Accountants Should Help Clients Financial Impact of Long-Term Care

Many accountants focus on retirement savings, taxes, and estate planning — yet often overlook one of the most significant threats to a client’s future financial stability: long-term care costs. As people reach their 50s, their chances of needing extended care sharply increase. The U.S. Department of Health and Human Services estimates that 56% of Americans will eventually need care that meets the federal definition of long-term services and supports (LTSS). These services, whether delivered at home, in assisted living, or in a nursing facility, are expensive and usually not covered by health insurance or Medicare beyond short-term skilled care. 

Accountants are uniquely positioned to spot this looming risk. They see firsthand how long-term health events drain savings, destabilize retirement plans, and burden families — often because clients had no plan in place. 

Proactive Planning: Insurance and Tax Incentives 

One of the most effective tools accountants can discuss with clients in their 50s is Long-Term Care Insurance. Premiums are lower and underwriting is easier while people are younger and healthier. These policies can be structured to provide guaranteed, tax-free benefits to pay for care at home, in assisted living, or in a nursing home, reducing stress on family members and preserving assets. 

Long-Term Care Insurance also offers tax advantages. For example:

• Deductibility of Premiums: Premiums for tax-qualified policies may be deductible as medical expenses (subject to IRS limits by age).
• Health Savings Accounts (HSAs): Eligible clients can use pre-tax HSA funds to pay for premiums within IRS limits.
• Business Owners: Certain business structures allow for more generous premium deductions.

These incentives can make coverage more affordable and fit strategically into a client’s tax plan.

Tax Deductions for Care Expenses

For clients already receiving care, accountants can advise on deductions that offset costs. IRS rules allow medical expense deductions for qualified long-term care services, including home health care, nursing services, and certain facility costs when prescribed by a health care professional. In some cases, family caregivers paid to provide care can be included as deductible expenses. 

Specific medical devices may also qualify for a medical expense deduction. Examples include: 

• Stair lifts 
• Bathroom safety equipment 
• Wheelchair ramps and home modifications for mobility

By documenting and categorizing these expenses properly, accountants help clients reduce their tax burden during a financially vulnerable time.

If a client has an LTC policy, those benefits are also tax-free if the policy meets federal guidelines.

Government Program Guidance 

Accountants can also play a critical role in guiding clients through public benefits such as Medicaid, Social Security disability, and other assistance programs. While legal and social services professionals may handle applications, accountants can ensure their clients’ financial records, asset documentation, and spending down plans are organized and compliant. 

Because Medicaid has strict asset and income limits, planning early — often five years in advance — can mean the difference between qualifying for help and exhausting personal savings. 

How to Integrate Long-Term Care into Financial Planning

As you advise clients, consider integrating long-term care planning into your standard midlife financial checkup. Practical steps include:

• Raise the Topic at Age 50: Encourage clients to begin researching options for long-term care coverage or savings plans.
• Use a Cost-of-Care Calculator: Direct clients to tools such as the LTC News Cost of Care Calculator to see real-time local care costs.
• Self-Funding Doesn't Work: You can analyze how LTC insurance saves money, provides tax-free benefits, and eases family burden; something self-funding does not provide.
• Collaborate with Specialists: Partner with Long-Term Care Insurance specialists to provide professional planning based on the client's age, health, and family history.

The Bottom Line for Accountants

Helping clients address future long-term care needs isn’t just good practice — it’s part of your fiduciary duty to protect their financial well-being. Insurance agencies and agents use accounting services for their business, and often refer their clients who need professional accounting assistance.

By introducing these aging and longevity conversations early, you can help your clients avoid crisis-driven decisions later, minimize tax exposure, and ensure their dignity and independence as they age.

Planning Should Happen Before Retirement

Planning should happen before someone retires when they have the most affordable options. Accountants should be aware of long-term health care's impact on their client's savings, investments, and future retirement income. Today, many seek help from qualified Long-Term Care Insurance specialists to help shop for and design affordable coverage to safeguard income and assets from these rising costs.

An article in Accounting Today, a trade publication, suggests CPAs address the financial threat of the high costs of long-term care.

The article says having a Long-Term Care Insurance contract "will not only provide their client with the dollars necessary to pay for some or all of the expenses associated with their care but will provide them with independence and peace of mind, knowing they'll never be a burden to their kids or spouse."

Henry Montag, an independent Certified Financial Planner from New York, notes an individual may be able to deduct the entire premium or a part of it. Some states, including New York, have tax credits or deductions available for those with Long-Term Care Insurance. 

Business owners have additional benefits. He notes that this is also one of the few times that an insurance benefit can be paid for on a totally discriminatory basis, i.e., for all officers and spouses, and then be taken as a 100 percent deduction in various corporate settings.

In my opinion, a client should consider purchasing a Long-Term Care Insurance contract in their mid to late 50s when their youth and good health will allow them to purchase this valuable protection at a lesser cost.

Partnership LTC Policy with Dollar-for-Dollar Asset Protection

People who live in one of the many states that offer Partnership Long-Term Care Insurance policies have additional dollar-for-dollar asset protection available. 

The Long-Term Care Partnership Program is a collaboration between the state government and insurance companies. Under this partnership, applicants who purchase qualifying Long-Term Care Insurance policies can access Medicaid coverage while retaining assets they would normally be required to spend on their long-term health care. 

What Is the Partnership Program in Long-Term Care Insurance?

Long-Term Care Impacts Families and Finances

While long-term care is a significant cash flow issue, the consequences on loved ones can be considerable. The impact can be both emotional and financial. Emotionally, adult children may be overwhelmed with the responsibility of caring for a parent and all of the associated demands, such as managing doctor's appointments and paying caregivers. 

There may also be a sense of guilt or anger at taking on such a burden. Financially, adult children may experience stress trying to cover the high costs of long-term health care and attempting to cover their own financial obligations. This can be incredibly overwhelming if the adult child has a spouse and their own children. 

Experts recommend using a Long-Term Care Insurance specialist who understands underwriting, policy design, and claims. Specialists will often work with CPAs and other financial professionals to develop appropriate plans.

Most people get coverage in their 50s to take advantage of better health and lower premiums.