Why Long-Term Care Planning Matters Now More Than Ever

The start of a new year is the perfect time to take stock of your life, health, and financial plans. In the wake of COVID-19 and its lasting impact, many Americans are focusing on what matters most—protecting their health and preserving their financial future.

One area that deserves special attention is long-term care planning.

The Reality of Long-Term Care

Many people think of long-term care insurance as something they won’t need until very late in life. The truth is that a sudden illness, accident, or chronic condition can create the need for care at any age.

• 70% of Americans over age 65 will need some form of long-term care in their lifetime (U.S. Department of Health and Human Services).
• 37% of long-term care recipients are under the age of 65 (Genworth).

Planning now—before a crisis hits—can make the difference between protecting your savings and facing financial hardship.

Funding Long-Term Care

When the time comes, you’ll want to have a plan in place for how to pay for care, where you’ll receive it, and who will provide it.

Ideal Scenario: Pre-Funding Care

The best-case scenario is having adequate savings set aside in retirement accounts or health savings accounts (HSAs) to cover the cost of care. If you cannot fully fund it yourself, consider:

• Sharing costs with family members – loved ones may be willing to help cover premiums
• Paying some costs out-of-pocket early – this can ease the emotional and financial toll of family members becoming full-time caregivers later

Tax Benefits of Long-Term Care Insurance

The IRS classifies qualified long-term care insurance as a medical expense, which means it can be tax-deductible.

Key points to remember:

• Policies issued on or after January 1, 1997 must meet federal requirements
• Older policies may qualify if they are “grandfathered” by your state’s insurance commissioner
• Deduction limits vary by age; for those aged 60–70, the IRS slightly reduced the allowable deduction in recent years
• Hybrid policies (life insurance or annuities combined with LTC benefits) typically do not qualify for the same deduction, but they do provide a death benefit if care is not used

Understanding Medicare vs. Medicaid

Many people assume that Medicare will cover long-term care needs, but this is a common misconception.

• Medicare provides limited short-term skilled nursing care, typically after a hospital stay
• Medicaid is a federal/state program that covers long-term care for seniors with limited income and assets

Because Medicaid eligibility is complex, many families wait until a crisis before applying—sometimes called Medicaid crisis planning. This often leads to unnecessary “spend down” of assets.

The Importance of Medicaid Planning

With proper planning, you may be able to protect a significant portion of your assets while still qualifying for Medicaid benefits.

An elder law attorney can help by:

• Structuring your assets to meet eligibility requirements
• Guiding you through the complicated application process
• Avoiding costly mistakes that could disqualify you or delay coverage

DIY Medicaid applications frequently fail, causing major financial setbacks. Working with a professional ensures you get it right the first time.

Plan Ahead Before a Crisis

Long-term care planning can be complex, but early action puts you in control. Waiting until care is needed often leads to fewer choices, higher costs, and unnecessary stress for your loved ones.

📞 Call us today at (207) 848-5600 or visit our  CONTACT to start building a plan that protects your health, finances, and peace of mind.