A woman named Diane Loomis drove two hours from Green Bay to sit in my office in the fall of 2014. She was sixty-one. Her mother had been diagnosed with vascular dementia seven months earlier, and Diane had spent those seven months doing what most people do when this happens: scrambling.
Her mother, Arlene, was eighty-three, living alone in a small ranch house in De Pere that she’d owned outright since 1997. She had Social Security of $1,640 a month, a savings account with $41,000 in it, and no long-term care insurance. No power of attorney. No healthcare directive. No plan of any kind for the situation that was now, undeniably, happening.
Diane had already moved her mother into an assisted living facility that could handle memory care. The cost was $7,200 a month. Diane was paying it out of her mother’s savings and her own checking account, alternating months, doing math on a napkin at her kitchen table, and she knew the napkin math wasn’t going to hold.
She sat across from me and said: “Nobody told us to plan for this.”
She was right. And that sentence is the reason I’m writing this piece.
What It Actually Costs
I’m going to name numbers, because naming numbers is what I do, and because the absence of specific numbers is one of the reasons people don’t plan for long-term care. They know it’s expensive. They don’t know how expensive. There’s a difference.
In 2026, the median cost of a private room in a nursing home in the United States is approximately $117,000 per year. That’s $9,750 a month. A semi-private room runs about $104,000 per year. Memory care facilities, which provide specialized support for Alzheimer’s and other dementias, cost between $84,000 and $120,000 per year depending on geography. In parts of the Northeast and West Coast, you can add 20 to 40 percent to those numbers.
Home health aides, the option most families prefer because it lets the person stay in their own house, aren’t cheap either. A full-time home health aide in 2026 costs roughly $75,000 to $80,000 per year. That’s for forty-four hours a week, which sounds like a lot until you realize it doesn’t cover nights, weekends, or holidays. If you need round-the-clock care, you’re looking at $150,000 to $200,000 a year.
The average length of a long-term care need in the United States is approximately three years. For women, it’s closer to 3.7 years. For people with dementia, it’s often five to eight years. Multiply the annual costs by the actual duration and you’re looking at total costs that range from $250,000 to over $800,000.
These are not theoretical numbers. These are the numbers I’ve watched clients face. Diane Loomis’s mother needed care for four and a half years before she passed. The total cost was approximately $390,000. The $41,000 in savings lasted less than six months.
What Medicare Covers (and Why People Are Shocked)
Here is the fact that catches almost everyone off guard: Medicare doesn’t pay for long-term custodial care.
I’ll say it again because it matters. Medicare, the program that most Americans over sixty-five rely on as their primary health insurance, doesn’t cover the kind of care most people think of when they think of nursing homes.
Medicare will pay for up to 100 days of skilled nursing care following a qualifying hospital stay of at least three days. “Skilled nursing care” means you need medical services, rehabilitation, or monitoring by licensed professionals. You’re recovering from a hip replacement. You need physical therapy after a stroke. That qualifies.
But custodial care, which is what Alzheimer’s patients need, what people with advanced Parkinson’s need, what people who simply can’t bathe, dress, or feed themselves need, that’s not covered. Medicare considers it non-medical. You can need help with every basic activity of daily life, and Medicare’s position is that this isn’t a medical problem.
The first 20 days of a qualifying skilled nursing stay are fully covered. Days 21 through 100 require a copay of $204.50 per day in 2025. After day 100, Medicare pays nothing. And most long-term care needs aren’t 100 days. They’re 100 weeks. Or 100 months.
I’ve sat across from people who were genuinely stunned by this. They’d paid Medicare taxes for forty years. They assumed it would be there. It isn’t. Not for this.
The Medicaid Trap
When the savings run out, and they do run out, Medicaid becomes the payer of last resort. Roughly 60 percent of nursing home residents in the United States are on Medicaid. But qualifying for Medicaid requires that you be, for all practical purposes, broke.
The rules vary by state, but in most states, to qualify for Medicaid long-term care coverage, an individual can have no more than $2,000 in countable assets. A married couple where one spouse needs care gets slightly more protection, something called the Community Spouse Resource Allowance, which in 2025 is capped at $154,140 in most states. The house is usually exempt as long as the healthy spouse is living in it, but everything else counts.
This is where the term “spend-down” comes in. It means exactly what it sounds like. You spend your assets down to the qualifying limit. The savings you built over a lifetime, the investments, the second car, the mutual funds, most of it has to go before Medicaid pays a dollar.
And here’s where people get into real trouble. The five-year look-back period. When you apply for Medicaid, the state looks at every financial transaction you’ve made in the previous five years. Every gift to a child. Every transfer to a family member. Every asset you moved or gave away. If they find a transfer that looks like an attempt to qualify for Medicaid by giving away assets, they impose a penalty period during which Medicaid won’t pay for your care. You gave your daughter $50,000 three years ago? Medicaid sees that. And you’re going to wait months before coverage kicks in, and someone has to pay the nursing home bill during that gap.
I’ve watched families discover this the hard way. People who thought they were being smart by putting the house in their children’s names, by gifting money to family members, by moving accounts around. In some cases, these strategies work if done correctly and far enough in advance, with the help of an elder law attorney. But in most of the cases I’ve seen, they were done too late, done without legal guidance, and they created exactly the kind of problem they were meant to prevent.
Long-Term Care Insurance: When It Works and When It Doesn’t
Long-term care insurance is the product that exists to address this exact risk. It pays a daily or monthly benefit if you can’t perform a certain number of activities of daily living, typically two out of six: bathing, dressing, eating, transferring, toileting, and continence.
Here’s my honest assessment, and I’ve looked at these policies for thirty years.
If you’re buying at age fifty-five to sixty, in good health, and you can get a policy with inflation protection and a benefit period of at least three years, it can be a reasonable purchase. You’re looking at premiums of roughly $2,500 to $4,500 per year for a couple in their late fifties, depending on the insurer, the benefit amount, and the elimination period (that’s the waiting period before benefits start, usually ninety days).
If you’re buying at seventy, the math gets ugly. Premiums can be $6,000 to $10,000 per year or more. At those prices, many people would be better off self-insuring by earmarking a portion of their portfolio specifically for long-term care risk.
There are a few things to watch. First, rate stability. Several major insurers have raised premiums dramatically on existing policyholders over the past fifteen years, some by 50 to 100 percent. Look at the insurer’s history of rate increases before you buy. Second, inflation protection. A policy that pays $200 per day with no inflation adjustment sounds good today. In twenty years, when the nursing home costs $400 per day, it covers half your bill. Get a policy with compound inflation protection, not simple inflation, even though it costs more. Third, benefit period. A three-year benefit period covers the average need. But averages don’t help if your mother has Alzheimer’s for seven years. If you can afford a five-year or lifetime benefit, consider it.
Hybrid policies, which combine life insurance with long-term care benefits, have become popular. They guarantee a death benefit if you never need care and provide long-term care coverage if you do. They’re typically funded with a single premium of $50,000 to $150,000 or more. They solve the “use it or lose it” complaint about traditional policies. They’re worth examining, but they’re not cheap, and the long-term care benefits are often less generous than standalone policies.
My bottom line on insurance: it’s one tool. It’s not the only tool. And it doesn’t replace the conversation.
The Conversation Nobody Is Having
I know something about this topic that I didn’t learn from a textbook.
In 1999, my wife Nancy’s mother was diagnosed with Alzheimer’s. She was seventy-four. She lived in a small house that she’d maintained alone since Nancy’s father died in 1991. She had no long-term care insurance. She had no power of attorney document naming anyone to manage her affairs. She had no healthcare directive. She had a savings account, a Social Security check, and a daughter and son-in-law who loved her and had absolutely no legal authority to make decisions on her behalf.
For the next six years, Nancy and I watched the cost of her mother’s care consume everything. The house was sold. The savings were spent. We contributed from our own accounts in ways I don’t regret but which set our own retirement planning back by years. We hired an elder law attorney after the crisis began, not before, because nobody had told us to hire one before. We fought with the Medicaid office over paperwork. We made decisions about her mother’s care in hospital hallways, exhausted, without guidance, because the guidance didn’t exist in any form we could have used.
Nancy’s mother died in 2005. She received good care in the last years of her life because Nancy made sure of it, personally, at significant cost to her own health and peace of mind.
I tell my clients this story not to frighten them. I tell them because I don’t want them to end up where we were: making the most expensive decisions of our lives with no plan, no documents, and no time.
The conversation you need to have isn’t complicated. It has four parts.
First: What does your parent, or you yourself, want if they can’t live independently? Home care? Assisted living? Move in with family? There’s no right answer. There’s only an answer you’ve discussed versus one you haven’t.
Second: Who makes decisions if the person can’t? This requires a durable power of attorney for finances and a healthcare power of attorney. Without these documents, you may end up in court seeking guardianship, which costs $3,000 to $10,000 and takes months, while the person you love needs help now.
Third: What resources are available? Insurance, savings, home equity, family contributions. Put the numbers on the table. Every one of them.
Fourth: What’s the plan if the money runs out? Is Medicaid an option? Should an elder law attorney review the asset picture now, while there’s time, rather than in a crisis?
These four questions can be covered in one kitchen table conversation. One. And the cost of not having that conversation, the cost I watched my own family pay, is measured in tens of thousands of dollars, in damaged relationships, in decisions made at two in the morning by people who love each other and are too tired to think clearly.
What to Do This Week
You don’t need to solve this today. You need to start today.
If you’re in your sixties, get quotes on long-term care insurance from at least two carriers. See what it costs. You might decide it’s worth it. You might decide it isn’t. Either way, you’ll have the information.
If your parents are living and over seventy, ask them whether they have a durable power of attorney and a healthcare directive. If they don’t, help them get one. An elder law attorney can draft both documents for $500 to $1,500 in most markets. That’s less than one day in a nursing home.
Look up the cost of assisted living and nursing home care in your state. The Genworth Cost of Care Survey publishes this data annually. Know the number. Don’t guess at it. Know it.
Then have the conversation. Not the whole conversation. Not a perfect conversation. Just the first one. At the kitchen table, with coffee, with the people who will be involved if something happens. Say the thing nobody wants to say: “What’s our plan if Mom needs care?” Or: “What’s our plan if I need care?”
The information exists. It’s been there all along. The gap isn’t knowledge. It’s action.
Diane Loomis didn’t have a plan because nobody told her to make one. I’m telling you now. Make the plan. Have the conversation. The cost of the conversation is one uncomfortable evening. The cost of avoiding it is everything else.
