AMAC Magazine Exclusive – By Frank Kestler
Many retirees assume that if long-term care (LTC) is ever needed, Medicare or Medicaid will step in. Unfortunately, that’s a risky misconception.
The Limits of Medicare & Medicaid
- Medicare may cover up to 100 days of skilled nursing care after a qualifying hospital stay. Beyond that, costs are generally yours.
- Medicaid is the largest payer of LTC in the U.S., but it’s a means-tested safety net. To qualify, most people must spend down or restructure assets. Importantly, IRAs and 401(k)s can’t be sheltered in trust and are typically spent down first—often triggering significant taxes.
For households with meaningful retirement savings, Medicaid planning is usually ineffective and financially harmful.
The Odds of Needing Care
Roughly three out of four Americans over 65 will need some form of long-term care—at home, in assisted living, or in a facility. Without a plan, retirees risk:
- Draining their nest egg
- Leaving a spouse financially vulnerable
- Burdening children with difficult decisions and expenses
Why Traditional LTC Insurance Often Falls Short
Traditional LTC policies were once the go-to solution, but rising premiums and tight underwriting have made them harder to obtain and keep. They also work on a “use-it-or-lose-it” basis: if you never need care, the premiums are gone.
Better, More Flexible Alternatives
Hybrid Life + LTC Policies
Combine life insurance with an LTC rider. If you need care, the policy pays benefits; if not, your heirs receive a tax-free death benefit. Either way, your premiums create value.
Asset-Based LTC Strategies
Reposition a portion of your savings to create leverage for future care while managing taxes:
- Qualified dollars (IRA/401(k)): Certain annuities allow funds to be drawn gradually, spreading the tax impact while creating additional income for care.
- Non-qualified dollars (after-tax savings): Some solutions can convert taxable gains into tax-free LTC benefits, increasing the efficiency of your assets and protecting your family from unnecessary taxes.
These approaches also preserve control and choice over where and how you receive care—at home, assisted living, or a facility—unlike Medicaid, which can limit options.
The Bottom Line
Medicare is limited. Medicaid is a safety net—not a plan.
LTC planning isn’t one-size-fits-all, but starting early keeps more options on the table and helps protect what you’ve built.
At RoseMark Advisors, we’ve guided thousands of AMAC members through these decisions—helping safeguard assets, minimize taxes, and preserve peace of mind.
Signed,
Frank Kestler
Financial Advisor, Rosemark Advisors
888-355-1606