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Long-term care and custodial care: the Medicare gap that can cost $7,000 a month

Wed, 02 Sep 2026 11:06:40 GMT

Part 2 of 9 — The Next Chapter: A Senior's Guide to the Years Ahead

In brief: Medicare generally does not cover long-term custodial care — the everyday help most people eventually need with things like bathing, dressing, and daily living. Long-term care can cost anywhere from $4,500 to $13,000 a month depending on the type of care and where you live. Roughly 70% of Americans turning 65 today will need some form of long-term care during their lives, averaging about three years of care. Planning options generally include self-funding, traditional long-term care insurance, hybrid life insurance and LTC policies, or annuities with LTC riders. Costs are typically lower when planning is done earlier in life.

$7,000 a month. That's roughly what a year of long-term care costs the average American who ends up needing it. Some places it's $5,000. Some places it's $13,000. But the national median lands close to that $7,000 mark.

Medicare doesn't cover it.

That's the whole problem in one sentence. Most Americans over 60 assume Medicare is the safety net for whatever comes next, including the help they might eventually need with everyday life — bathing, dressing, getting up the stairs, taking medication on time. It isn't. Medicare covers medical treatment. The care most of us will actually need as we get older isn't medical. It's custodial. And custodial care sits almost entirely outside what Medicare will pay for.

The numbers behind that gap are worth a hard look. Most retirees skip this math because once you do it, you can't unsee it. But the math is also the only thing that helps you plan around it.

The number Medicare doesn't pay for: custodial care

Custodial care is the help most older adults eventually need — assistance with bathing, dressing, eating, transferring from bed to chair, managing medications. None of it requires a doctor. All of it requires another human being.

Medicare will pay for skilled nursing care — the kind that requires a licensed nurse or therapist — for up to 100 days, and only after a qualifying hospital stay. After day 100, you're on your own.

For custodial care, Medicare pays essentially nothing. Whether the care happens in your home, in an assisted living facility, or in a nursing home, the bill is yours.

That's where the $7,000 figure starts. According to the 2025 CareScout Cost of Care Survey, median assisted living now runs around $6,200 a month. Median in-home care for 44 hours a week runs around $6,680. A semi-private nursing home room runs around $9,580. A private room runs around $10,800. Where exactly your number lands depends on where you live and the care you need, but $7,000 a month is a reasonable starting point for the conversation.

These are national medians from the 2025 CareScout survey. State-by-state variation can be significant, and half the country pays more than the median.

The number nobody plans for: 70% will need long-term care

Most people quietly assume they won't be the ones who need long-term care. The data says otherwise.

Roughly 70% of Americans turning 65 today will need some form of long-term care during their lives. About one in five — roughly 20% — will need care for five years or more, according to federal data from the Administration for Community Living. Women, who live longer on average, need it longer than men do.

That number is worth sitting with for a moment. If you and your spouse are both 65, the math says there's an extremely high chance at least one of you will need substantial help at some point. Planning around "we probably won't be the ones who need it" isn't really planning. It's a bet against a 70% probability.

The number behind the number: 3 years of care on average

The average length of long-term care need runs about three years.

Women average closer to 3.7 years. Men, around 2.2.

Three years of care at $7,000 a month is $252,000. Three years at the median nursing home rate is closer to $321,000.

That's not a worst-case scenario. It's the average.

The number that changes the conversation: how to fund $250,000+ of care

Once you look at $250,000 to $300,000 sitting on top of a retirement plan built to last 30 years, the question becomes: how do you protect against it?

There are essentially four answers, and the right one depends on your assets, your health, and how comfortable you are with the math.

Self-funding . Paying out of savings. This only really works if you have substantial assets and are willing to spend down a meaningful portion of your retirement plan if care is needed for an extended period.

Traditional long-term care insurance . A policy you pay premiums on, and that pays for care if and when you need it. Costs have risen significantly over the past two decades, and many insurers have left the market, but coverage is still available for people in reasonable health.

Hybrid life insurance and LTC policies . A life insurance policy with a long-term care benefit built in. If you need care, the policy pays for care. If you don't, your beneficiaries receive the death benefit. The "use it or lose it" risk of traditional LTC insurance disappears.

Annuities with LTC riders. An annuity that pays more income if long-term care is needed. Lower upfront cost than insurance, but typically smaller benefits.

There's also Medicaid, which will eventually cover nursing home care for people who deplete their assets. But only after a five-year lookback period, and only after most of those assets are gone. It's a safety net, not a plan.

 The number people forget about: the cost of waiting to plan

There's one more number worth knowing, and it cuts the other way. The cost of planning for long-term care at 60 is meaningfully lower than at 70. Hybrid policies in particular tend to be far less expensive when you're younger and healthier. Premiums in your early 60s can be a fraction of what they'd be a decade later — and a decade later, qualifying at all is no longer a given.

That's the part most people miss when they tell themselves they'll think about long-term care "eventually." Eventually has a price.

The bottom line

Long-term care is the single largest unplanned-for expense in most American retirements. Medicare doesn't cover it. Savings can be drained by it. And the longer the conversation gets put off, the more expensive the options become.

The math is uncomfortable. But it's also the entire reason the planning exists. If you've never had this conversation with someone who knows the products, the best time to have had it was five or ten years ago. The next best time is now.

Once the long-term care numbers are in front of you, the next thing worth checking is whether the life insurance policy you've been paying premiums on for 30 years might already hold part of the answer. We'll get into that next week.

Frequently Asked Questions About Long-Term Care Costs and Coverage

Does Medicare cover long-term care?
Generally no. Medicare typically covers short-term skilled nursing care after a qualifying hospital stay, usually up to 100 days. It does not cover the custodial care most people eventually need — help with everyday activities like bathing, dressing, eating, and managing medications — whether that care happens at home, in assisted living, or in a nursing home.

What is the difference between skilled care and custodial care?
Skilled care is medical care generally requiring a licensed nurse or therapist. Custodial care is non-medical assistance with activities of daily living, such as bathing, dressing, transferring from bed to chair, and managing medications. Medicare covers limited skilled care in specific situations. Medicare typically does not cover custodial care.

How much does long-term care cost in the United States?
Costs vary significantly based on the type of care and location. National medians generally range from around $5,000 to $5,500 a month for assisted living, roughly $6,300 for in-home care at 44 hours a week, around $9,000 for a semi-private nursing home room, and over $10,000 for a private nursing home room. State-by-state variation can be significant.

How likely am I to need long-term care?
Roughly 70% of Americans turning 65 today are expected to need some form of long-term care during their lives, according to federal data. About one in seven need it for five years or more. Women, who live longer on average, typically need it for longer periods than men.

How long does the average person need long-term care?
The average length of long-term care need is generally about three years. Women average closer to 3.7 years and men closer to 2.2 years, though individual situations vary significantly based on health, family history, and other factors.

What are the main ways to pay for long-term care?
There are generally four main options: self-funding through personal savings, traditional long-term care insurance, hybrid life insurance and LTC policies that pay for care if needed or a death benefit if not, and annuities with LTC riders. Medicaid may also cover nursing home care for those who deplete their assets, but only after a five-year lookback period and generally only after most assets are gone.

Is long-term care insurance worth it?
It depends on your situation. Traditional long-term care insurance can help cover costs that could otherwise deplete retirement savings, but premiums have generally risen over the past two decades and coverage varies. Hybrid policies address the "use it or lose it" concern of traditional LTC insurance by providing either care benefits or a death benefit. Deciding which option fits generally requires a personal evaluation with a qualified professional.

When should I start planning for long-term care?
Generally, the earlier the better. Long-term care insurance and hybrid policies tend to be less expensive when purchased at younger ages, and qualifying medically can become more difficult as people get older. Many planning professionals suggest starting the conversation in your 50s or early 60s.

Next: Part 3 — You're 65 and the mortgage is paid. Do Americans still need life insurance?

Turning 65? Your 7-month Medicare window starts ticking before your birthday

Wed, 01 Jul 2026 09:47:55 GMT

Part 1 of 9: The Next Chapter: A Senior's Guide to the Years Ahead

In brief: Turning 65 triggers a 7-month Medicare enrollment window. Miss it without qualifying coverage and you'll pay a Part B penalty of 10% for every 12 months delayed; for life. COBRA and retiree health plans don't count as creditable coverage. If your spouse has employer coverage from a company with 20+ employees, you may be able to delay without penalty.

You probably remember turning 16. Maybe 21. And if you're reading this, your 65th birthday is either on the way or maybe a few candles ago.

Here's the thing nobody really tells you about turning 65: a clock starts ticking about three months before the candles even come out.

That clock is your Medicare Initial Enrollment Period, and it's a seven-month window to sign up. It starts three months before the month you turn 65, includes your birthday month, and ends three months after. If you miss it, the bill can follow you around for a long time.

Meet Linda

Linda is 64 and lives in Phoenix. She works part-time as a bookkeeper, and she's married to Matt, who's 61 and still works full-time at a marketing firm with about 80 employees. Linda gets her health insurance through Matt's plan, and she turns 65 in April.

Most people in Linda's situation don't realize the answer depends on details most HR departments don't volunteer.

Her question is the one most people have when they get to this point: do I need to sign up for Medicare right now, or can I wait? The answer depends on a few specifics and Linda's situation is more common than you might think.

If your spouse is still working

Because Matt's employer has more than 20 employees, Linda can stay on his plan and delay Part B without being penalized for it. When Matt eventually retires or loses coverage, she'll get an eight-month Special Enrollment Period to sign up for Medicare with no late fees. The full Special Enrollment Period rules are on the Social Security Administration site .

But if Matt worked at a smaller company, say fewer than 20 employees, the rules flip. Medicare would become Linda's primary insurance the moment she turns 65, and she'd need to enroll during her window or end up paying penalties.

For employers with 20 or more employees: the employer plan stays primary and Medicare is secondary. You can delay Part B without penalty if the coverage is creditable.

For employers with fewer than 20 employees: Medicare becomes primary the moment you turn 65. Delaying Part B results in a permanent late enrollment penalty.

So let's talk about two traps a lot of people fall into.

The first one involves something called COBRA. When someone leaves a job, whether by quitting, retiring, or getting laid off, federal law lets them keep their employer's health insurance for up to 18 months, as long as they pay the full premium themselves. It's a bridge most people use to avoid a gap in coverage between jobs, or to ease into retirement without having to scramble for a new plan overnight. On paper, it feels like the same insurance you had at work.

But here's where it gets tricky: COBRA doesn't count as creditable coverage for Medicare. Say Matt retires at 64 and Linda stays on his COBRA for the next 18 months until it runs out. She might assume she's been covered the whole time, so why would Medicare penalize her? The problem is that the Medicare clock started the day Matt walked out of the office, not the day COBRA ended. By the time she finally signs up, she could be a year and a half late, with penalties attached to her premium for the rest of her life.

Retiree health plans work the same way. Some employers offer health coverage to retirees as a benefit, and it can actually feel more secure than COBRA because it's not time-limited. But Medicare treats it the same way: it's nice to have, but it doesn't get you off the hook for enrolling on time. We can help.

The safest move is to ask your spouse's HR department one specific question: "Does this plan qualify as creditable coverage for Medicare?" And get the answer in writing.

Everything you need to know before you turn 65

The cost of being late

If you skip your window without qualifying coverage, the federal government adds a penalty to your premium.

Forever.

 Details on the penalty structure are laid out by Medicare directly .

For Part B, the penalty is 10% for every 12 months you delayed, and you pay it for as long as you have Part B. The standard Part B premium in 2026 is $202.90 a month. If you wait two years, you're paying about 20% extra, or roughly $40 more a month, for the rest of your life. Spread that over 20 years of retirement, and you've handed close to $10,000 to the government just for being late. This is the kind of avoidable cost a proper retirement income plan is designed to catch before it happens.

Late enrollment penalties get added to your monthly premium and stick around for as long as you have coverage. Spread over 20 years of retirement, the math gets ugly fast.

For Part D, which covers prescription drugs, the penalty is 1% of the national base beneficiary premium for every month you delayed. In 2026, the national base is $38.99, so a two-year delay would add roughly $9.36 to your monthly Part D premium — added permanently. It doesn't sound like much month to month, but it adds up over a long retirement.

The money-saver almost nobody mentions

Some Medicare Advantage plans offer something called the Part B "giveback," where the plan pays part or all of your Part B premium back to you. In 2026, that benefit can range from a few dollars a month all the way up to the full $202.90. The savings show up as a smaller deduction from your Social Security check, which means more money in your pocket every month.

For the right ZIP code and the right plan, the giveback can put an extra $50 to $100 back in your monthly check.

There's a catch, of course. Not every plan offers it, and availability really depends on your ZIP code. Plans in competitive markets like Florida or parts of California tend to offer the biggest givebacks, while smaller markets might offer little or nothing. Many plans with a giveback offer $10 or less per month, though the exact distribution varies by year and market

There's another thing to watch for too. A giveback plan might lower your premium but raise your copays, narrow your network of doctors, or drop a specialist you've been seeing for years. So don't pick a plan based on the giveback alone. But if everything else lines up, an extra $50 or $100 a month back in your check is worth knowing about.

The bottom line

Most people don't have someone walking them through this. They get a Medicare card in the mail, panic a little, sign up for whatever seems easiest, and then find out years later that they overpaid or missed something important.

Your seven-month window isn't just a deadline. It's the moment to start asking the right questions, about your spouse's plan, about whether your current coverage actually counts, about which Medicare path fits the life you're stepping into. Getting those answers before the clock runs out is exactly the kind of thing a good advisor helps you think through in an hour.

Once you've sorted out Medicare, there's a much bigger surprise waiting for most people. If you ever need help bathing, dressing, getting around the house, or just managing daily life as you get older, Medicare won't pay for it. That kind of care, called custodial or long-term care, can run anywhere from $4,500 to $13,000 a month, and it's where most of the real out-of-pocket risk in retirement actually lives.

The good news is that there are ways to plan for it; long-term care insurance, hybrid life insurance policies, annuities designed to cover care costs, but the time to look at them is well before the need shows up. We'll get into what that planning actually looks like next week.

Frequently Asked Questions About Medicare Enrollment at 65

When does Medicare enrollment start?
Your Medicare Initial Enrollment Period starts three months before the month you turn 65, includes your birthday month, and ends three months after; a seven-month window total.

What happens if I miss my Medicare enrollment window?
You'll pay a penalty added to your Medicare Part B premium for as long as you have Part B — 10% extra for every full 12 months you delayed. Part D drug coverage has its own permanent penalty of 1% per month delayed.

Can I delay Medicare if I'm still working at 65?
If your employer has 20 or more employees and offers creditable coverage, yes. You can delay Part B without penalty and use an eight-month Special Enrollment Period later. If the employer has fewer than 20 employees, Medicare becomes your primary insurance at 65.

Does COBRA count as creditable coverage for Medicare?
No. COBRA is not considered creditable coverage. If you delay Medicare enrollment while on COBRA, the late enrollment penalty starts the day your employer coverage ended, not the day COBRA runs out.

What is the Medicare Part B premium in 2026?
The standard Part B premium in 2026 is $202.90 a month. Higher earners pay more based on income.

What is the Medicare Advantage giveback benefit?
Some Medicare Advantage plans offer a giveback that reimburses part or all of your Part B premium, which shows up as a smaller deduction from your Social Security check. Availability varies significantly by ZIP code.

How long is the Medicare Special Enrollment Period?
If you delayed Part B because you had creditable employer coverage, you get an eight-month Special Enrollment Period after that coverage ends to sign up without a penalty.

Next: Part 2 — Long-term care and custodial care: The Medicare gap that can cost $7,000 a month.

This information is intended for educational purposes only. Estate Performance Advisors is not affiliated with or endorsed by the U.S. government or the federal Medicare program. Medicare Advantage plan availability and benefits vary by ZIP code and change year to year. Consult with a licensed Medicare agent for options in your area.

Our complete guide walks you through Medicare enrollment, coverage choices, and the decisions that affect the next 20 years.

Investor Sentiment (Emotions) Can Move Markets

josh@fix8media.com (Josh Neimark) — Thu, 29 Apr 2021 14:47:55 GMT

Why having a defined investment plan is vital to your retirement goals

Investor sentiment surveys tell us that today, with the stock market up dramatically since late March of 2020, there is widespread optimism about future gains. When you hear that, be wary.

When markets move to extreme levels, smart investors often make their largest portfolio gains – by doing the opposite of the popular sentiment. Warren Buffet once said, “Be fearful when others are greedy and be greedy when others are fearful.”

Managing our finances would be far easier if we could view markets as if we were machines devoid of emotion. But we are human and powerful emotions often move markets to what some may consider extreme levels. It’s a mistake to think the stock market is based on science, a large part of what moves stocks on a daily basis is human emotion.

This situation creates opportunity for those with nerves of steel and a trusted investment plan. Sentiment data, derived from surveys of individual investors, money managers or newsletter writers, can provide insight into the human emotion that drives capital markets.

According to survey data from the American Association of Individual Investors as of the end of 2020, 46.1% of investors were bullish – a pretty high reading relative to historical numbers (26.8% were bearish and the remainder were neutral).

As always, don’t view any data set in a vacuum, or rely on a single data point. Human beings are complicated. But this information helps active investors get an idea of the human emotion that drive the current market advance.

The stock market in its simplest form is one big voting box. Each time you buy or sell a stock, bond, exchange-traded fund or any other security, you cast a vote. Even holding cash is a reflection of market participants casting their votes.

History tells us we should view this data in a contrarian manner, taking the opposite action when data is at extreme levels. This means that the larger the crowd that shares a single viewpoint, the more likelihood the crowd is wrong. This isn’t always the case, but if you have too many people on one side of the teeter-totter, it just won’t work until it is rebalanced.

Case-in-Point

On March 5, 2009, the American Association of Individual Investors survey found that 70.2% of investors were bearish on the stock market, the largest amount of pessimism since 1990. As you may remember, the Standard & Poor’s 500 bottomed the following day, before rising over 60% through the rest of the year.

Markets, whether of stocks, commodities or real estate, typically overshoot their “fair value” level, however you chose to measure it. During times of panic or euphoria, look at them through a clear lens. Having a defined investment plan is vital in order to navigate the at-times choppy waters of the capital markets.

The investment world is more of an art form once you strip away the complexity. When viewed in the right light – a sensible assessment of its susceptibility to human foibles – it can be a beautiful thing

The Biggest Financial Pressures Facing Retirees (and How to Plan for Them)

josh@fix8media.com (Josh Neimark) — Thu, 29 Apr 2021 14:08:14 GMT

Retirement is a time for pursuing your passions, reaping the fruits of your life’s work, and making the most out of life. But there are many financial pressures facing those planning to retire in the coming months and years.

There Are Fewer Retirement Benefits Than Ever Before

Retirement benefits looked different in decades past than they do today. Before the 1980s, employers helped fund their employees’ retirements through pension plans. Today, few companies outside of the public sector offer pensions, and most that do are closing their plans to new employees. Some have even seen their promised pensions reduced or frozen.

Retirement benefits aren’t what they used to be, but there are actions you can take to get the most out of your existing benefits.

Maximize Your Social Security Benefit

For social security, having a strategy is essential for maximizing the benefit. Some ways to get the best benefit include:

Taking inventory of your health history, expected longevity, and lifestyle
Selecting the optimal retirement age for your situation
Accounting for other income streams and savings (such as pensions, a 401(k), annuities, etc.)
Understanding the tax implications of your other income streams (and how to reduce them where you can)

Keep an Eye on Your Pension

If you were promised a pension, congratulations! But some people may experience a freeze, where employers will no longer provide pension credit for future years of work.

If this is your situation, talk to your company’s human resources department to help calculate what your new payments will look like. Ask if they offer anything to help compensate for the money you weren’t putting away in retirement (for example, a buyout option).

Health Care Costs Are Rising

Most people have a greater need for health care as they age—and it can get expensive quickly. In fact, it’s one of the largest expenses you’ll need to consider during retirement.

In general, health care is only getting more expensive. As baby boomers age, the number of Americans ages 65 and over is growing dramatically and this rise in demand will drive up health care costs. The Centers for Medicare and Medicaid Services projects that health care costs will rise to an average of 5.4 percent every year until 2028.

In addition, people who reach age 65 are likely to live longer than ever before — in fact, about six years longer than their grandparents on average — prolonging the time that they require medical care.

Health care needs arise whether we like it or not, but you can prepare yourself.

Open an HSA Account

If you’re on a high deductible health insurance plan, consider opening a Health Savings Account (HSA). HSAs offer unrivaled tax efficiencies. They allow you to contribute pre-tax dollars that can be used towards current or future medical expenses. The money in the account carries over every year—even after you retire. After a certain threshold, the pre-tax dollars in the account can be invested in securities, and essentially serve as another IRA

Look into Tax Deductions

You may be able to itemize your tax deduction and deduct unreimbursed medical expenses on your tax return. This strategy usually works best for people who require a lot of expensive health care services.

You May Need to Financially Support Others

Many people don’t just need to support themselves during retirement, but others, too. Whether you’re helping an adult child who needs support, aging parents who aren’t self-sufficient, a family member in need, or a combination of these, caring for those that rely on you can impact your retirement. Have conversations with your loved ones now—even if it’s uncomfortable. Gathering documentation and developing a plan while your loved ones are still healthy will better prepare you to care for them later.

With the Right Plan, You Can Be Confident in Your Retirement

At first glance, these pressures on your retirement may seem overwhelming. But no obstacle is insurmountable— especially if you have the right plan on your side. With a comprehensive retirement plan, you can enter this exciting phase of your life armed with the resources you need to thrive.

If you have questions about your retirement plan or need help solidifying your plan, talk to a financial professional. Sources

1. “National Health Expenditure Fact Sheet.” Centers for Medicare and Medicaid Services, 2020. December 16. https://www.cms.gov/ Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet.

2. Zuo, Wenyun, Sha Jiang, Zhen Guo, Marcus W. Feldman, and Shripad Tuljapurkar. “Advancing Front of Old-Age Human Survival.” PNAS 115 (44), 2018. doi: https://doi.org/10.1073/pnas.1812337115.

TWO Investing Questions

josh@fix8media.com (Josh Neimark) — Thu, 29 Apr 2021 10:44:21 GMT

There is an investment strategy out there for just about everyone, whether you want to be aggressive or preserve your capital long-term. It can be easy to get bogged down in the Investing section of Google, looking at all the articles promising to make you rich in five easy steps.

Whether you have been receiving financial planning advice for 30 years or for three months, circling the wagons and looking at your processes is a great idea to make sure you and your advisor miss nothing—and are open to improving.

Start by considering these two questons (and share your answers with your fnancial advisor):

1. WHAT ARE YOUR INVESTMENT GOALS?

Are they written down and clearly defined? Did you establish a time frame—when will you need the money? And what do you need it for? To pay for college, to buy a house, to fund your retirement? What’s the amount of risk you can tolerate? Do you want to invest in mutual funds, individual stocks, or exchange-traded funds?

It’s important to capture all this information to help keep you on track. Remember, for most investors, retirement is often the end goal of investing your savings, which means this is a marathon not a sprint.

2. WHAT TYPE OF INVESTING STYLE DO YOU WANT?

Strategy is vital: Investing is too important to simply wing it. For many investors, it’s a bad idea to just shoot from the hip and buy the latest stock mentioned on TV that morning, without doing due diligence into the prospective purchase.

Will you make decisions based on fundamental data like the company’s sales growth, cash flow, and debt level? Will chart patterns, price, and volume be a consideration?

Looking back at your risk profile from step one, you need an exit strategy before you buy a single share. This can help prevent emotion from taking over and muddling your original plan. If an investment drops 50 percent and shows little sign of rebounding, would you dump it?

Having a well-thought-out investment plan that lays out your time frame and risk allowance can help keep you on track during turbulent times. Years like 2018 are rare, where the stock market reached new highs; entered into correction-territory multiple times; set more daily, weekly, and monthly records; and then ended the year more than 6 percent of from 2017.

Do not allow this type of volatility to create confidence or concern. Instead, focus on the basics to achieve your goals.