By Michael Henley, CFP®, CPWA®, CRPC®, RMA®
There is a category of financial risk that most families do not think about until it is sitting right in front of them.
Not market volatility. Not taxes. Not even estate planning.
It is the cost of needing help with everyday life.
A parent who can no longer drive or cook or manage medications on their own. A spouse who requires memory care after a cognitive decline. A health event in your sixties that requires months of rehabilitation before you can return home.
These scenarios are not rare. According to the U.S. Department of Health and Human Services, roughly 70% of people turning 65 today will need some form of long-term care during their lifetime. And the cost of that care, whether it is in-home assistance, assisted living, or a skilled nursing facility, can run anywhere from $50,000 to over $100,000 per year depending on where you live and what level of support is required.
For families who have spent decades building wealth, long-term care represents one of the largest unplanned expenses they are likely to face. And yet it is one of the least planned for.
At Brandywine Oak Private Wealth, long-term care often becomes an important planning conversation as clients approach retirement. Not because it is a comfortable conversation, but because having it early enough to do something about it is the whole point.
What Long-Term Care Actually Costs
Before deciding whether insurance makes sense, it helps to understand what you are actually insuring against.
Long-term care is not medical care in the traditional sense. It is custodial care, meaning help with the activities of daily living: bathing, dressing, eating, moving around, and managing medications. Medicare covers very little of this. It pays for short-term skilled nursing care after a hospitalization but does not cover ongoing custodial care. Medicaid covers long-term care, but only after you have spent down most of your assets, which is not a plan most of our clients find acceptable.
The costs vary significantly by care setting and geography. In-home care through a professional aide can run $25 to $35 per hour, which adds up quickly if care is needed several hours a day. Assisted living communities in the Philadelphia and Wilmington area average between $4,500 and $6,500 per month. A private room in a skilled nursing facility can exceed $10,000 per month.
A two to three year care need, which is roughly the average duration, can cost $150,000 to $300,000 or more. For couples, the risk is compounded, because one spouse often needs care while the other is still living independently and depending on the same pool of assets.
Why Most People Wait Too Long
The most common reason families do not address long-term care planning is the same reason they avoid many uncomfortable financial conversations: it feels premature.
In your fifties, long-term care feels like something to think about later. By the time it feels urgent, the window to act has often closed.
Long-term care insurance is underwritten based on your health at the time of application. If you wait until your late sixties or until a health event has already occurred, you may find that coverage is unavailable, significantly more expensive than it would have been earlier, or limited in ways that reduce its value.
The sweet spot for most applicants is somewhere between ages 55 and 65, when premiums are more manageable and the likelihood of being approved for coverage is higher. Waiting beyond that window does not mean planning is no longer possible, but the options narrow.
How Long-Term Care Insurance Works
A traditional long-term care insurance policy pays a daily or monthly benefit when you meet certain eligibility criteria, typically the inability to perform two or more activities of daily living without assistance, or a cognitive impairment such as dementia.
You choose a benefit amount, a benefit period, and an elimination period, which functions like a deductible measured in days rather than dollars. A common structure might provide $6,000 per month in benefits, for a benefit period of three years, after a 90-day elimination period during which you cover costs out of pocket.
Most policies also include an inflation protection option, which increases your benefit amount over time to keep pace with rising care costs. This feature matters considerably over a 20 to 30 year period between when you buy the policy and when you are likely to use it.
Premiums for traditional long-term care insurance can be a meaningful annual expense, which is one reason the market for these policies has shifted over the past decade. Many families now consider alternative structures.
Alternatives to Traditional Long-Term Care Insurance
The traditional standalone policy is not the only way to address long-term care risk. Several other structures have become increasingly common, and for some clients they represent a better fit.
Hybrid life insurance and long-term care policies combine a permanent life insurance policy with a long-term care benefit rider. If you need long-term care, the policy pays out benefits. If you never need care, the death benefit passes to your heirs. These policies are often funded with a single lump sum premium or a limited payment period, and they eliminate the risk of paying premiums for years and never collecting a benefit, which is a concern many clients raise about traditional coverage.
Annuities with long-term care riders offer a similar concept from a different starting point, using an annuity as the funding vehicle with long-term care benefits layered on top.
Asset-based strategies involve setting aside a portion of your existing wealth specifically designated to cover potential long-term care costs, essentially self-insuring. This approach works best for families with substantial liquid assets who are comfortable accepting the full financial risk of a potential care need.
The right structure depends on your health, your assets, your income, your family situation, and how you weigh the certainty of premiums against the uncertainty of needing care. There is no single right answer, which is why this decision belongs inside a broader financial plan rather than being made in isolation.
How This Fits Into Your Overall Financial Plan
Long-term care planning does not exist in isolation. It interacts with your retirement income plan, your estate plan, your investment portfolio, and your Social Security strategy in ways that matter.
A care event for one spouse can accelerate the depletion of a joint portfolio, alter the survivor's retirement income picture, and create tax complications depending on which accounts are used to cover costs. Planning for that possibility in advance, whether through insurance, a dedicated reserve, or a combination of both, changes the math for the entire retirement plan.
It also changes the conversation with your family. One of the most valuable things long-term care planning does is remove the uncertainty that falls on adult children when a parent's care needs arise unexpectedly. When there is a plan, the decisions become clearer and the financial burden does not land without warning.
At Brandywine Oak Private Wealth, our wealth advisors and in-house CPAs look at long-term care as one piece of the full retirement picture. We help clients evaluate their options, model the financial impact of different scenarios, and coordinate the decision with the rest of their plan.
If you have not yet thought through how a long-term care need would affect your financial picture, we would welcome the conversation. It is one of those areas where starting early gives you the most options. Call (484) 785-0050, email contact@BrandywineOak.com, or Start Your Financial Journey to schedule a meeting online. You can also visit our client testimonials page to hear how we have helped other families prepare for what lies ahead.
Frequently Asked Questions About Long-Term Care Planning
Does Medicare cover long-term care?
Medicare covers a limited amount of short-term skilled nursing care following a qualifying hospital stay of at least three days, but it does not cover ongoing custodial care, which is the kind of assistance most people need when they can no longer manage daily activities on their own. Once a Medicare-covered stay ends, the cost of continued care falls to the individual. Medicaid does cover long-term care, but it requires that you have spent down most of your countable assets to qualify, which is not an appropriate strategy for most of our clients at Brandywine Oak Private Wealth in Kennett Square, PA.
When is the best time to buy long-term care insurance?
The general consensus among financial planners is that the optimal window is between ages 55 and 65. During this period, premiums are more manageable than they will be later, and the likelihood of qualifying for coverage without significant restrictions is higher. Waiting until health issues arise can make coverage unavailable or prohibitively expensive. That said, planning for long-term care risk does not always require traditional insurance, and the right approach depends on your full financial picture.
How much does long-term care insurance cost?
Premiums vary based on your age at the time of application, your health history, the benefit amount you choose, the benefit period, and whether you add inflation protection. A healthy couple in their late fifties might pay $3,000 to $6,000 or more per year combined for a traditional policy with meaningful coverage. Hybrid life and long-term care policies are often funded with a larger upfront premium or a shorter payment period. The cost of the premium needs to be weighed against the potential cost of care and the impact a significant care expense would have on your overall retirement plan.
What if I never need long-term care?
With a traditional policy, premiums paid for coverage that is never used are not recoverable, which is a legitimate concern and one reason some clients prefer hybrid policies that combine long-term care benefits with a life insurance death benefit. If care is never needed, the death benefit passes to heirs. For clients who prefer to self-insure, setting aside dedicated assets for potential care costs keeps the funds within the estate if they go unused. The right structure depends on your priorities and how you weigh certainty against flexibility.
Can I plan for long-term care without buying insurance?
Yes. Self-insuring by designating a portion of your investment portfolio to cover potential care costs is a legitimate strategy, particularly for families with substantial liquid assets. The risk is that a prolonged or high-cost care need depletes those assets more quickly than anticipated, affecting the surviving spouse or the estate. A financial advisor can help you model different scenarios and determine whether insurance, self-insurance, or a combination of both provides the most appropriate level of protection for your situation.
About Michael
Michael Henley is the Founder and CEO of Brandywine Oak Private Wealth, a private wealth management and registered independent advisory firm headquartered in Kennett Square, PA. Over the course of his 20-year career, Michael has been dedicated to helping wealthy individuals and families plan and manage all aspects of their finances and investments. With a passion for helping others look behind the curtain and understand the complex world of finance, he develops close relationships with clients as he helps them progress toward their financial goals. Michael loves to provide clarity and alleviate financial anxiety, help prevent families from overpaying in taxes, and give wealthy families permission to enjoy their life savings. He says, "No work is more gratifying than giving families outcomes to what matters most to them."
Michael holds the CERTIFIED FINANCIAL PLANNER®, Certified Private Wealth Advisor®, Chartered Retirement Planning Counselor℠, and Retirement Management Advisor® designations. Residing in Chadds Ford, PA, with his two children, he enjoys outdoor activities, particularly maintaining trails on his property, hiking with his dogs, and being an actively engaged dad, always taking his kids everywhere. Michael's latest hobby is tennis and he recently started ice skating to join his daughter Savannah. He can also be found moving logs to the firepit with his son Maverick on the tractor. Michael serves on the board of United Way of Southern Chester County and loves mentoring younger advisors. Great mentors helped him succeed, and he's convinced that every leader needs to both have mentors and be a mentor. To learn more about Michael, connect with him on LinkedIn.
Brandywine Oak Private Wealth is a registered investment adviser. Registration does not imply a certain level of skill or training. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
