This depends on your asset level, health status, and risk tolerance. Self-funding (paying from savings) makes sense if you have $3-5+ million in investable assets and can absorb $200,000-$400,000 in potential care costs without jeopardizing your spouse's financial security. LTC insurance is valuable if you have $500,000-$3 million in assets—enough to protect but not enough to easily absorb major care costs. Those with under $500,000 might rely more on Medicaid planning. Many Scottsdale retirees use a hybrid approach: insurance to cover some years plus reserves for additional needs.

Hybrid policies combine life insurance or annuities with long-term care benefits, addressing the "use it or lose it" concern with traditional LTC insurance. With a life-insurance-based hybrid, if you never need care, your beneficiaries receive a death benefit. If you do need care, the policy accelerates the death benefit to pay for services. Annuity-based hybrids work similarly—your money grows tax-deferred, and you can access enhanced benefits for care needs. While often requiring a larger upfront premium, hybrids offer guaranteed benefits regardless of whether you need care, making them increasingly popular with Scottsdale residents.

Arizona's Medicaid long-term care program (ALTCS—Arizona Long Term Care System) covers nursing home and some home care services for those who meet strict income and asset limits. For 2025, individuals generally must have under $2,000 in countable assets ($3,000 for couples with one spouse in care). Homes up to $713,000 in equity may be exempt if a spouse lives there. However, Medicaid has a five-year "lookback" period—asset transfers within five years of applying can cause penalties. Strategic Medicaid planning with a knowledgeable advisor can help protect some assets while qualifying for benefits.

Without proper planning, yes—significantly. In Arizona (a community property state), both spouses' assets are generally available to pay for one spouse's care. However, federal and state protections allow a "community spouse" to retain the home, one vehicle, and specified assets (around $148,620 in 2025) plus minimum monthly income ($2,465) even when the other spouse needs Medicaid-covered nursing home care. Strategic planning can protect additional assets through proper titling, trusts, and spend-down strategies that benefit the healthy spouse while qualifying the ill spouse for Medicaid assistance.

The right strategy depends on your health, assets, family situation, and preferences. Working with a fee-only fiduciary financial advisor ensures you receive unbiased guidance on whether to pursue traditional LTC insurance, hybrid policies, self-funding with dedicated reserves, Medicaid planning, or a combination approach. Your advisor should coordinate with your estate planning attorney and tax professional to integrate LTC planning with asset protection, tax strategies, Medicare optimization, and legacy goals. The best plans balance cost protection with maintaining quality of life and family financial security.