AS YOU LOOK AHEAD to what you hope will be a long and fulfilling retirement, there’s one financial reality to keep in mind: People turning 65 today have almost a 70% chance of needing some type of long-term care.¹ And Medicare generally doesn’t cover the cost of that care.

Planning for this major “what if” is top of mind for many families — no parent wants to be a burden to their children later in life, and no adult child wants to see their parent struggling to afford the healthcare they need. So what are your options as you begin to think ahead to how you’ll pay for the care you or your parents might need?

“Hoping that you’ll stay healthy isn’t enough,” says Robert Murray, Personal Retirement Solutions Relationship Manager, Investment Solutions & Personal Retirement, Bank of America.

Counting on traditional health insurance isn’t enough either. While some Medicare Advantage plans purchased at extra cost may pay for certain home care services, Medicare itself offers very limited coverage for nursing home and home health services, and that coverage is subject to strict rules. That’s why Murray recommends putting together a plan for covering future medical and caregiving costs using a combination of the suggestions below.

Save and invest for the care you’ll need

Creating a portfolio of conservative, liquid assets for the specific purpose of funding long-term care needs is one choice to consider. Those assets could be placed in a revocable trust, also known as a living trust, designated for your future care, says Murray. Or, if you are covered under a high deductible health plan, they could be invested in a health savings account (HSA) to pay for qualified medical expenses on a tax-free basis. “But relying on self-funding as the exclusive means of covering the costs of long-term care has its risks. Your expenses may exceed the amount you’ve set aside and then deplete the assets you’ve designated for other goals or for beneficiaries,” he says. “Then again, if you set aside enough funds for a worst-case medical or disability scenario, you may be tying up assets that could otherwise be invested and growing.” Murray suggests bolstering that safety net with some sort of insurance.

Transfer some of the risk to an insurer

“You’ve got several approaches to consider here,” he says. Insurance policies for long-term care provide the most robust benefits, but insurers have had poor experience with these products, which has resulted in significant premium increases, even on existing policies. Generally, premiums for long-term care insurance can, however, be treated as qualified medical expenses and be paid for with money drawn from an HSA, which you can fund with pretax dollars, notes Murray. The premiums for long-term care insurance that you can treat as qualified medical expenses are subject to certain limits.

But what if you purchase a policy for long-term care and end up not needing care? In that case, you’d forfeit the money you paid out in premiums. For that reason, you might consider hybrid life insurance with a benefits rider for long-term care. If you use only a portion or none of the long-term care benefits, your beneficiaries will receive a death benefit without income tax from the balance of the policy. Or you might explore permanent life insurance with a benefits rider for long-term care or chronic illness. This option could be a good fit if your primary goal is to provide a death benefit for your beneficiaries, but you also want the option of tapping into the policy’s death benefit early if you need it to supplement paying for your healthcare costs.

“Your financial advisor can help you decide how to put together a long-term care funding strategy that’s right for you — one that’s based on your age, your family’s medical history and the resources you have available to you,” says Murray. “Whatever option you choose, you’ll feel better that you’ve done something to prepare.”