Planning for the Cost of Long-Term Care

What does long-term care actually cover?

Long-term care refers to help with everyday activities — bathing, dressing, eating, mobility, and managing medications — rather than short-term medical treatment. It can be provided in your own home by a caregiver or home health aide, in an assisted living community, or in a skilled nursing facility. Many people will need some form of long-term care at some point, whether due to a chronic condition, an injury, or the effects of aging.

What does long-term care cost?

Costs vary widely depending on the type of care and location, but industry cost-of-care surveys generally put North Carolina long-term care costs in roughly these ranges per year, as a general guide rather than a specific quote for any individual situation:

• In-home care (non-medical home health aide): often in the range of $55,000–$65,000 per year for a typical schedule of care.
• Assisted living facility: often in the range of $45,000–$55,000 per year.
• Private room in a nursing home: often in the range of $100,000–$115,000 per year.

These figures are general industry ranges, not a quote — actual costs depend on your specific location, level of care needed, and provider. Costs also tend to rise over time, which is one reason many people build inflation protection into a long-term care plan.

Hybrid long-term care policies

Traditional standalone long-term care insurance pays benefits only if you need care — if you never need it, the premiums are simply gone. Hybrid policies address that concern by combining life insurance or an annuity with a long-term care benefit. If you need care, the policy can pay out toward care costs; if you never need long-term care, the policy still provides a death benefit to your beneficiaries or retains its account value. This structure has made hybrid policies an increasingly popular alternative to standalone LTC insurance.

When should you start planning?

Most long-term care and hybrid policies require you to answer health questions to qualify, so the best time to plan is typically well before care is needed — often in your 50s or 60s while you're still in reasonably good health. Waiting until a health event occurs can limit or eliminate your options entirely. Building a long-term care strategy alongside your broader retirement income plan andannuity strategy can help protect your savings from being drained by an unexpected care need.

Ways to plan for long-term care costs

There isn't one single "right" way to plan for long-term care — the best approach depends on your health, budget, and goals. Common approaches include:

• Traditional standalone LTC insurance: Pays a defined daily or monthly benefit toward qualifying care expenses. Premiums can increase over time, and benefits are only paid if care is actually needed.
• Hybrid life/LTC policies: Combine a life insurance death benefit with an LTC benefit, so unused LTC benefits still pass to beneficiaries as a death benefit.
• Hybrid annuity/LTC policies: Use an annuity's accumulated value to fund care costs, often at an enhanced payout rate if care is needed.
• Self-funding: Setting aside a dedicated pool of savings or investments specifically earmarked for potential care costs.

Why families often underestimate this risk

It's easy to assume "that won't happen to me" when it comes to long-term care, but the need for some form of extended care later in life is common enough that it's worth planning for regardless of your current health. The financial impact isn't limited to the person who needs care — extended, unplanned care costs can also drain savings a spouse was counting on, or create difficult decisions for adult children about how to help pay for a parent's care. Addressing the question proactively, while there's still time to qualify for coverage, tends to produce far better outcomes than scrambling to figure it out during a health crisis.

Long-term care and your overall retirement plan

Long-term care planning works best when it's integrated with the rest of your retirement strategy rather than treated as an afterthought. A hybrid policy, for example, might be funded using a portion of assets that were otherwise sitting in low-growth accounts, or structured alongside a retirement income plan so that a care need doesn't force you to interrupt an income stream you're relying on elsewhere. A licensed insurance agent can help you weigh standalone LTC insurance, hybrid policies, and self-funding against your specific financial picture, health, and family situation.