---
title: "How to Pay for Long-Term Care Without Buying LTC Insurance"
source: https://www.perissosprivatewealth.com/insights/pay-for-long-term-care-without-insurance
publisher: Perissos Private Wealth Management
published: 2026-09-10T03:00:00+00:00
updated: 2026-09-10T03:00:03.29483+00:00
topics: pay for long-term care, self-funding long-term care, Oklahoma retirement planning, long-term care reserve range, custodial care funding, Medicaid estate recovery Oklahoma
license: Educational content. Cite with attribution. Not personalized financial, tax, or legal advice.
---

# How to Pay for Long-Term Care Without Buying LTC Insurance

## Quick answer

To pay for long-term care without insurance, you must identify specific assets to cover a projected reserve range while protecting a financial floor for a surviving spouse. This involves utilizing taxable accounts, Health Savings Accounts, and home equity, while ensuring legal documents like durable powers of attorney are in place to manage funds during cognitive decline.

## Key takeaways

- Approximately 70% of adults surviving to age 65 will eventually require severe long-term services and supports.
- A self-funding reserve should be modeled on a range, such as a three-year care estimate which may reach approximately $498,000 assuming 3% inflation and a 10-year horizon.
- Federal and Oklahoma state laws require Medicaid to pursue estate recovery for certain long-term care services paid for individuals aged 55 or older.
- Qualified long-term care services are treated as medical expenses by the IRS, allowing for potential tax-free reimbursements from Health Savings Accounts (HSAs).
- A viable self-funding plan must establish a protected income and asset floor for the well spouse before designating surplus assets for care costs.

Long-term care is difficult to plan for because the timing, setting, duration, and cost are all uncertain. The risk is real, but it is not uniform. HHS research estimates that 70% of adults who survive to age 65 will develop severe long-term-services-and-supports needs, while 48% will use some paid care. Only 24% are projected to receive more than two years of paid care. 1 A sound plan must handle both the common, manageable outcome and the smaller chance of a long, expensive claim.

Buying long-term-care insurance is one way to transfer part of that risk. It is not the only way. A household with sufficient resources, flexible spending, suitable housing, and a clear family plan may choose to retain the risk and fund care from its own balance sheet. The choice should be deliberate. "We can afford it" is not a funding plan until we identify which assets pay, how quickly they can be accessed, and what happens to the surviving spouse.

## Start With the Care, Not the Account

Long-term care includes help with activities such as bathing, dressing, toileting, transferring, eating, and managing severe cognitive impairment. It may be delivered at home, in adult day care, in assisted living, or in a nursing facility. Medicare distinguishes this custodial care from short-term skilled care and generally does not pay for ongoing long-term care. 2

The first planning decision is therefore not an investment allocation. It is where the client wants to receive care and who is expected to coordinate it. Home care may preserve familiarity, but a house may need renovations, paid caregivers, backup coverage, and active management. Facility care may be easier to coordinate but can separate spouses or require a move during a stressful period. Family assistance can reduce paid costs, yet it creates a real demand on the caregiver's time, health, and income.

## Quantify a Reserve Range

Self-funding does not require setting aside the maximum imaginable cost on day one. It requires a range that connects care duration with a credible annual cost assumption and the years until care may begin.

Figure 1 uses a hypothetical current care cost of $120,000 per year, 3% annual cost inflation, and a need beginning 10 years from now. Under those assumptions, the first year of care costs about $161,000. A two-year reserve is about $327,000, a three-year reserve about $498,000, and a five-year reserve about $856,000 because the assumed cost continues to rise during the care period. These figures are planning assumptions, not estimates of a particular Oklahoma provider or care setting.

 Modeled reserve needs rise with both duration and care-cost inflation. 

The range should be recalculated for local home-care, assisted-living, memory-care, and nursing-facility options. We should also model separate and overlapping claims for spouses. A joint plan that can absorb one three-year claim may still fail if the first claim depletes liquid assets and the second spouse needs care later.

## Build a Funding Order

A practical self-funding plan uses several layers rather than one oversized cash account. Near-term expenses can come from cash and short-duration fixed income. A dedicated portfolio sleeve can cover the next several years while retaining a measured growth allocation for a claim that may be decades away. Taxable accounts often provide flexible access; retirement accounts may create ordinary income and can raise Medicare premiums when large distributions are required.

An existing health savings account can be especially useful. IRS rules treat qualified long-term-care services for a chronically ill individual as medical expenses when the services are provided under a prescribed plan of care. Tax-free HSA distributions may reimburse qualified medical expenses that are not otherwise compensated. 3,4 Keep records that connect the expense, recipient, and plan of care to the tax rule.

Home equity can provide another layer through a sale, downsizing, or borrowing arrangement, but the housing plan must survive the care event. If one spouse moves to a facility while the other remains home, selling may not be available. If both spouses intend to move, the net sale proceeds after debt and transaction costs may become part of the care reserve. The plan should state which circumstance activates the home-equity layer.

Permanent life insurance or an annuity already owned by the household may contain cash value, withdrawal rights, or accelerated-benefit provisions. Those terms vary and can affect guarantees, surrender charges, death benefits, and taxes. Review the actual contract before counting any value. Do not buy a product merely to make the funding diagram look complete.

## Protect the Survivor

The largest self-funding mistake is measuring affordability at the household level without separating the survivor's needs. Care expenses can coincide with lost pension income, reduced Social Security, home modifications, or the cost of maintaining two residences. A claim may also force portfolio withdrawals during a market decline.

I would set a protected floor for the well spouse before designating assets for care. That floor should support housing, ordinary spending, taxes, and a prudent reserve through the survivor's planning horizon. Assets above the floor can be assigned to the care strategy. If projected care costs invade the floor under reasonable stress tests, retaining the entire risk may be inappropriate.

The legal documents matter as much as the assets. Durable financial and healthcare powers of attorney, trust provisions, access to digital and financial records, and clear authority to hire caregivers can determine whether the reserve is usable when cognition declines. An attorney should confirm that the plan works under Oklahoma law and reflects the household's intentions.

## Understand the Medicaid Boundary

Medicaid can pay for long-term services and supports for people who satisfy state financial and functional eligibility rules, including protections that may apply to a community spouse. Eligibility is not based only on current income, and trusts, transfers, home equity, and ownership arrangements require specialized review. 5

Medicaid should not be described as free long-term-care insurance for an affluent household. Federal law requires states to pursue recovery from certain estates for nursing-facility and home-and-community-based services paid for people age 55 or older, subject to survivor and hardship protections. 6 Oklahoma also operates a Medicaid recovery program. 7 Families considering Medicaid planning need an Oklahoma elder-law attorney; last-minute transfers can create eligibility and legal problems.

## Decide Whether Retaining the Risk Is Rational

Self-funding can fit households with substantial assets relative to the stress-tested reserve, a strong survivor floor, flexible housing, and a willingness to leave less to heirs if care is prolonged. It can also fit people who cannot qualify for coverage or who already have a workable combination of HSA assets, home equity, and investment reserves.

It may be a poor fit when the potential claim would materially change the survivor's lifestyle, the estate is illiquid or concentrated, family members disagree about care, or the household wants a contractual benefit and professional claims process. In those cases, traditional or hybrid coverage may still deserve review even if the household could technically write the checks.

Paying for care without insurance is not passive. It requires a reserve target, a funding order, a survivor floor, legal authority, and a written decision about housing and family caregiving. We should update those elements as assets, health, family availability, and local care costs change.

The goal is not to predict the exact claim. It is to make sure a care need does not force the wrong asset sale, jeopardize the well spouse, or leave family members improvising under pressure. That is the standard a self-funded plan must meet.

All my best,

Brandon VanLandingham, CFA, CMT, CFP

 

## Related Reading

[Lifetime Gifting Strategies for Families With $10M+](/insights/lifetime-gifting-strategies-high-net-worth-families)

[When Should Retirees Hold Annuities (and When They Shouldn't)](/insights/when-should-retirees-hold-annuities)

[Healthcare in Early Retirement: Bridging to Medicare](/insights/early-retirement-healthcare-bridge-to-medicare)

 

## Citations

 

- U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, "What Is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?" April 3, 2019. https://aspe.hhs.gov/reports/what-lifetime-risk-needing-receiving-long-term-services-supports

- Medicare.gov, "Long-Term Care," accessed September 4, 2026. https://www.medicare.gov/coverage/long-term-care

- Internal Revenue Service, Publication 502 (2025), "Medical and Dental Expenses," accessed September 4, 2026. https://www.irs.gov/publications/p502

- Internal Revenue Service, Publication 969 (2025), "Health Savings Accounts and Other Tax-Favored Health Plans," accessed September 4, 2026. https://www.irs.gov/publications/p969

- Centers for Medicare & Medicaid Services, "Medicaid Eligibility Policy," accessed September 4, 2026. https://www.medicaid.gov/medicaid/eligibility-policy

- Centers for Medicare & Medicaid Services, "Estate Recovery," accessed September 4, 2026. https://www.medicaid.gov/medicaid/eligibility-policy/estate-recovery

- Oklahoma Health Care Authority, OAC 317:35-19-4, "Medicaid Recovery," accessed September 4, 2026. https://www.oklahoma.gov/ohca/policies-and-rules/xpolicy/medical-assistance-for-adults-and-children-eligibility/nursing-facility-services/medicaid-recovery.html

## Important Disclosures

This piece is educational. It is not legal, tax, or accounting advice and is not a recommendation to take or refrain from any specific action. Tax law is fact-specific and changes regularly. Please coordinate any decisions discussed here with your attorney, your CPA, and Perissos before acting.

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## Frequently asked questions

### Does Medicare pay for long-term care services?

Medicare is designed for short-term skilled nursing and rehabilitative care; it generally does not cover ongoing custodial care such as assistance with dressing, bathing, or eating.

### Can I use an HSA to pay for long-term care expenses?

Yes, tax-free HSA distributions may reimburse qualified long-term care services for a chronically ill individual when provided under a prescribed plan of care, per IRS rules.

### What is the primary risk of self-funding long-term care?

The greatest risk is depleting liquid assets during the first spouse's care event, which may leave the surviving spouse with insufficient funds for housing and their own future needs.

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Source: [Perissos Private Wealth Management](https://www.perissosprivatewealth.com/insights/pay-for-long-term-care-without-insurance) — fee-only fiduciary wealth management in Bethany, Oklahoma. 405.212.9690.

This article is educational and is not personalized financial, tax, legal, or investment advice.