Caring for aging parents can be one of the most rewarding yet challenging roles many of us will take on. As parents grow older, everyday tasks can become more difficult for them to manage alone, and their care needs can increase quickly, often catching families off guard. This is where long-term care planning comes in. Thoughtful preparation for your parents’ future needs — whether they’ll require help at home or a higher level of support in a care facility — can provide invaluable peace of mind and ensure they receive the quality of care they deserve.
However, families can face unexpected costs, legal hurdles and emotional strain without a solid plan. Bankrate spoke to Yanira Guzmán, founder of The Career Gem, about the struggles she and her siblings went through when her parents needed expensive long-term care. She shares their challenges, but also what they learned. In this article, we’ll explore the ins and outs of long-term care planning, from understanding care options to managing finances and navigating family dynamics to help you plan with clarity and confidence.
What is long-term care?
Long-term care (LTC) is a type of support that helps individuals manage the daily tasks of life when health issues or aging make these activities challenging. Unlike traditional health care, which focuses on curing illnesses, long-term care is designed to help people live as comfortably and independently as possible. It encompasses a range of services, from in-home assistance with activities like bathing, dressing and cooking to more intensive support in assisted living or skilled nursing facilities.
The importance of long-term care
Planning for long-term care is important when caregiving for an elderly parent, as it not only safeguards their future but also protects the well-being of the entire family. Many people underestimate how quickly a parent’s health needs can change, and without a plan, families may find themselves facing unexpected financial burdens or difficult decisions without clear direction.
When a loved one has a plan in place, families can navigate these transitions more smoothly, helping ensure that everyone is emotionally and financially prepared.
What happens when parents don’t plan for long-term care?
Planning for long-term care can feel emotionally overwhelming, and for some families, it simply doesn’t happen. Yanira Guzmán, the founder of The Career Gem — a leadership and career development consulting group — shares her journey of navigating her parents’ long-term care without a comprehensive plan. The experience was filled with unforeseen challenges and ultimately led to a renewed commitment to preparing better for her own children. Guzmán’s story sheds light on the true impact that an absence of planning, or a limited ability to plan, can have on a family.
While her family didn’t outright neglect long-term care planning, their situation reflects a reality likely common to many American households. As Guzmán explains, “It was known in the household that we didn’t have disposable income. All the income that my parents brought in from their full-time work went toward basic living expenses and some savings. There was no sinking fund for long-term care.”
Navigating complex systems as a first-generation caregiver
As a first-generation child of working-class immigrants, Guzmán faced several unique challenges when providing long-term care for her parents. Her parents, like many, worried about their health and quality of life as they aged, but the obstacles to planning long-term care were significant. “The inability to plan long-term care was a result of two main drivers,” Guzmán explains, “One, the cost of healthcare and two, the knowledge on how to navigate the systems (i.e., financial, healthcare, legal, etc.) within our country to make this happen.”
For immigrant families, the challenges often extend beyond finances. “Despite their efforts in learning English, the complexity in understanding how the various systems worked in this country was a challenge,” says Guzmán. “It’s like a maze trying to figure out how each of the systems supports one another and/or even contradict one another.”
Knowing what services were available was only half the battle — figuring out the right questions to ask and the correct people to approach became equally important in navigating this complicated terrain.
Legal and logistical hurdles without prior planning
Guzmán and her siblings soon realized the importance of having legal directives in place. Having witnessed extended family and friends struggle without documented wishes, Guzmán and her older siblings encouraged their parents to establish legal documents, including power of attorney and medical directives. “That was one piece of the puzzle,” she notes, acknowledging the relief that came from having their parents’ wishes formally recorded.
However, legal documentation alone did not solve the financial issues. While they had plans in place, they didn’t have a dedicated healthcare or trust fund to finance long-term care needs. Guzmán, along with two siblings, took on the responsibility of exploring programs like Medi-Cal/Medicare and In-Home Supportive Services (IHSS) to offset costs.
Yet, even with government support, there was a monthly expense. “Families have a monthly cost for the services — which can range up to $1,200/month or more. We were no exception,” says Guzmán. In response, her family pooled resources, with all eight siblings contributing financially to cover the monthly costs required for their father’s long-term and hospice care.
Lessons learned and steps for future planning
Having gone through these experiences, Guzmán is committed to a different approach when it comes to her own future care. “I don’t want my own children to have to go through what I went through for my parents,” she says. The experience has motivated her to bolster her own financial literacy and understand the systems she once found so confusing. “I’m learning how our banks work, investments work, insurance works,” she explains, with the goal of ensuring her children have the resources they need to cover future expenses without the strain her family experienced.
Through financial education and preparation, Guzmán aims to create a smoother path for her own children and ensure that future generations are financially equipped for the unknowns of long-term care.
The takeaway?
Yanira Guzmán’s story highlights the deep value of planning ahead, especially for families stepping into the role of caregivers for the first time. Her journey reveals that long-term care isn’t just about financial resources; it’s about the emotional strength and resilience needed to navigate complex systems, from securing legal documents to finding the right support. For first-generation families, her experiences resonate even more, showing how exploring resources, rallying together and preparing today can ease tomorrow’s challenges.
Guzmán’s insights are a heartfelt reminder that by planning thoughtfully, we’re not just securing our loved ones’ care but also paving a smoother path for the next generation, helping them face life’s challenges with confidence and compassion.
Long-term care considerations
Planning for long-term care can be overwhelming, but it’s crucial to ensure both you and your family are prepared. Beyond healthcare, effective planning touches many areas, including legal, financial and day-to-day caregiving aspects. Here are some key components to consider:
Activities of daily living (ADLs)
Long-term care often involves assistance with ADLs, such as bathing, dressing, eating and moving around safely. Losing the ability to perform these tasks independently is often a primary reason for LTC services. If your parents can no longer manage these activities alone, they may require in-home care or relocation to a supportive environment, such as an assisted living facility or nursing home.
Assisted living vs. nursing home vs. at-home care
Understanding the different care settings is helpful in determining the best fit for your parents’ needs:
- Assisted living: Provides a more independent environment with some assistance available for ADLs. Ideal for parents who need minimal medical support but benefit from a community atmosphere and receive some daily assistance.
- Nursing home: Offers more intensive care and medical supervision, suitable for those with chronic conditions or higher healthcare needs.
- At-home care: Allows parents to stay in familiar surroundings with visiting healthcare professionals. Although this can be more costly in the long term, it may provide a better quality of life for those who wish to remain in their own homes or with other family members.
Understanding Medicare and Medicaid
Medicare and Medicaid are both federal programs but serve different purposes. Medicare is generally limited in its LTC coverage, only covering short-term care after a hospital stay. Medicaid, on the other hand, offers more extensive LTC benefits but is income-based. It may cover in-home, nursing home or assisted living care, but qualifying requires meeting strict financial requirements, which can vary by state.
Legal considerations: Wills and power of attorney
Planning for long-term care also means handling essential legal documents:
- Wills: Ensure that your parents’ assets are distributed according to their wishes. Linda Bell, Senior Writer at Bankrate, stresses the importance of keeping these documents updated, “A will is not a set-it-and-forget-it kind of document… Every three to five years, you should look at it to see if the rules that you put in place still apply.”
- Power of attorney: Allows someone to make financial and legal decisions on your parents’ behalf.
- Healthcare power of attorney: Designates a person to make medical decisions for them if they’re unable to do so themselves.
Probate and estate planning
Probate can be a complex, time-consuming process for families who are already dealing with the loss of a loved one. Linda Bell reflects on her experience with probate after inheriting her mother’s house.
Almost a year and several thousands of dollars later, I learned firsthand why probate gets a bad rap. The process is not only time-consuming and costly, but it can also be intrusive.
— Linda Bell, Bankrate Senior Writer
Consider setting up a trust: Trusts can help avoid probate, ensuring your family’s privacy and a smoother transition of assets. If probate is unavoidable, be prepared for the associated costs and the possibility of delays.
Veteran benefits
Several benefits may help cover long-term care costs if your parent is a veteran. Veterans may qualify for health services, pensions and financial aid specifically for LTC needs. Programs include:
- Veterans health care: Offers preventive and primary care services, including nursing home care in some cases.
- Disability compensation: Financial support for service-related disabilities that could fund additional care.
- Survivor benefits and death pensions: Monthly benefits provided to eligible survivors of deceased veterans.
How you can plan for long-term care
Planning for long-term care now can make a huge difference in easing the burden on loved ones down the road. With a few proactive steps, you can set yourself — and your family — up for a more secure, prepared future. Here’s a breakdown of some important considerations to get started:
- Assess your future care needs: Consider what type of long-term care you may need based on family health history, lifestyle and financial resources. Will you want to age in place with at-home care, or might an assisted living facility be a better fit? Understanding these options helps guide financial and logistical preparations.
- Explore long-term care insurance options: Long-term care insurance is one way to protect your assets while ensuring coverage for future care needs. Policies vary widely, so research options early, considering both your current health and potential long-term needs. This coverage can help manage costs, whether you eventually require home care, assisted living or skilled nursing.
- Build a dedicated care fund: If long-term care insurance isn’t right for you, or to supplement it, consider building a separate savings or investment account dedicated to future care. Even small, consistent contributions can accumulate over time, providing extra security for future expenses without impacting everyday financial needs.
- Create and update key legal documents: Establishing documents such as a will, power of attorney and healthcare directive can make a big difference in ensuring that your wishes are honored and simplifying decisions for loved ones. Make sure these documents are up to date, especially if family circumstances change, and keep them somewhere easily accessible.
- Research and take advantage of government programs: Programs like Medicare, Medicaid and Veterans Affairs benefits offer support, but each has its own eligibility requirements and limitations. Research these options ahead of time to understand the costs they cover and any gaps in service. This knowledge can be invaluable in planning for expenses beyond personal savings.
- Engage in estate planning: In addition to a will, consider setting up a trust if you want to manage how assets are distributed and reduce probate costs. Trusts allow you to pass on wealth, such as a family home or other investments, while offering privacy and minimizing legal complications. Estate planning not only protects assets but also helps avoid unnecessary tax burdens.
- Communicate your plans with family: Talking with family members about your plans can be challenging, but is helpful. Having open discussions about your long-term care preferences and financial plans provides clarity and ensures everyone is on the same page. It also reduces misunderstandings and can help your loved ones support you more effectively.
By taking these proactive steps, you’re not only preparing yourself but also helping to safeguard your loved ones from emotional and financial stress in the future. Each step you take now becomes a way to honor your values and provide peace of mind — for both you and those who matter most.
Frequently asked questions
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The expense of long-term care can very significantly based on your needs as you age. However, according to a study by Genworth Financial, the median annual cost of in-home care in the U.S. in 2023 was $75,504 for a home health aide, $116,800 for a private nursing home room, and $64,200 for care in an assisted living facility. As you get older, the costs increase because you need more assistance.
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A long-term care rider is an add-on to a life insurance policy that allows you to use part of your death benefit to pay for qualifying long-term care expenses. This can include costs for nursing homes, assisted living or in-home care if you’re unable to perform basic activities like bathing or eating independently. While adding an LTC rider may increase your premium, it can provide financial support for care needs during your lifetime, reducing the financial burden on you and your family.
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It’s not common to be able to directly convert a life insurance policy into a standalone long-term care policy, but certain life insurance policies offer options to address LTC needs. Many permanent life insurance policies, such as whole life or universal life, allow you to add a long-term care rider. This rider enables you to use part of the policy’s death benefit to pay for qualifying long-term care expenses while you’re alive.
It is best to review your existing policy with your insurer or a financial advisor to explore options for incorporating long-term care benefits.
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