How to Pay for Long-Term Care: Planning Strategies to Know

None of us know exactly what our future healthcare needs will look like.

However, statistics suggest that most Americans will eventually require some form of long-term care (LTC).

And unfortunately, these costs can add up very quickly.

The good news is that there are several ways to plan ahead financially, including hybrid life insurance policies, annuities with LTC benefits, or tax-advantaged savings strategies to help cover potential care costs.

The Problem

According to the 2025 Genworth Cost of Care Survey, the national median cost of an assisted living community has risen to about $70,800 per year, up 10% from the previous year.

Without an LTC funding strategy in place, people often end up:

• Paying entirely out of pocket

• Selling assets such as their home

• Relying heavily on family members for care

• Or eventually qualifying for Medicaid after their assets are depleted

Let’s look at some strategies that can help you avoid these outcomes.

Hybrid Life Insurance Policies

Traditional LTC insurance used to operate largely as a “use it or lose it” product. If you never needed care, the premiums were simply gone.

Today, many people choose hybrid policies, which combine life insurance with LTC benefits.

With these policies:

• If you need care, you can use part of the death benefit to pay for it.

• If you never need care, your beneficiaries receive the full death benefit.

In some cases, existing permanent life insurance policies can even be converted into hybrid coverage through a 1035 exchange, allowing people to reposition assets they already own.

Annuities with LTC Benefits

Another option is an annuity with an LTC rider.

These annuities provide regular income during retirement, but if LTC is needed, the monthly payout may increase, potentially providing double or triple the amount in LTC benefits, depending on the policy.

Annuities can sometimes be easier to qualify for than traditional LTC insurance, particularly for people exploring options later in life.

Tax-Advantaged Savings Strategies

Certain savings vehicles can also help you prepare for LTC costs.

Health Savings Accounts (HSAs)

If you have a high-deductible health plan, an HSA can be a powerful way to save for future medical expenses.

HSAs offer three major tax advantages: 

• Contributions are pre-tax 

• Investments grow tax-free 

• Withdrawals are tax-free for qualified medical expenses 

HSA funds can also be used to pay LTC insurance premiums, subject to age-based limits.

Plan as a Couple

Couples may have additional planning opportunities.

Some insurers offer discounts when both partners apply for coverage, even if they are not legally married.

Couples may also consider shared benefit policies, which allow both partners to draw from a shared pool of LTC benefits. If one spouse exhausts their portion, they may still be able to use benefits from the shared pool.

Connect with Dewitt & Dunn

The right LTC funding strategy all depends on your: 

• Age 

• Health 

• Financial resources 

• Retirement goals 

• Family situation 

For some people, insurance makes sense. For others, a hybrid strategy or self-funding approach may be more appropriate.

The key is exploring your options before a health event limits your choices. Let’s talk about what makes sense for you! Book an appointment with us today to get started.