Most retirement plans are stress-tested against a bad market. Very few are tested against a long illness. According to the U.S. Department of Health and Human Services, someone turning 65 today has almost a 70 percent chance of needing some type of long-term care, and a private nursing home room now runs a national median of about $129,575 a year (CareScout Cost of Care Survey, 2025).
Medicare Will Not Cover It
The most common assumption is that Medicare will cover it. It will not. Medicare pays for limited skilled care after a qualifying hospital stay. The help most people actually need (help with bathing, dressing, mobility, and memory) is custodial care, and Medicare excludes it. Medicaid pays only after assets are spent down.
The Hidden Cost of Self-Insuring
Many successful owners plan to self-insure. That can work, but it carries hidden costs: forced liquidation on someone else’s timeline, tax drag from retirement-account withdrawals, and a surviving spouse whose retirement is quietly consumed by one person’s care.
The Shift to Hybrid Coverage
The industry has shifted toward hybrid designs: permanent life insurance with long-term care benefits built in. If care is needed and the benefit triggers are met, the policy helps pay for it up to its limits; if not, the remaining value passes to heirs. Design details matter enormously, and coverage is subject to underwriting.
Added Levers for Business Owners
For business owners, there are added levers: age-based premium deductions in 2026, potential C corporation deductibility, and 1035 exchanges of existing policies. Each depends on your facts and is best reviewed alongside your CPA and attorney.
Read the full guide for real 2026 care costs, what Medicare excludes, how hybrid coverage compares, and a six-step planning sequence. Download the October 2026 Prospera Perspectives PDF →
This content is for educational purposes only and does not constitute legal, tax, or investment advice, nor a recommendation of any product. Cost-of-care figures are national medians and vary by location. Medicare, Medicaid, and tax rules are summarized for general education and subject to change. LTC and chronic illness riders vary by contract, may carry added cost, and accelerated benefits reduce the death benefit. Coverage is subject to underwriting; guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Life insurance is not a bank deposit and is not FDIC insured. Prospera Financial offers insurance products.