Modeling a future long-term care expense
This article will show you how to model a future long-term care expense.
Last published on: May 21, 2026
Overview
This article outlines the components required to accurately model long‑term care within a financial plan. Each section describes how to enter expenses, benefits, and policy details to ensure the plan reflects the intended long‑term care assumptions.
Long‑Term Care Expense
To model a long‑term care expense, enter the cost as an Other Variable Expense.
- Use the End from Plan Start Date option to limit the expense to a specific period, such as the final four years of the plan.
- This approach is appropriate when you only need to reflect the out‑of‑pocket impact of long‑term care, or if the client is covering the costs from their portfolio.
Long‑Term Care Benefit
To model long‑term care benefits received from an insurance policy, enter the benefit amount as an Other Income source with the tax treatment as Not Taxable.
Ensure the income dates and amounts align with the long‑term care expense entered in the Other Variable Expense section.
This alignment allows the plan to accurately show how the insurance benefit offsets the long‑term care costs.
Long‑Term Care Policy
To represent the insurance policy itself, add the long‑term care policy as an Insurance item.
Include any premium payments under the insurance item to reflect the client’s ongoing policy costs.
This provides a complete view of both the cost and the protection associated with the policy.
Scenario Comparison
For clearer client communication, consider creating two scenarios:
Scenario 1: Long‑term care expense only (client pays out of pocket).
Scenario 2: Long‑term care policy modeled with corresponding benefits entered as Other Income.
Comparing these scenarios helps demonstrate the difference between self‑funding long‑term care and using an insurance policy to reduce the financial burden later in the plan.
Video: Modeling a future long-term care expense
Video Transcript
Add a self-insured long-term care cost
- In the plan inputs, click on Expenses and select the Other/Variable Expenses subsection.
(Other/variable expenses are the place where "temporary," "lumpy," "special," "significant," or "what if" expenses are best placed.)
- Fill out the information for the expense, then click the gear icon.
- Enter the frequency for the expense. For unique expenses, such as long-term care, that are based on the end of a client's plan, use the From end of plan begin date option to have the expense start in the last 3 years of the plan (for example).
- Enter the inflation treatment. Then, for joint expenses, enter any survivorship details to adjust the expense amount if one spouse passes away, then click Save.
You will see your long-term care inputs within Cash Flows under Expense Details and in Life Hub under the Other/Variable Expense tab.
View in Cash Flows
View in Life Hub
