Last reviewed: July 2026
High-net-worth retirees should plan for long-term care by deciding, in advance, exactly which assets will pay for a care event and what pulling those assets does to the rest of the plan. Long-term care planning for high-net-worth households is rarely about whether you can afford care. With $3 to $5 million, you usually can. It is about which part of the plan you are willing to sacrifice when a multi-year care event lands on top of your normal spending. Most people never ask that second question until the bill is already here.
Key Takeaways
- Medicare pays nothing for custodial care and stops after 100 days; days 21 to 100 carry a $217 daily coinsurance in 2026.
- A 65-year-old may need about $172,500 for retirement health care, and that Fidelity estimate excludes long-term care entirely.
- Having $3 to $5 million does not remove the problem; it changes which part of your plan you end up sacrificing.
- The real exposure is the surviving spouse, left with one Social Security check and a portfolio drained by years of care.
About the Author: Jeff Judge, CFP®, AEP®, ChFC®, CLU® is Managing Partner of Chesapeake Financial Planners in Forest Hill, Maryland. He has been helping families and business owners in Harford County and the Baltimore metro area navigate long-term care and estate decisions since earning his CFP® certification in 2013, using Chesapeake's signature process, the R.U.D.D.E.R. Method™. "The households that handle this well decided, on purpose and years ahead of time, exactly where the care money would come from," Jeff says.
Why Does Long-Term Care Planning Look Different for High-Net-Worth Households?
The default plan at this level is three words: we'll just pay. That works right up until it doesn't. Below a certain level of wealth, the decision makes itself: you either qualify for Medicaid after a spend-down or you buy insurance because you have to. Far above this level, say a $30 million balance sheet, a multi-year care event is a rounding error. The $3 to $5 million household sits in the uncomfortable middle, wealthy enough to self-fund on paper, not so wealthy that a seven-figure care event disappears.
Does having $4 million take the problem off the table? No. It changes the question from "how do I pay for this" to "which part of the plan do I give up when it happens." That is a harder question, and it is the one that actually matters.
In the Baltimore metro, care is not cheap. According to the 2024 Genworth and CareScout Cost of Care Survey, the median cost of a private room in a Maryland nursing home runs about $173,375 a year, higher than the national median. Multiply that by four or five years and layer it on top of the lifestyle you already fund, and the "we'll just pay" plan starts eating principal fast.
Jeff Judge has sat across the table from more than a few couples who assumed a big portfolio made this a non-issue. "The number on the statement fools people," he says. "It looks like plenty until you run it against five years of care plus the life you actually live."
What Does Medicare Actually Cover for Long-Term Care?
Medicare covers very little of what people picture when they think about long-term care. It pays for skilled nursing only, and only after a qualifying hospital stay. The first 20 days of skilled care are covered in full. Days 21 through 100 carry a daily coinsurance, $217 a day in 2026 according to the Centers for Medicare & Medicaid Services. After day 100, Medicare pays nothing. And all of that is skilled care.
The care that actually drains retirement plans is custodial care: help with bathing, dressing, eating, moving, and memory support. Medicare does not pay for custodial care at all. That is the gap most plans never see coming.
The headline retirement number leaves it out too. Fidelity estimates a 65-year-old will need roughly $172,500 after taxes for health care in retirement, and that figure specifically excludes long-term care. So even careful, numbers-driven savers who budgeted for health care never priced the open-ended, multi-year custodial event.
"I have watched more than a few multimillion-dollar retirement plans get cracked open by a nursing home bill than by a bad market." – Jeff Judge, CFP®
What Happens to the Surviving Spouse When Care Costs Pile Up?
The surviving spouse is the version of this problem nobody models, and it is the one that breaks households at this wealth level. Run the real scenario. One spouse develops dementia at 78. Care runs five years, paid on top of the existing lifestyle. The portfolio gets drawn down, maybe during a weak market when selling hurts most. Then the first spouse dies.
The survivor now lives on a battered portfolio and one Social Security check instead of two, potentially for another 20 to 30 years. The care bill was only the first hit. The lasting damage is a smaller balance carrying a longer life on a single income.
In Jeff's experience with Harford County retirees, the care event itself is rarely what undoes the plan. It is the aftermath. "The surviving spouse is the person the plan forgot," Jeff says. "You spend down together, and then one income and one Social Security check has to carry someone who might live three more decades." That is why he models the survivor's balance sheet on purpose, not the couple's combined one.
Is It Better to Buy Long-Term Care Insurance or Self-Fund?
Framing this as insurance versus self-funding is a false choice, and both lazy versions fail for the same reason: neither is an actual decision about specific dollars. Traditional long-term care insurance has real drawbacks at this level. Premiums are not contractually fixed and have climbed on many older policies, and the classic version is use-it-or-lose-it. But "I'll self-insure" is a sentence, not a plan, until you have carved out the money and decided where it comes from.
Is "I'll self-insure" a plan? Not by itself. It becomes a plan only when you name the specific assets that pay for care and model what selling them does to everything else. Until then it is a hope with a dollar sign in front of it.
| Approach | Main advantage | Main drawback |
|---|---|---|
| Traditional LTC insurance | Transfers the risk off your balance sheet | Premiums can rise; use-it-or-lose-it if care never happens |
| Pure self-funding | Full control, nothing paid for coverage you may not use | Empty unless specific assets are earmarked; exposes the survivor |
| Hybrid life-and-care policy | Money is not purely lost if care never happens | More complex and costly up front |
If you want the deeper trade-offs, we walk through them in Do You Need Long-Term Care Insurance? and in our breakdown of hybrid long-term care policies that pair coverage with a death benefit.
Which Assets Should Pay for Care, and How Do You Earmark Them Before You Need It?
Stop thinking of net worth as one pool. Earmark the money before you need it. The couples who handle long-term care well decided in advance which dollars do the job. Here is the framework I use with clients.
- Carve out a dedicated, labeled care reserve. Keep it invested, but give it a known job so it is not competing with everything else in your head.
- Look hard at ugly-tax assets. A large traditional IRA is often the worst thing to liquidate quickly, because big withdrawals stack on your income and can push you into higher brackets and Medicare surcharge (IRMAA) territory. That is one reason Roth conversions in your 60s can make the reserve more tax-efficient later.
- Reconsider the house as a deliberate backstop, not an unexamined one. Home equity can be part of the plan if you decide that on purpose rather than by default.
- Consider a hybrid life-and-care product clear-eyed: the money is not purely lost if care never happens, but it is more complex and costs more up front.
This is exactly the kind of decision our planning process is built to force into the open. The R.U.D.D.E.R. Method™ is Chesapeake Financial Planners' six-step planning process: Review and Recognize, Uncover and Understand, Design and Develop, Discuss and Decide, Execute and Empower, and Reassess and Refine.
There is a Maryland wrinkle that makes earmarking even more important here. Maryland's estate tax kicks in at a $5 million exemption, far below the federal level, so a Harford County couple with a paid-off home and healthy retirement accounts can quietly approach the state threshold. When a care event forces a spend-down at the same time, the two problems collide. For local high-net-worth clients we plan the care reserve and the estate exposure together, from our Forest Hill office, because in Maryland they are not separate questions.
What I would actually do is run the bad scenario on purpose. Model a five-year care event for one spouse, layered on normal spending, and look at what the survivor is left with. If the survivor is fine, you may be able to self-fund; earmark the assets and document the decision. If the survivor is not fine, you just found the most important hole in the plan while you still have time to fix it. This is fixable at 60. It is much harder at 80.
Frequently Asked Questions
Does Medicare pay for long-term care?
Medicare pays for very little long-term care. It covers skilled nursing only, and only after a qualifying hospital stay: the first 20 days in full, days 21 to 100 with a $217 daily coinsurance in 2026, and nothing after day 100. It does not cover custodial care, the daily help most people actually need, at all.
Does having $3 to $5 million mean I do not need to plan for long-term care?
No. At $3 to $5 million you can usually afford care, but affording it is not the same as having a plan. Without earmarked assets, a multi-year care event simply pulls from whatever is easiest to sell, which often means the surviving spouse absorbs the financial damage for decades afterward.
What is the biggest long-term care risk for high-net-worth couples?
The biggest risk is the surviving spouse. A five-year care event drains the portfolio, then the first spouse dies and the survivor lives on one Social Security check and a smaller balance for another 20 to 30 years. That combination, not the care bill by itself, is what breaks households at this level.
Is long-term care insurance worth it if I can self-fund?
It depends on whether you have actually earmarked the money. Traditional policies transfer the risk but carry rising premiums and use-it-or-lose-it terms. Self-funding works only when specific assets are set aside for care. Hybrid life-and-care policies sit in between, returning value even if care is never needed, at a higher upfront cost.
How does long-term care planning interact with Maryland estate tax?
In Maryland, the two collide. The state estate tax starts at a $5 million exemption, well below the federal level, so a Harford County couple with a home and retirement accounts can approach it. A care-driven spend-down changes the estate math, so plan the care reserve and estate exposure together, not as separate problems.
Ready to Pressure-Test Your Plan?
If you have built real wealth, long-term care planning for high-net-worth families is the part of the plan most likely to be left to chance, and it has a deadline: it is far easier to solve at 60 than at 80. Schedule a no-obligation call with Jeff Judge and we will run the bad scenario on purpose, then decide exactly where the care money comes from and what it does to the rest of your plan.
A version of this article was originally published on Jeff Judge's LinkedIn.
Disclosures
The information provided is for educational purposes only and should not be construed as investment advice. Investment strategies should be tailored to individual circumstances, risk tolerance, and goals. Past performance doesn't guarantee future results. Consult with qualified financial professionals regarding your specific situation.
This material is for educational purposes only. Insurance products contain exclusions, limitations, and terms for keeping them in force. Please contact a qualified insurance professional for costs and complete details.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
Advisors associated with Chesapeake Financial Planners may be either (1) LPL Financial Registered Representatives offering securities through LPL Financial, Member FINRA and SIPC, and investment advisor representatives offering investment advice through Great Valley Advisor Group; or (2) solely investment advisor representatives offering investment advice through Great Valley Advisor Group and not affiliated with LPL Financial. Great Valley Advisor Group, and Chesapeake Financial Planners are separate entities from LPL Financial.
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