax incentive embedded in the funding decision — a structural reversal of the usual “younger is cheaper” pricing logic.
Individuals with a Health Savings Account can reimburse qualified long-term care premiums on a pre-tax basis up to the age-based limit each year. This mechanic creates a path for everyday W-2 employees to apply pre-tax dollars to long-term care planning without itemizing deductions or clearing the medical-expense threshold that otherwise applies to individual taxpayers.
Sole proprietorships, S-corporations, limited liability companies, and partnerships can deduct qualified long-term care premiums as an above-the-line self-employed health insurance deduction, up to the age-based limit. This category of taxpayer is exempt from the adjusted-gross-income threshold that applies to individual deductions — meaning the deduction is available regardless of total medical expenses for the year.
C-corporations and limited liability companies taxed as C-corporations can write off the full premium as a corporate expense without being capped by the age-based individual deduction limits. The executive receives a meaningful coverage asset while reporting only the life insurance portion of the premium as taxable income — the long-term care portion is excluded entirely. This structure is often the highest-leverage tax-advantaged funding pathway for owners of qualifying businesses.
The specific application of any of these structures depends on business form, income level, and existing benefits package. These specifics are best evaluated within the engagement.
Two additional structures address situations where eligibility or funding calls for a different path.
For applicants who cannot afford full long-term care coverage or no longer qualify for it — whether due to age, health, or budget — short-term care offers up to 360 days of benefits with simplified underwriting and issue ages extending through 89. Many households who were quoted long-term care coverage in the past and assumed it was financially out of reach are surprised by how affordable short-term care can be. The structure also matches how care events typically unfold: most begin with a hospital stay followed by an extended recovery period — exactly the timeline short-term care is designed to fund. For a meaningful share of applicants, this is the most practical first layer of defense available. Learn more about short-term care coverage.
For applicants connected to a small business at any age, group long-term care coverage can be installed at the employer level — often with as few as three to ten employees — providing guaranteed-issue or simplified-issue access for the owner, the team, and family extensions. Group plans are often substantially more affordable than individual coverage, opening the door for applicants who assumed long-term care protection was financially out of reach. They also address eligibility for applicants who would not qualify individually. Even for applicants who could qualify individually, a group plan often provides a meaningful, lower-cost foundation that individual coverage builds on top of. If you’re employed at a small business and don’t currently have group long-term care available, reach out to us. We can often work directly with your employer to evaluate installing a plan that benefits you, the owner, and any team member who voluntarily opts in. Learn more about group long-term care for small businesses.
Content reviewed and authored by Matthew Mesaros, RFC® — Principal Managing Partner, Legacy Funding Insurance LLC. NPN 16705601. Licensed to serve clients in Arizona and across the United States. Matthew has 17 years of experience in life insurance distribution, complex case placement, and impaired-risk underwriting strategy.
Whether you’re evaluating long-term care for the first time, reviewing existing coverage, or looking for a path forward after a prior decline — every engagement starts with a straightforward conversation about your situation, your assets, and your objectives.
Legacy Funding provides field underwriting support, advanced case design, and carrier access to independent agents and advisor organizations across the country. Our team works behind the scenes to simplify placement and improve outcomes on challenging cases.
The most favorable planning window for long-term care coverage is generally in your 40s and 50s, when health and pricing may still be at their best. For many people, the conversation becomes more practical in their 50s, when they have a clearer view of retirement, assets, income, and family responsibilities.
That said, your 60s and 70s can still be an excellent time to put a plan in place and reduce future long-term care expense exposure. The key is not waiting until care is already needed. Whether the plan is large or modest, having some form of coverage can expand your options, especially for home care beyond what Medicare typically provides.
It’s not too late to plan in your late 70s or even your 80s, but the conversation becomes more practical and more specific. At older ages, coverage amount, benefit duration, underwriting, and funding strategy all matter more. The goal may not be to insure every possible long-term care expense, but to create meaningful support for the most likely care needs.
At this stage, asset-based long-term care and short-term care coverage can be excellent alternatives, especially when traditional long-term care insurance is no longer the best fit. Asset-based strategies may appeal to those who want to reposition existing assets, while short-term care is often structured around common care events, including recovery needs that follow a hospitalization. Because Medicare coverage for home care is limited and Medicaid may restrict choices even further, having a plan that helps extend care options at home can make a meaningful difference for you and your family.
Medicare does not cover ongoing custodial care. It only covers short-term skilled nursing or rehabilitation after a qualifying hospital stay. Daily assistance like bathing, dressing, and eating is not covered.
Self-funding may be possible, but it creates a forced decision about which assets to liquidate and when — often during a stressful time. Coverage provides dedicated liquidity and removes that burden from the family.
A prior decline for traditional long-term care insurance does not eliminate other options. Asset-based solutions, life insurance-based coverage, and short-term care may still be available depending on your situation.
Long-term care creates both a cost and income disruption. Coverage provides dedicated funds for care, helping preserve retirement assets and maintain income stability for the surviving spouse.
