What Should I Know About Long-Term Care?

A recent paper from the Center for Retirement Research at Boston College highlights a major retirement risk: long-term care (LTC) costs are largely uninsured, creating financial strain for many aging households.

Key findings from the research:

  • Long-term care expenses pose a serious financial risk because most costs are not covered by insurance.

  • Researchers compared what people think they will do if care costs exceed their resources with what retirees in similar situations actually do.

  • Results show a significant disconnect between expectations and reality:

    • Many retirees plan to rely on Medicaid, but only a small percentage will meet the program’s strict financial eligibility rules.

    • People generally do not expect to use home equity, yet this becomes one of the most common real-life funding sources.

    • Those who need care rarely end up moving in with their children, but they often leave their children smaller inheritances than planned.

Source: Chen, Munnell, & Wettstein (2025), “How Do Retirees Cope with Uninsured Healthcare Costs?” Center for Retirement Research at Boston College.

What Is Long-Term Care?

The National Institute on Aging defines long-term care as a range of services that help individuals meet health or personal care needs when they can no longer perform everyday activities independently and safely.

These everyday tasks are known as Activities of Daily Living (ADLs):

  • Bathing

  • Dressing

  • Eating

  • Transferring (moving in and out of bed or chairs)

  • Toileting

  • Continence

Common Misunderstandings About Coverage

Myth: Medicare covers long-term care.
Reality: Medicare covers only short-term, rehabilitative care, typically following a hospitalization. Coverage is limited (often under 90 days) and only applies if medical professionals believe recovery is likely.

Medicare may pay for:

  • Skilled nursing care (short term)

  • Physical, occupational, or speech therapy

Medicare does not pay for:

  • Custodial care (help with ADLs)

  • Ongoing long-term care

  • Assisted living

  • Independent senior housing

What About Medicaid?

Medicaid can cover long-term care, but only after strict financial qualification.

Key rules include:

  • Applicants must spend down most assets before qualifying.

  • A single applicant typically may keep only about $2,000 in countable assets (rules vary by state).

  • A healthy spouse at home may keep limited assets under spousal protection rules.

  • Medicaid has a five-year “look-back” period. Asset transfers during this period can result in penalties or temporary disqualification.

Even for those who qualify, access is limited:

  • Not all facility beds accept Medicaid

  • Long waiting lists are common

Why This Matters Now

By 2030, all Baby Boomers will be age 65 or older, dramatically increasing demand for long-term care services. This growing need, combined with limited public coverage, means planning ahead is essential.

Long-term care is not just a health issue — it is a retirement income, asset protection, and family legacy issue.

What should I do next?

Do not wait until a health event forces rushed decisions. Proactive planning creates more options, more control, and better financial outcomes.

Schedule a long-term care planning review with a financial advisor to:

  • Estimate your potential care costs

  • Stress-test your retirement plan

  • Evaluate insurance and funding strategies

  • Protect your assets and your family’s future

The earlier this is addressed, the more choices you keep.