The question
How quickly could long-term care consume the assets you’ve accumulated, and how could insurance change that?
The asset pool
This model treats care as a draw against one pool of money: cash, investments, home equity if you choose to count it, metals, annuity and life-insurance cash values, and other assets you are willing to count. Excludable assets stay out of that pool.
You choose the state, the setting, when care is assumed to start, how many years to model, a cost-inflation rate, an investment return, and — optionally — a long-term care insurance design. The year-by-year run shows care cost, what insurance pays, and what is left for countable assets.
Assumptions
- Start with today’s countable assets. The primary residence can be excluded.
- Each year before care, the remaining pool grows at the return you enter, after the tax rate on that return.
- If a policy is included, the premium or deposit is a use of assets. Premiums stop once care starts.
- Once care starts, that year’s cost is today’s planning median grown by the inflation rate you picked.
- Insurance, if still in force, pays first up to the benefit. Countable assets pay the rest. Anything unpaid is a shortfall.
Care prices are rounded planning medians. Confirm a location on the LTC News Cost of Care Calculator. It is a nationwide private-pay calculator and is not an insurance-company survey.
Published home-care medians are for about 44 hours a week. This model does not multiply that rate by 168 hours (168 ÷ 44 = 3.82). Around-the-clock care is priced as an illustrative live-in schedule of about 18 paid hours a day: two daytime shifts, with overnight presence not billed as a third full hourly shift. 18 × 7 = 126 hours a week, and 126 ÷ 44 = 2.86, shown as 2.8 times the 44-hour annual median. Agencies also use daily live-in rates and different shift patterns. Confirm a local quote. This is not an agency price.
Insurance in this model
This model simplifies Long-Term Care Insurance. Actual benefits depend on policy language, benefit eligibility, elimination periods, reimbursement or cash provisions, benefit maximums, inflation provisions, and other contractual terms.
A traditional benefit is modeled as a pool: today’s daily benefit × 365 × the benefit period. An inflation choice can grow that daily amount. An asset-based, annuity, or hybrid design is modeled as a deposit taken from countable assets, with a leverage multiple and a remaining death benefit. None of these figures is a quote.
If a premium or deposit is left blank, the model may insert an illustrative placeholder. That placeholder is not a recommended premium and not an insurance quote. Enter the actual proposed premium or deposit when you have one. A separate consumer worksheet cautions that a premium above 7% of income may be hard to sustain. That caution is not a target for this model.
What stays out of this page
Medicaid, Medicare, VA benefits, tax rules, Partnership, life settlements, and professional license lookups support the report when you open those sections. They are not the calculator. Sources are grouped on Sources and methodology. The NAIC Shopper’s Guide and Personal Worksheet are linked from Section 3 and can be included in the report.