Long-Term Care: The Retirement Risk Federal Employees Aren’t Talking About

Most federal employees spend years planning their retirement income — and almost no time planning for what could consume it. Long-term care is the expense that derails otherwise solid retirement plans, and the odds of needing it are higher than most people expect.

Roughly 70% of people who reach age 65 will need some form of long-term care during their lifetime. For federal employees and retirees, ignoring that statistic isn’t optimism — it’s a gap in the plan.

What Long-Term Care Actually Means

Long-term care isn’t a hospital stay or a surgery. It’s the ongoing assistance people need when aging, illness, or cognitive decline makes everyday tasks difficult or impossible. Eligibility for care is typically measured through six Activities of Daily Living — bathing, dressing, eating, toileting, continence, and transferring (moving from a bed to a chair, for example). When someone can no longer manage two or more of these independently, long-term care services generally become necessary.

That care can also extend to managing medications, preparing meals, transportation to medical appointments, and household upkeep — services that add up quickly whether provided at home or in a facility.

What It Costs

Long-term care isn’t cheap, and costs vary significantly depending on the level and setting of care:

• In-home care from a health aide or nurse can run up to $80,000 per year
• Assisted living facilities average around $54,000 annually
• Skilled nursing facilities — full-time, around-the-clock care — can exceed $100,000 per year

These figures also tend to climb with healthcare inflation each year, meaning future costs will likely be higher than today’s estimates.

Medicare Won’t Cover It

This is the misconception that catches the most people off guard. Medicare does not pay for long-term custodial care. It may cover a short-term skilled nursing stay following a qualifying hospitalization, but once care shifts from rehabilitation to ongoing daily assistance, Medicare coverage ends.

Medicaid can cover long-term care — but only after most personal assets have been spent down to meet eligibility requirements. For federal retirees who spent decades building savings, that’s a scenario worth planning around, not toward.

The FLTCIP Gap

Federal employees have historically had access to the Federal Long Term Care Insurance Program (FLTCIP) through the Office of Personnel Management. That program is currently suspended for new enrollment with no reopening date announced, leaving federal workers without their traditional safety net.

That makes private alternatives more important than ever — traditional long-term care insurance, hybrid life insurance policies with LTC benefits, and annuities with LTC riders are all options worth exploring with a qualified advisor.

The Time to Plan is Now

Long-term care planning works best before health changes narrow your options. Waiting means higher premiums, stricter underwriting, or fewer policies to choose from. For federal employees and retirees, addressing this early protects retirement savings, preserves independence, and ensures the care you may need is actually available when you need it.

A Federal Retirement Consultant (FRC®) can help evaluate your options and build long-term care planning into a broader retirement strategy.