Long-Term Care Planning Considerations for High-Net-Worth Families

Key Takeaways

• For high-net-worth families, long-term care planning centers on how the funding choice interacts with taxes, legacy goals, and the surviving spouse’s income.
• A deliberate self-funding plan is a legitimate strategy for many high-net-worth families, and it differs from simply assuming the portfolio is large enough.
• Long-term care (LTC) insurance options now include traditional and hybrid life/LTC policies, either of which may be tax-qualified, each with different trade-offs for affluent households.
• November is Long-Term Care Awareness Month, a natural window for high-net-worth families to revisit how their plan handles this risk.

Consider a hypothetical couple in retirement with a substantial portfolio and adult children. They have never bought long-term care insurance. Their answer has always been: “We can afford it ourselves.”

They may be able to. But when their advisor walks through what “affording it” could look like, the picture gets more complicated. Years of memory care could require selling appreciated assets in a down market, with downstream effects on a surviving spouse’s income and the estate. “We can afford it” and “we have a plan for it” turn out to be different statements.

That gap is where many high-net-worth families lose ground on long-term care: a mismatch between financial capacity and financial coordination.

Why Does Long-Term Care Planning Look Different for High-Net-Worth Families?

For much of the retirement planning market, the central question is whether a household can absorb a prolonged care event without running out of money. For high-net-worth families, that question is usually already answered: the portfolio can absorb it.

What is not yet answered is how paying for care interacts with taxes, legacy goals, and a surviving spouse’s income. This may include questions like:

• If a care event hits during a down market, which assets are sold first, and what does that trigger in capital gains, Medicare surcharges, or state estate exposure?
• If one spouse needs several years of care and the other lives longer after that, what does the surviving spouse’s income look like once care spending has reshaped the portfolio?
• If a care event depletes assets earmarked for heirs or charitable intent, has that been a deliberate choice or an accident?
• Does the current estate plan assume liquid assets at death that a prolonged care event could meaningfully reduce?

These are coordination questions. The right answer depends on the family’s tax position, legacy goals, and broader plan structure.

What Is the Cost of Long-Term Care?

The 2025 CareScout Cost of Care Survey put the national annual median at $129,575 for a private nursing home room and $114,975 for a semi-private room. Costs vary by region, care setting, and length of care required, and specialized memory care may run higher. Home-based care at the hours many families need may approach or exceed facility costs, particularly if 24-hour support becomes necessary.

High-net-worth families often model a range rather than a single number: anywhere from a few years of moderate care to a decade of intensive care, for one or both spouses, with inflation applied over the planning horizon. The exposure includes the direct cost and the sequence risk of needing to sell assets at the wrong time to generate liquidity.

Standard Medicare generally does not cover long-term custodial care. Medicaid does, but qualifying often requires spending down assets to levels inconsistent with many families’ goals.

Related: Why Your Medicare Plan Choice Often Matters More Than the Premium

How Does Self-Funding Long-Term Care Work?

Self-funding means paying for care from the family’s own assets rather than transferring the risk to an insurer. For many high-net-worth families, it can be a legitimate strategy: no premiums, capital stays invested, and the family keeps full control over care decisions without carrier involvement.

A deliberate self-funding plan generally includes:

• A dedicated pool of assets earmarked for potential care, invested with the care-event horizon in mind.
• A liquidation sequence identifying which assets could be drawn down first, with tax implications modeled in advance.
• Coordination with the surviving spouse’s income plan, including the higher tax rates a surviving spouse may face on a depleted portfolio.
• Explicit communication with heirs about how a care event may affect the inheritance they have been planning around.

Assuming the portfolio is large enough and leaving it there may work, but it could expose the family to sequence risk, poor timing, and ad hoc decisions once a care event is underway.

What Long-Term Care Insurance Options Do High-Net-Worth Families Have?

Families who want to transfer part of the risk can choose among traditional long-term care insurance and hybrid life/LTC policies, and either structure may be tax-qualified. Each shifts the coordination problem described above differently, whether that is softening the liquidation sequence, protecting a specific legacy amount, or changing the tax picture.

Traditional LTC insurance pays long-term care benefits when the insured meets specified care triggers. Premiums have historically been subject to carrier-driven increases, and the use-it-or-lose-it structure, where no benefit is paid if care is never needed, is a common objection from affluent households.

Hybrid life/LTC policies combine a life insurance death benefit with an accelerated LTC benefit. If care is needed, the policy may pay toward it. If care is not needed, the death benefit passes to heirs. Premiums are often higher and frequently paid as a lump sum or over a limited number of years, with pricing that may be more predictable than traditional LTC.

Tax-qualified long-term care insurance refers to policies meeting federal requirements that may make a portion of premiums deductible as a medical expense, subject to age-based limits and the medical expense deduction threshold. Benefits received are generally not treated as taxable income. The tax treatment matters more for some high-net-worth families than others, depending on itemization and overall deductible expenses, and is one area addressed through The Tax Management Journey®, our process for proactively managing lifetime taxes, which extends to how a cost like long-term care fits into the broader tax picture.

None of these is universally the right choice. It depends on cash flow, tax position, legacy priorities, and health history at the point of underwriting.

How Does Long-Term Care Affect Estate Planning and Legacy Goals?

A prolonged care event funded from the portfolio may change what passes at death, affecting trust funding, charitable bequests, and the overall inheritance structure. A hybrid life/LTC policy may preserve a specific legacy amount whether or not care is needed, and a traditional LTC policy may help protect the portfolio itself.

Long-term care decisions, estate planning, and broader healthcare planning in retirement are often addressed as separate conversations. Coordinating them is part of legacy planning for high-net-worth families.

An estate plan built years ago may have assumed a particular level of assets at death. If current LTC strategy does not match that assumption, the inheritance, the surviving spouse’s income, or a charitable intent built into the plan may bear the difference.

Related: 5 Ways to Preserve Family Wealth Without Ruining the Next Generation

How Should High-Net-Worth Families Choose a Long-Term Care Strategy?

Rather than defaulting to “we’ll self-fund” or “we need insurance,” high-net-worth families may benefit from working through a short set of questions:

1. How large would a worst-case care event need to be before it meaningfully changes the surviving spouse’s income or the children’s inheritance?

2. Which assets are drawn down first in a care event, and what does that trigger in taxes and estate exposure?

3. Would preserving a specific legacy amount justify shifting part of the risk to a policy that provides a benefit either way?

4. Does the family’s health history make underwriting easier now than it could be in five years?

5. Has the estate plan been reviewed against the long-term care funding assumption?

The right answer for one family is often different from the right answer for another. What matters is a choice that is deliberate and documented.

Related: 3 Key Strategies to Help Reduce Taxes on Retirement Withdrawals

Why Revisit Long-Term Care Planning Before Year-End?

Long-term care is one of the few financial risks that may get harder to plan for the longer it is deferred. Health changes may affect underwriting, markets may affect self-funding capacity, and estate plans that have not been coordinated with care funding can create surprises for a surviving spouse or heirs. This is the same coordination gap the hypothetical couple above never closed.

November is Long-Term Care Awareness Month, and year-end is when many families already review taxes and estate documents. That makes the coming weeks a practical time to put this conversation on the calendar.

Related: Your End-of-Year Wealth Check-Up: Smart Financial Moves Before December 31

Get Long-Term Care Guidance That Fits Your Full Financial Picture

At Prosperity Capital Advisors, we treat long-term care planning as part of your full financial picture, coordinated across the Five Pillars of Holistic Wealth Management: Financial Planning, Asset Management, Tax Management, Protection Planning, and Legacy Planning. A qualified financial advisor who understands how care decisions interact with the rest of your plan may help you make this call deliberately.

Frequently Asked Questions About Long-Term Care Planning for High-Net-Worth Families

What is long-term care planning?

Long-term care planning is the process of deciding how a potential extended care need, whether in a facility, at home, or in a memory care setting, could be funded, how it may interact with the family’s tax and estate plan, and what it could mean for a surviving spouse or heirs. For high-net-worth families, the funding choice often interacts with taxes, legacy goals, and the surviving spouse’s income, so coordination across the broader plan matters.

How much does long-term care cost for a couple?

Costs vary significantly by region and care setting. The 2025 CareScout Cost of Care Survey put the national annual median at $129,575 for a private nursing home room per person, so a couple in which both spouses need facility care may face roughly twice that amount. Specialized memory care may cost more. For planning purposes, affluent families typically model a range of scenarios, from a few years of moderate care to a decade of intensive care, with inflation applied over the planning horizon.

Should high-net-worth families buy long-term care insurance?

There is no single right answer. Some high-net-worth families choose to self-fund, some transfer part of the risk through traditional or hybrid LTC insurance, and some use a blended approach. The right choice depends on the family’s cash flow, legacy goals, tax position, health history, and how the broader estate plan is structured. The decision is best made deliberately.

What is a hybrid long-term care policy?

A hybrid long-term care policy combines a life insurance death benefit with an accelerated long-term care benefit. If care is needed during the insured’s lifetime, the policy may pay toward it; if not, the death benefit passes to heirs. Premiums are often higher than traditional LTC and frequently paid as a lump sum or over a limited number of years, with pricing that may be more predictable than traditional policies. Because the death benefit is paid regardless of whether care is ever needed, this structure can appeal to families who view traditional LTC premiums as money spent with no return if a claim is never filed.

Is long-term care insurance tax-deductible?

Premiums for tax-qualified long-term care insurance may be deductible as a medical expense, subject to age-based limits and the overall medical expense deduction threshold. Benefits received from tax-qualified policies are generally not treated as taxable income. For many high-net-worth households, the deduction is a secondary consideration rather than the main reason to choose a tax-qualified policy, since the greater value often lies in the benefit structure and underwriting terms. Whether the deduction provides a meaningful benefit depends on whether the household itemizes and the overall level of deductible medical expenses in a given year.

How does long-term care affect estate planning?

A prolonged care event funded entirely from the portfolio may change what passes at death, which can affect trust funding, planned charitable bequests, and the overall structure of the inheritance. This is one reason an estate plan benefits from periodic review rather than a single one-time setup, particularly as a family’s health, asset mix, or care preferences change over time. Coordinating the long-term care funding strategy with the estate plan may help keep the plan intact under a range of care scenarios.

Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“Prosperity”), an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Prosperity does not provide tax or legal advice. For more information, please visit www.adviserinfo.sec.gov.

The client scenario described above is hypothetical and intended for illustrative purposes only. It does not represent a specific client or outcome.