Published 10/1/2015
Ben Snowden

The True Cost of Self-Funding Long-Term Care

According to the U.S. Department of Health and Human Services, about 70 percent of individuals older than age 65 will require long-term care (LTC) at some point in their lives.

As people grow older, they may become more aware of their frailties, which seem to sneak up and burst out. Simple motions such as walking or standing can cause sudden flares of pain. Memory doesn’t work as quickly and accurately as it once did. Seemingly normal functions require more time and effort.

In the “golden years” after age 65, individuals often require help to complete every day tasks such as eating, dressing, bathing, and moving from one place to another. Home health care companies, assisted living facilities, and nursing homes offer services, but at a price.

In 2012, a year in a semi-private nursing home cost an average of $81,000; but the numbers may be vastly different 25 years from now. With an annual increase of 5 percent compounded, that same care would cost more than $274,000 per year. Today, a 6-hour visit by a home health aide every weekday could average more than $30,000 a year; that figure will probably also increase significantly over the next 10, 15, or 25 years.

LTC insurance offers AAOS members a proactive way to prepare for the time when help may be needed to complete daily routines.

Considering self-funding?
Rather than pay for coverage over time, some people choose to self-fund LTC costs with their own assets. Families don’t always consider the following three points when choosing to self-fund LTC costs.

LTC specialists reduce stress in care planning—LTC specialists are adept at helping clients find the services and caregiving facilities that meet their requirements. Adopting a proactive mindset and working with these professionals alleviates stress for families of those who need LTC services. It also saves time and effort for all parties involved.

LTC coverage strengthens estate plans—Self-funding can deplete assets for heirs and end up costing more than an LTC plan.

Financial advisors can use LTC policies to add security and diversity to estate plans. For example, if a married couple self-funds LTC costs and one spouse needs LTC services, funds may not be available when the other spouse needs care. LTC policies account for several scenarios and help protect entire families.

LTC policies help preserve wealth—Owning an LTC policy transfers financial risk from the individual to an insurance company. This gives the person and their family more freedom with liquid assets and personal savings when the decision is made to obtain long-term care. The investment in LTC coverage will start to pay itself off when care is needed.

Think again
Before paying for LTC expenses out-of-pocket, think about the benefits of investing in an LTC plan. When a nursing home stay or assisted living services are needed, LTC coverage allows AAOS members and their families to get the care required without disrupting other financial plans. LTC coverage can help preserve personal wealth and reduce worries about estate plans.

AAOS members have access to comprehensive LTC insurance coverage at exclusive rates. To learn more about the LTC insurance, visit aaosinsurance.com/LTCadvantage, or call the LTC plan administrator at 800-616-8759.

Coverage may vary or may not be available in all states.

Ben Snowden is a copywriter for Pearl Insurance Group.


  1. “Risk Management & Long Term Care: Understanding Your Options.” LTCR. Web. 13 July 2015. http://www.ltcr.com/assets/img/LTCR_2015_Planning_kit.pdf.
  2. McCarty, Ed. “Targeting High Net Worth Clients With LTCI.” Talk About LTC. Web. 30 April 2015. http://www.talkaboutltc.com/2015/04/30/targeting-high-net-worth-clients-with-ltci.
  3. “Protecting Your Wealth and Lifestyle.” Northern Trust. Web. 31 August 2015. https://www.northerntrust.com/documents/white-papers/wealth-management/research/protecting-your-wealth-and-lifestyle.pdf.