Insurance Review Services · Long-Term Care Planning
How the coverage is structured, who pays for care, and why planning happens early.
By Withbert (Bert) W. Payne, CPA, CGMA, Chartered Accountant (England & Wales)
September 7, 2026
Most people spend decades accumulating retirement assets. Very few spend any time planning for the single event most likely to erode them. Long-term care — the extended assistance required when chronic illness, cognitive decline, or disability prevents independent living — affects most Americans who reach age 65. Yet it remains one of the least planned-for financial risks in retirement.
This article is not a sales pitch. It is an attempt to give you the factual foundation you need to make an informed decision — the same foundation I provide to every client before any product is discussed.
My background is not in selling insurance. It is in accounting, auditing, financial analysis, and insurance evaluation. I apply the same objective discipline to every long-term care recommendation — without carrier bias, sales quotas, or promotional agendas.
Long-term care is not acute medical treatment. It is assistance with the basic activities of daily living — bathing, dressing, eating, toileting, continence, and transferring — that becomes difficult or impossible when a chronic condition, cognitive impairment, or physical disability makes independent living no longer possible without assistance. Care can be delivered in the home, in an assisted living facility, in a memory care unit, or in a skilled nursing facility.
The six activities of daily living.
The widely quoted figure is that about seventy percent of people turning 65 will need some form of long-term care. Roughly fifty-six percent will develop an impairment severe enough to meet a long-term care insurance benefit trigger. Either way, it is the majority — and the care most families need is custodial, not medical.
The distinction matters because Medicare — which many families assume will cover extended care — was designed for acute and rehabilitative care. It covers skilled nursing for limited periods under specific conditions. Medicare was never designed to pay for ongoing custodial long-term care, which is the type most families will need. When Medicare coverage ends, the financial exposure falls entirely on the individual or the family.
Medicare covers skilled nursing care for up to 100 days, provided the patient is admitted following a qualifying hospital stay of at least three days. Coverage beyond 20 days requires a daily co-payment. After 100 days, Medicare coverage ends entirely.
Medicaid (Medi-Cal in California) covers long-term care, but only after an individual has spent down personal assets to meet eligibility thresholds. For most professionals and executives, Medicaid is not a plan — it is the last resort after personal assets have largely been exhausted.
Personal assets are the default funding source for most families without coverage. A multi-year care event — particularly dementia, which can extend well beyond a decade — can eliminate retirement portfolios, disrupt income strategies, and transfer a disproportionate financial and caregiving burden to spouses and adult children. Even for those who can afford it, self-funding is rarely the most efficient use of capital.
Long-term care insurance is designed to transfer this risk. When structured correctly, it helps ensure that care costs are met by the policy — not by investment liquidations, not by family members, and not by an asset spend-down.
The figures below are planning assumptions for a high-cost market such as the San Francisco Bay Area, where semi-private care runs about $15,000 a month and a private room about $20,000. They are stated in today’s dollars, before inflation, and they are the numbers a policy’s monthly benefit should be measured against.
| Duration of care | At $15,000 a month | At $20,000 a month |
|---|---|---|
| One year | $180,000 | $240,000 |
| Three years | $540,000 | $720,000 |
| Five years | $900,000 | $1,200,000 |
| Ten years (extended dementia event) | $1,800,000 | $2,400,000 |
A benefit of $20,000 a month is not an extravagance; it is the private-room cost. That is why benefit levels should be set against local costs rather than national averages.
Before any policy evaluation, you should be familiar with the following terms:
| Daily / Monthly Benefit | The maximum amount your policy will pay toward care costs per day or per month. Benefit levels should be calibrated to actual care costs in your geographic area — not to national averages. A monthly maximum is generally more flexible than a daily one, because care costs rarely arrive in even daily amounts. |
| Benefit Period | How long benefits are payable. Options typically range from two years to a lifetime. For clients with a family history of dementia, lifetime benefit designs deserve thoughtful consideration — and only a few carriers still offer them. |
| Elimination Period | The waiting period before benefits begin — typically 30, 60, or 90 days of qualifying care. It works like a deductible measured in days rather than dollars: a longer elimination period reduces premiums, and you fund care yourself during the wait. Read whether your policy counts calendar days or only days on which care was actually received; the difference can be weeks. |
| Inflation Protection | A provision that increases your benefit over time to keep pace with rising care costs. Compound inflation riders are significantly more valuable than simple inflation over long holding periods. |
| Benefit Triggers | The conditions under which benefits become payable — typically the inability to perform two of six activities of daily living, expected to last at least ninety days, or severe cognitive impairment such as Alzheimer’s disease. A licensed health care practitioner certifies the condition; the diagnosis alone does not open a claim. |
| Shared Benefits Rider | For couples, this allows one spouse to draw on the other’s benefit pool if his or her own is exhausted. Women generally require long-term care more often, and for longer periods, than men. A shared-benefit rider helps protect both spouses if one exhausts his or her benefits first. |
| Reimbursement vs. Indemnity | A reimbursement policy pays covered expenses actually incurred, up to the limit, and requires invoices. An indemnity or cash-benefit policy pays the stated benefit once the claim requirements are met, regardless of the exact expense — which can make paying a family caregiver workable. |
| Non-Forfeiture Provision | Provides that if you stop paying premiums, some level of reduced benefit is retained rather than the policy being forfeited entirely. |
| Guaranteed Renewability | Your policy cannot be canceled as long as premiums are paid. Premiums can be increased only if the carrier obtains state regulatory approval for an entire class of policyholders. |
Traditional long-term care insurance — a stand-alone policy with a dedicated benefit pool — remains a sound structure for many clients. But a sizable portion of today’s market has moved toward hybrid, or linked-benefit, designs that combine life insurance or annuity funding with long-term care benefits.
Many people prefer hybrid policies because if long-term care is never needed, a death benefit is generally paid to beneficiaries. In addition, premiums are typically guaranteed not to increase. For clients who are uncomfortable with the “use it or lose it” nature of traditional long-term care insurance, a hybrid structure addresses that concern.
Select hybrid carriers now offer structures that can be funded using IRA or 401(k) assets, allowing qualified retirement funds to be repositioned into a care funding arrangement; the tax mechanics deserve review with your own CPA. Lifetime benefit options are still available from a small number of carriers, and monthly benefit levels can reach $40,000 or more for clients requiring concierge-level care arrangements.
No single structure is appropriate for every client. The right design depends on age, health status, financial profile, family history, and planning objectives — all of which require genuine analytical evaluation, not a standard product presentation.
An existing policy deserves the same scrutiny as a new one. Policies issued ten or fifteen years ago were often designed for care costs that no longer exist, and two contracts issued a decade apart — even by the same carrier — can pay very differently in identical circumstances. An independent review looks at:
Replacement is rarely the answer; optimization usually is. The review costs nothing to request and often confirms that the policy should simply be kept.
Premiums are based primarily on age and health at the time of application. The cost of waiting is not abstract — it is measurable. A policy purchased at 50 will cost materially less than the same coverage purchased at 60, and coverage that is available today may not be available after a change in health. Approximately half of applicants over age 70 are declined or rated for health reasons.
The market itself is narrowing. Long-term care insurers once commonly offered lifetime benefits; today, only two do, and just one offers up to $40,000 per month.
The best time to explore your options is while you are healthy and have the greatest number of choices available.
Whether you already own long-term care insurance or are considering coverage for the first time, I would be pleased to provide an independent review tailored to your circumstances. Every review is conducted personally by Withbert W. Payne, CPA — never delegated to junior staff or automated systems. Email is best: it puts the facts in writing for both of us.
Request Your Personalized Illustration/Quote(925) 708-6501
withbert.payne@insurance-review-services.com · LTCCPAs.com
Withbert (Bert) W. Payne, CPA, CGMA, Chartered Accountant (England & Wales)
Founder & Principal | Insurance Review Services | CA License No. 0E90257
More than five decades of experience in accounting, finance, insurance, and independent policy analysis. Independent insurance broker. Former Internal Audit Manager at a major national life insurance company. Fellow of the Institute of Chartered Accountants in England & Wales.
Long-term care and life insurance planning for professionals and affluent families.
925.708.6501 · withbert.payne@insurance-review-services.com · LTCCPAs.com
3150 Crow Canyon Place, Suite 100, San Ramon, CA 94583
Continue reading What Triggers Long-Term Care Insurance Benefits? · What the Policy Actually Pays For · Facts, Myths & FAQ · You Can Afford Long-Term Care. But Should You Self-Fund It?
Sources. The seventy-percent and fifty-six-percent lifetime-need figures are published by the U.S. Department of Health and Human Services. Medicare skilled-nursing coverage limits are those published by the Centers for Medicare & Medicaid Services. Care-cost figures are planning assumptions for a high-cost market; actual costs vary by location, setting, and level of care.
This article is for educational purposes only and does not constitute personalized insurance, legal, tax, or financial advice. Coverage availability, benefits, and premiums vary by individual health status, age, state of residence, and product selection. Insurance products are subject to medical underwriting approval and to policy terms and conditions. Long-term care benefits are generally income-tax-free under a tax-qualified contract — consult your own CPA or tax advisor.
Insurance products are offered through Insurance Review Services, CA License No. 0E90257. This is an advertisement and a solicitation for insurance. A licensed insurance agent may contact you.
