We continue our series on what you need to know to talk with your family about long-term care with the costs and funding options.
What is the cost?
National annual median costs of care venues from 2025 are as follows:
- Home care: $220 daily, $6673 monthly, $80,080 annually
- Assisted living: $204 daily, $6200 monthly, $74,400 annually
- Skilled nursing: $335 daily, $10,798 monthly, $129,575 annually
Costs vary depending on where you reside and the supply and demand of caregivers and care venues. Costs have been increasing about 4% annually. A valuable resource for determining costs where you live is the CareScout Cost of Care Survey.
What are the funding options?
For most Americans there are just three ways to fund long-term care expenses.
- Self-fund or pay for care using your income and savings or liquidating assets. Liquidating assets may be untimely like selling your home in a down real estate market and may result in unfavorable tax consequences. About 14% of the cost of long-term care is paid using personal income and savings. Keep in mind that assets include home equity, securities, life insurance and annuities.
- Another way to fund long-term care is to transfer the risk of the expense to an insurance company. Currently 9% of the cost of long-term care is paid by private insurance. That is because so few have planned for long-term care expense. Think about this: Longevity is only two or three generations old. Longevity brings with it new requirements like retirement financial planning. And planning for LTC expense which is a critical component of a financial plan.
- The third way to fund long-term care is to qualify for Medicaid. About 45% of the cost of LTC in the country is paid by Medicaid. To qualify an applicant must meet resource reduction requirements concerning income and assets.
Medicaid, Medicare and other public programs pay 69% of the cost of LTC. Private funding accounts for 31% of LTC expenses. These numbers do not include unpaid family members who provide the most care.
Creating your long-term care plan starts with a conversation. Contact me today to get started!
See the first blog post in this series:
