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Planning now for the possibility of long-term care gives you the freedom to live life the way you want.

The LTC reality  /  What are the costs?  /  How is LTC paid for?

What’s your vision for the future?

When it comes to planning for retirement, many people are missing a key piece of the puzzle: a strategy for covering potential long-term care (LTC) costs later in life.

LTC is an event and its related expenses that needs to be planned for, just like any other aspect of retirement. And planning now will give you more choice, control and flexibility to make your vision for the future a reality.

lightbulb icon Watch Thomas and Lorene’s story to see how their caregiving experiences changed their opinion of long-term care. Do you agree with the value of having a flexible solution to meet your future needs?
A retired couple takes a walk through their neighborhood

73% of LTC claims begin with home care1

While most people think of a nursing home when you mention LTC, most care actually begins in a home-based setting and could continue there for a long time.

It’s more than a place

LTC is a variety of services and supports designed to help people live as independently and safely as possible when they can no longer do so on their own. These can include, but are not limited to:

The LTC reality

Click on the items below for details about some of the most frequent misconceptions surrounding LTC.
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Health insurance
Does not cover LTC expenses; neither your employer plan nor Affordable Care Act policies cover LTC expenses

Medicare
Generally covers only rehabilitative care after a hospital stay and only up to 100 days; requires a 3-day stay admitted in a hospital under treatment, as well as other qualifiers; the first 20 days are covered at 100% and the remaining 80 days require a significant copay

Medicaid
Covers LTC expenses, but only for individuals with countable assets of $2,000 or less (according to Medicaid regulations and may vary by state); options for care may be limited

Long-term disability insurance
This type of insurance covers your lost income due to a disability, not LTC; it generally ends when your employment ends
lightbulb iconNow that you know what won’t cover LTC, what’s your plan to cover these potential expenses?
Leading a healthy lifestyle can increase your life expectancy, which is great news. But the longer you live, the more likely you are to need LTC. In fact, there’s a 91% chance that 1 or both members of a 65-year-old (male-female) couple will need LTC.2
lightbulb iconDid you know that healthy people have more chance of needing LTC than those with chronic health conditions (with the exception of people who have heart disease)?3

Due to changes such as medical advancements and improved public health measures, people are living longer now than in past generations.4 In fact, a 65-year-old couple has a 50% chance of 1 of them living to age 92.5

So even if your parents or grandparents passed away before needing LTC, don’t assume that means you will, too.

Many people plan to pay for any LTC costs out of pocket. Your savings might not stretch as far as you think and can be impacted by market conditions or unexpected expenses.

Spending your assets to pay for LTC lowers the future income you and your spouse receive and can even impact the inheritance you planned to leave for your loved ones.

Receiving care from a loved one should be a choice you both make, not a necessity. Being a caregiver can be physically, emotionally and financially draining, especially for people who are still caring for their own children.

So it’s important to have a conversation first to see if this is the right solution for everyone involved.
Use this guide to help start an LTC conversation with your family
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Watch Lisa’s story and then ask yourself what your loved ones would do in her situation.
What if they didn’t have a choice?

What are the costs?

Even if your vision for the future includes remaining in your home for as long as possible, there are still costs associated with it. These costs vary widely by location.

Here are the national averages per year (as of 2023) for some of the most common LTC expenses6:

$31,282
Professional home-based care7

$39,112
Informal home-based care8

$59,101
Assisted living

$109,683
Nursing home

These are the actual costs.

Don’t forget about the hidden costs, including:

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Assets used for LTC expenses can decrease the income you have available to maintain your lifestyle

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The financial, emotional and physical toll it can have on caregivers and their lifestyles

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Diminished legacy for loved ones
lightbulb icon Did you know 75% of all caregivers are women9 and 55% of them reported they had no other choice but to provide care?10 This guide offers tips and resources to assist caregivers


How long does it usually last?

For LTC claims that last more than 1 year, the average length of claim was 3.9 years.11

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Cheryl’s mom had the funds to choose where she received care. After learning more about the costs of LTC, will you be able to afford your vision for the future?


So how is LTC paid for?

Self-fund

This is the default option for people without another plan in place. Here, you spend out of pocket for your care, pulling the money from savings and income or by selling assets. This option has the potential to impact your lifestyle and/or legacy.

LTC insurance

Either a traditional or a linked-benefit policy creates a separate source of funds for LTC so you and your loved ones don’t have to sacrifice your time, income and assets. It can be very cost efficient because you can potentially get more out of the policy than you put into it. Most policies also offer tax advantages.

Other options

For those who want a dedicated source for LTC funds but don’t qualify for LTC insurance, consider using another asset, such as an annuity, for these expenses.

If you decide that LTC insurance is right for you, then consider how the plan will pay your LTC benefits once you meet the claim requirements.

There are 2 primary ways policies pay LTC benefits

With cash indemnity policies: With reimbursement policies:
The full monthly benefit is available and sent directly to the policyowner. The policyowner is reimbursed the lesser of the monthly benefit amount OR the actual LTC costs.
There’s no need to submit monthly bills, receipts or other paperwork.12 Some, but not all, facilities may be willing to bill the insurance company directly for qualifying expenses.
The LTC benefit can be spent without any restrictions from the insurance company, so you can receive the care of your choice from whom you choose.13 The insured has to pay for expenses that are not covered their policy out of pocket.
lightbulb iconThe benefit models offered will vary from company to company, so be sure to choose a policy that pays LTC benefits in the way that best fits your needs.
A middle-aged couple talks to their financial professional about long-term care coverage.
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What’s your vision for the future?

Now that you know more about LTC, picture the type of care you’d want. Then work with your financial professional to create a plan that can help turn your vision into a reality.
What are your LTC insurance options?
Discover how Nationwide® can help you get the coverage you need.
View our LTC solutions

Additional resources

Long-term care quick reference guide
Long-term care benefit qualifications
Answers to common Medicare questions
Personal info organizer

[1] American Association for Long-Term Care Insurance, aaltci.org (2022).

[2] “The Likelihood and Cost of LTC May Be Higher Than You Think,” Robert Pokorski, Insurance Newsnet Magazine (Jan. 1, 2022).

[3] “Long-Term Care & Financial Planning,” Healthview Services (2021).

[4] “More people are living to be 100: Here’s why,” Alejandra O’Connell-Domenech, The Hill (Feb. 7, 2023).

[5] “Actuaries Longevity Illustrator,” longevityillustrator.org/ (accessed April 4, 2023).

[6] HealthView Services proprietary data received 2023 and used by permission.

[7] Based on 23 hours per week.

[8] Based on 23 hours per week worked by a family member or friend providing care multiplied by the average hourly income in the selected region. This number does not take into account lost opportunity costs, such as potential loss of job advancement opportunities or reduction of benefits tied to reducing or ending employment. In addition, out of pocket expenses a caregiver may incur are not included — such as gas or other transportation costs, incidentals, etc. Other costs not included are those that can’t be priced, such as loss of time with family, and the cost of treating physical and emotional stress associated with care giving.

[9] “Caregiver Statistics: A Data Portrait of Family Caregiving,” Claire Samuels, aplaceformom.com (Dec. 2, 2022).

[10] “Women in caregiving,” Amy Barger and Christina Best, caregiving.com (March 25, 2021).

[11] “Long Term Care Statistics,” ltctree.com/long-term-care-statistics (accessed on April 3, 2023).

[12] Please note that while bills and receipts are not required to collect monthly benefits, some paperwork will be necessary to establish the initial claim.

[13] Benefits that exceed the daily HIPAA limit may be taxable if they aren’t used for qualified LTC expenses. You should consult a tax specialist when receiving LTC benefits.