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The basics
Long-term care means ongoing help with everyday activities, such as dressing, bathing, and eating. It can take place at home, in assisted living, or in a nursing facility.
In MoneyWhatIf, you choose when care starts and how long it lasts for each person. The forecast adds the cost, subtracts modeled insurance benefits, and considers eligible out-of-pocket costs in the medical deduction.
Illustrative numbers
Three years of assisted living from 84
Assisted living, 2024 national median$5,900 a month, $70,800 a year
A qualified policy paying $4,000 a month$48,000 a year reimbursed, $22,800 owed
Deducted on Schedule A, on $60,000 of AGI$22,800 − $4,500 floor = $18,300, plus the premium up to its cap
The household pays $22,800 a year of its own money, deducts $18,300 of it, and can convert pre-tax savings to Roth against that deduction at a fraction of the usual tax.
Calculation transparency
How it works in MoneyWhatIf
- 01
Off until the household switches it on and supplies a monthly figure; the survey medians are offered beside the field and never charged silently. A plan saved before the setting existed is charged nothing.
- 02
Each person's spell starts in the plan year of the chosen age and runs whole plan years; a death inside the spell ends it, and nobody is charged for a year they are not in the plan for. The monthly figure grows at plan inflation plus two points, the same drift the Medicare and marketplace premiums assume.
- 03
A policy pays the lesser of the care bill and its monthly benefit, after the elimination period in days of care, for as many months as its benefit period holds; the benefit grows only by the inflation rider chosen, and the premium is charged in every year the policy is not paying, grown with prices.
- 04
The net bill plus the premium up to the §213(d)(10) age cap — $500 to $6,200 a person in 2026 — is added to the return's medical expenses and deducted past the federal 7.5% floor and each state's own; a couple filing separately put each spell on the return of the person in it. What a policy reimburses is never income.
The same figure is what an HSA may pay tax-free, less what Schedule A already deducted.
Keep in mind
Model limits
A spell is set, not sampled: the plan charges the care it is told about and says nothing about the odds. Medicaid, its spend-down and five-year lookback, state partnership policies and Washington's WA Cares payroll tax are not modelled.
Only a tax-qualified reimbursement policy is priced. Per-diem contracts, excluded only up to $430 a day in 2026, hybrid life-insurance policies with a care rider, and premium rate increases beyond inflation are not.
Medicare's own premiums and surcharge are not yet added to the medical deduction, so a return that itemizes on care deducts slightly less than a real one would.
This explanation documents the planning model. It is educational, not individualized tax, legal, Medicare, or investment advice.
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Related financial terms
Plain-English definitions, with 2026 figures and worked examples, from the financial terms glossary.