With $2 million or more, you can probably afford long-term care. That was never really the question. What matters is what paying for it would do to the rest of your plan: the income your spouse depends on, the tax bill a big withdrawal creates, and whether you’d end up selling investments at exactly the wrong moment.
For a lot of Florida retirees in this range, planning to pay for care yourself makes more sense than buying a policy by default. It’s still a decision you want to make deliberately, and it takes a little work to know where you stand.
Know What You’re Actually Insuring Against
Long-term care mostly isn’t medical treatment. It’s help with the ordinary things: bathing, dressing, eating, getting safely from one room to another.
Medicare doesn’t pay for that kind of help. It covers a skilled nursing stay for up to 100 days, and only after a qualifying three-day hospital admission, with the first 20 days fully covered and a daily charge after that. Once care shifts from skilled treatment to daily assistance, Medicare stops paying entirely.1 Regular health insurance leaves it out too.
So the cost falls to you. Someone turning 65 today has close to a 70% chance of needing some kind of long-term care, though the range is enormous: about a third will never need it at all, while roughly one in five will need it for more than five years.2
That spread is what makes this hard. You’re planning for something that may never happen, might last six months, or might run a decade.
Why Self-Funding Is Usually the Starting Point Here
Insurance is worth paying for when it takes a risk off your hands that you couldn’t absorb on your own. Think of your house burning down. Almost nobody could write that check, so you pay someone else to carry it.
Care is different at this asset level. If your portfolio can handle several years of it without damaging the rest of your finances, paying a policy to take on that risk may add very little. You’d be buying protection you already have.
Self-funding still has to be an actual decision, though, complete with a number, a plan for which accounts you’d tap, and a stress test.
Figure Out Whether Your Money Can Really Do the Job
Judge this on the money you could actually put toward care, which is usually a good deal less than your net worth suggests.
Separate Your Core Money From Your Surplus
Start with what it takes to fund your normal life across both lifetimes: the house, the taxes, insurance, travel, everyday spending. Then look at how reachable the rest is. A valuable home, a second property, a business interest, or a private investment can look impressive on paper and still be useless when a facility wants a deposit next week. Count home equity only if selling, downsizing, or borrowing against it is something you’d genuinely do.
What’s left after all that is your surplus, and it’s the money actually available for care. Near $2 million, almost every dollar tends to be spoken for already. Closer to $10 million, the cushion is usually wide enough that self-funding is straightforward.
Stress-Test It Under Bad Conditions
One average cost and one expected duration won’t tell you much. Run the unpleasant versions.
A useful stress test covers these:
- Several years of care rather than several months, especially if dementia is a possibility in your family.
- The healthy spouse’s life continuing at full cost, since the house and the car don’t stop while the other spouse is in care.
- A care event that starts during a market downturn, when selling investments locks in losses.
- The tax cost of funding care, since large IRA withdrawals or big asset sales create taxable income of their own.
- The surviving spouse living another fifteen or twenty years after the care is over and paid for.
- Actual quotes from providers near you, rather than a statewide average that may be nowhere close to your county.
Build the Funding Plan Before You Need It
Having the money is half of it. The other half is knowing exactly where it would come from, in what order, and who’s authorized to move it if you can’t.
Decide the Order You’d Tap Your Accounts
The first invoice shouldn’t decide which investment gets sold. Give each pool a role ahead of time.
A workable order might look like this:
- An immediate reserve. Cash for assessments, deposits, home modifications, and the first wave of bills before anything else is arranged.
- Near-term holdings. Cash equivalents and short-term investments to carry the early months without touching anything volatile.
- Taxable accounts. Check your cost basis and built-in gains first, since selling appreciated shares triggers tax of its own.
- Traditional IRAs and retirement plans. Usually, every dollar out counts as ordinary income.
- Roth accounts. Tax-free money is most valuable in a high-expense year or in a surviving spouse’s hands.
- Real estate and illiquid assets. Decide whether downsizing or selling a second property is something you’d actually do, rather than leaving it as an assumption.
Please Note: Self-funding doesn’t mean parking the full cost of a worst-case event in cash. You keep enough liquid for the near term and leave the rest invested according to when you’d realistically need it.
Use the Florida and Tax Advantages You Already Have
Two things make self-funding meaningfully cheaper in Florida than in most states, and they’re worth building into the math.
The first is simple: Florida has no state income tax. When you pull $150,000 from an IRA to cover a year of care, you owe federal tax on it and nothing to the state. That same withdrawal in New York or California would cost meaningfully more.
The second is one most people miss. Qualified long-term care services count as medical expenses, and medical costs above 7.5% of your adjusted gross income are deductible if you itemize.3 In a year with heavy care costs, that deduction can offset a large share of the tax created by the withdrawals funding it. Premiums on a qualified policy can count too, subject to age-based limits.
Neither of these settles the insurance question on its own.
Put the Legal and Family Pieces in Place
The whole plan has to work on a day when you can’t run it yourself. So get durable powers of attorney, healthcare documents, and account access sorted out well before anyone needs them.
Whoever handles your finances should know where the money is and how care is meant to be paid for. Someone also needs the authority to tour facilities, arrange care, and keep an eye on its quality as things change.
Then talk to your family about roles. Decide who coordinates providers, who reviews the bills, and who’s the point of contact. Sorting that out in advance spares your children a lot of guessing and arguing during a hard stretch.
When Insurance Still Earns Its Place
A policy should solve a problem you’ve actually identified. Here’s where it often does.
Insurance tends to make sense when:
- One spouse would be left exposed. If extended care for one of you would eat the income the other depends on, coverage protects the survivor as much or more than the patient.
- Much of your wealth is hard to sell. Real estate, a business, or concentrated stock can leave you asset-rich and short of cash exactly when you need it.
- Certain money is genuinely committed. When assets are truly earmarked for family, charity, or a trust, a policy funds care without breaking those promises.
- You want the decision made in advance. A policy gives your family clear instructions and spares them from choosing what to sell during a crisis.
- You only want the catastrophic risk covered. You can pay for the first stretch yourself and insure the unusually long event, which is the one that does lasting damage.
- You already own a policy. Older contracts often have pricing or terms you couldn’t replace today. This is true even after the rate increases many policy holders received in recent years. Compare what you have against what it would cost to replace before you drop it.
Please Note: Florida policies differ widely in what settings they cover, how long benefits last, what triggers a claim, and how long you wait before benefits start. Read the contract itself before treating projected benefits as money in hand.4
Long-Term Care Insurance for Florida Retirees with $2–10M FAQs
1. Is $2 million enough to self-fund long-term care in Florida?
It can be, though $2 million is where this gets tight for many. It depends on how much of it is liquid, how much is already funding your normal spending, whether you’re protecting a spouse, and how long a care event you’re planning for.
2. Why would someone with $5 million skip the insurance?
Because they’d rather keep the capital invested and working, retain full control over where and how care happens, and avoid paying premiums for years to insure a risk their portfolio can already absorb.
3. How much should I set aside for care?
There’s no universal number. Base it on prices from providers near you, the kind of care you’d want, a long duration rather than an average one, the taxes on whatever you’d sell, and what your spouse still needs to live on.
4. Does Medicare cover long-term care in Florida?
Not the kind most people end up needing. Medicare pays for short skilled nursing stays after a qualifying hospital admission, but it doesn’t cover ongoing help with daily activities at home or in a facility.
5. Does partial coverage make sense?
Often, yes. Covering yourself for the first year or two and insuring only the long event keeps the premium down while protecting against the scenario that would actually damage your plan.
6. Should I keep a policy I already have?
Review it before you touch it. Policies written years ago often include benefit growth or pricing you can’t buy today, so compare what you’d be giving up against what it would cost to replace.
Build a Long-Term Care Strategy Around the Wealth You Already Have
Plenty of affluent Floridians can pay for their own care. Whether you should still comes down to your surplus, your liquidity, the taxes involved, how long care might last, and what your spouse would be left with.
We can separate your core money from your true surplus, model several care scenarios, test what each would leave a surviving spouse, and set the order you’d draw from your accounts if the day comes.
That work usually shows exactly where self-funding is strong and whether any gap is left worth insuring. We can also coordinate with your estate attorney, CPA, and care professionals when it is. Schedule a complimentary consultation to figure out which side of the line you’re on.
Resources:
1) Medicare: Skilled Nursing Facility Care
2) Administration for Community Living: How Much Care Will You Need?
3) IRS Topic No. 502 (Medical and Dental Expenses)
4) Florida Department of Financial Services: Long-Term Care Overview