Long-term care costs and planning
It’s the gap big enough to erase a retirement. Roughly 69% of today’s 65-year-olds will need some long-term care, a nursing home runs about $115,000 a year, and neither Medicare nor FEHB pays for the custodial help that most of it is. To make matters harder, the federal long-term care program is currently closed to new applicants. None of this is a reason to panic — it’s a reason to plan deliberately. Here are the real 2026 costs, who actually pays, and the four ways to fund the care you may someday need.
1. What long-term care actually is
Long-term care isn’t a hospital stay or a medical procedure. It’s the daily, ongoing help people need when they can no longer fully care for themselves — assistance with the basics of living. The standard yardstick is the six Activities of Daily Living (ADLs): bathing, dressing, toileting, continence, eating, and transferring (moving in and out of a bed or chair). When someone can no longer do two or more of these — or has a serious cognitive impairment like Alzheimer’s — they need long-term care.
That care happens across a range of settings: in your own home with a paid aide, in an assisted-living community, in a memory-care unit, or in a nursing home for the most intensive needs. Critically, the bulk of long-term care is custodial, not medical — and that distinction is exactly what determines who pays.
2. What it costs in 2026
The numbers are sobering, and they climb every year:
| Type of care | 2026 median cost | Per month |
|---|---|---|
| Home health aide | $60,000–$80,000 / yr | ~$5,000–$6,700 |
| Assisted living | ~$74,400 / yr | ~$6,200 |
| Nursing home (semi-private) | ~$115,000 / yr | ~$9,600 |
| Nursing home (private room) | ~$132,000 / yr | ~$11,000 |
And these are today’s figures. Care costs have been rising faster than general inflation — assisted living jumped about 5% in the latest survey — so the bill you’ll face in your 80s will be far larger. At historical inflation, a nursing-home year costing about $112,000 now could approach $186,000 in twenty years. Costs also vary enormously by state, with California and the Washington, D.C. area among the most expensive.
3. Why Medicare won’t save you
Here is the misconception that wrecks the most retirement plans: Medicare does not cover long-term care. It covers short, skilled care — up to 100 days in a skilled nursing facility following a qualifying 3-day inpatient hospital stay, and only for genuinely skilled needs like rehabilitation or wound care. Even then, you owe a $217-per-day coinsurance for days 21–100 in 2026, and after day 100 the coverage stops cold.
What Medicare never covers is custodial care — the bathing, dressing, and eating help that is the vast majority of long-term care. FEHB doesn’t cover it either, and neither does Medigap. We dig into this trap in the dispatch on Medicare and the long-term care myth. The takeaway is blunt: if you need long-term care, you are paying for it yourself unless you’ve arranged another source in advance.
Medicare’s skilled-nursing benefit ends at day 100, and only applies to skilled care to begin with. Custodial care — what most people actually need — gets nothing from day one. Plan as if Medicare contributes zero, because for long-term care it essentially does.
4. Project your own exposure
Pick a care type, the age you might need care, how many years it might last, and an inflation assumption. The calculator projects the annual cost at that future age and the total bill — the number your plan needs to be able to absorb.
Your scenario
Uses 2026 median costs, grown at your chosen inflation rate to the year care begins, then summed over the care years (also inflating). A planning estimate, not a prediction or advice.
5. The four ways to pay
Since insurance you already have won’t cover it, long-term care comes down to four funding sources — most people end up using a combination:
| Source | How it works | Best for |
|---|---|---|
| Self-funding | Pay from savings, investments, or home equity | Those with substantial assets to absorb a multi-year bill |
| LTC insurance | Premiums buy a daily/monthly benefit when you can’t do 2+ ADLs | Middle-wealth retirees protecting savings; buy in your 50s–60s |
| Hybrid life/LTC | Life insurance or annuity with an LTC rider; pays heirs if unused | Those who dislike “use it or lose it” traditional premiums |
| Medicaid | Covers care after you spend down assets to state limits | The safety net of last resort; note the 5-year look-back |
A common middle-class strategy is to insure part of the risk — enough to cover a few years of care — and self-fund the rest, rather than trying to insure every possible dollar. Wealthy households may self-fund entirely; those with modest assets may rely on Medicaid after a spend-down. The wrong move is the unspoken default: assuming it won’t happen to you, when the odds say otherwise.
6. The FLTCIP suspension
For federal employees there’s a complication you need to know about. The Federal Long Term Care Insurance Program (FLTCIP) — the government’s own LTC coverage for feds and their families — is not accepting new applications. OPM first suspended enrollment on December 19, 2022, then extended the suspension for another 24 months effective December 19, 2024, keeping it closed to new applicants through at least late 2026. The agency cited cost volatility and a shrinking long-term care insurance market.
What this means in practice: if you’re already enrolled, your coverage continues (though you can’t apply to increase it during the suspension). If you’re not enrolled, FLTCIP is currently off the table, and you’ll need to look at private traditional or hybrid policies instead. Keep an eye on OPM announcements for a reopening — but don’t wait on it to start planning, because care costs and your own insurability won’t pause for the program.
7. Traditional vs. hybrid policies
If you go the insurance route, the central choice is between traditional and hybrid coverage:
Traditional LTC insurance works like car or home insurance — you pay annual premiums (commonly in the $150–$400/month range, more for richer benefits), and if you never need care, those premiums are simply gone. The catch that has soured many on traditional policies is rate increases: insurers have raised premiums on existing policyholders by 50–100% in some cases, since the LTC market has proven hard to price.
Hybrid policies bundle LTC coverage with life insurance or an annuity. They cost more upfront — often two to four times as much — but typically lock in level premiums and pay a death benefit to your heirs if you never use the care benefit, so the money isn’t lost. That single feature — removing the “use it or lose it” risk — is why hybrids have become the faster-growing choice. The best window to buy either type is generally your mid-50s to mid-60s, when premiums are lower and you’re more likely to pass medical underwriting.
8. Building your plan
A workable long-term care plan doesn’t require certainty about a future you can’t predict — it requires a deliberate decision about how you’d pay. A simple sequence:
| Step | What to do |
|---|---|
| 1. Estimate the risk | Use the projector above to size the potential bill in your situation |
| 2. Decide your funding mix | Self-fund, insure part, or plan around Medicaid — pick deliberately |
| 3. Shop while insurable | If insuring, do it in your 50s–60s; compare traditional vs. hybrid |
| 4. Earmark assets | Designate which savings would fund care; consider inflation-resistant holdings |
| 5. Document your wishes | Pair the money plan with the care decisions in your estate documents |
Long-term care is the largest unfunded liability in most retirement plans precisely because it’s the easiest to ignore. Sizing it honestly and choosing a funding path — even if that path is “self-fund from this earmarked account” — turns a frightening unknown into a line item you’ve already handled.
9. Frequently asked questions
How much does long-term care cost in 2026?
In 2026, national median costs are roughly $115,000 a year for a semi-private nursing home room (about $315 a day), around $74,400 a year ($6,200 a month) for assisted living, and roughly $60,000 to $80,000 a year for a home health aide. Costs are considerably higher in states like California and the Washington, D.C. area, and they rise every year — a nursing-home stay that costs $112,000 today could approach $186,000 in twenty years at historical inflation. These numbers are why long-term care is the single largest gap in most retirement plans.
Does Medicare or FEHB cover long-term care?
Neither covers custodial long-term care. Medicare pays only for short skilled-nursing stays — up to 100 days after a qualifying 3-day hospital stay, with a $217-per-day coinsurance for days 21 through 100 in 2026 — and nothing after that. It never covers the everyday help with bathing, dressing, and eating that most long-term care actually is. FEHB, like most health insurance, also doesn’t cover custodial care. That leaves four ways to pay: personal savings, long-term care insurance, a hybrid life/LTC policy, or Medicaid after spending down your assets.
Can federal employees still enroll in FLTCIP?
Not right now. OPM suspended new applications to the Federal Long Term Care Insurance Program on December 19, 2022, and extended that suspension for another 24 months effective December 19, 2024 — keeping enrollment closed to new applicants through at least late 2026. If you’re already enrolled, your coverage continues, but you can’t apply to increase it during the suspension. OPM cited cost volatility and a shrinking long-term care insurance market. Until FLTCIP reopens, federal employees who want coverage must look at private long-term care or hybrid policies instead.
When does long-term care insurance pay out?
Most long-term care policies — including FLTCIP — pay benefits when you can no longer perform at least 2 of the 6 Activities of Daily Living (bathing, dressing, toileting, continence, eating, and transferring), or when you have a severe cognitive impairment such as Alzheimer’s disease. Policies typically pay up to a daily or monthly benefit amount, often after a waiting (elimination) period of 30 to 90 days. The best time to buy is generally in your mid-50s to mid-60s, when premiums are lower and you’re more likely to qualify medically.
What is the difference between traditional and hybrid long-term care insurance?
Traditional long-term care insurance works like other insurance: you pay annual premiums, and if you never need care, the premiums are gone — and traditional policies have seen steep rate increases, sometimes 50% to 100%. Hybrid policies combine long-term care coverage with life insurance or an annuity: they cost more upfront (often two to four times as much) but typically guarantee level premiums and pay a death benefit to your heirs if you never use the care benefit, so the money isn’t lost. Hybrids have grown popular precisely because they remove the “use it or lose it” worry of traditional coverage.
- FLTCIP, “Costs of Long Term Care” (2024 Cost of Care Survey)
- LTCFEDS.gov, FLTCIP application suspension notice
- Carescout / Genworth, “Cost of Care” (2026 medians)
- Medicare.gov, “Long-Term Care” coverage
- SeniorLiving.org, “Nursing Home Costs in 2026”
- Administration for Community Living, long-term care planning