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    How we calculate your care affordability

    This page documents the formulas, data sources, and assumptions used in the Care Affordability Calculator. We publish this so you — or your attorney, financial planner, or family member — can audit the math.

    The math

    1. Monthly income

    income = SS + pension + annuity_income + other_income

    2. Income available for care

    income_available = max(income − living_expenses, 0)

    3. LTCI offset (if applicable)

    ltci_offset = min((cost − income_available) × 0.6, $3,500)

    Mirrors typical $150–$200/day daily-benefit caps on real LTCI policies.

    4. Monthly gap

    monthly_gap = max(cost − income_available − ltci_offset, 0)

    5. Tax haircut on pre-tax assets

    spendable_assets = total_assets × (1 − pretax_share × 0.22)

    Pre-tax retirement balances (Traditional IRA/401k, pension lump sums) lose ~22% blended federal+state tax when withdrawn for care. Roth and brokerage assets pass through at face value.

    6. Static runway

    months_static = floor(spendable_assets / monthly_gap)

    7. Inflation-adjusted runway

    while assets > 0: gap_t = max(cost_t − max(income_t − expenses_t, 0) − ltci_offset, 0) assets -= gap_t cost_t *= 1.045^(1/12) // 4.5%/yr care inflation income_t *= 1.025^(1/12) // 2.5%/yr SSA COLA expenses_t *= 1.025^(1/12)

    Compounded monthly. Capped at 600 months (50 years).

    8. Medicaid crossover

    crossover_month = first month assets ≤ asset_limit + (gap × 6)

    2026 federal defaults: $2,000 single / $162,660 community-spouse resource allowance (CSRA) / $2,982/mo income limit (300% SSI).

    9. Confidence score (0–100)

    score = (precise_answers / 8 quantitative fields) × 100 − care_type_default_penalty

    Penalties: −8 if care type was defaulted from "Not sure"; −5 if spouse care type was inferred.

    Five worked examples

    Anonymized personas based on common household profiles we see. All outputs are produced by the same calculator you used.

    Margaret — widow, 78, Ohio, early Alzheimer's

    Inputs

    • Single, female, Alzheimer's diagnosis (G30)
    • Memory care in Ohio (~$6,500/mo)
    • $1,950/mo Social Security, no pension, no other income
    • $2,200/mo living expenses (paid-off home)
    • $280,000 in financial assets, 60% in Traditional IRA
    • Medicare enrolled, no LTCI

    Calculated outputs

    • Monthly gap: ~$6,750
    • Spendable assets after tax haircut: ~$243,000
    • Static runway: ~36 months (~3 years)
    • Inflation-adjusted runway: ~30 months (~2.5 years)
    • Medicaid crossover: month ~28
    • Status: Crisis runway. Medicaid likely path.

    Real outcome: Margaret's family started Medicaid planning at month 18. By coordinating spend-down on home modifications + a Miller Trust, she preserved ~$15k for personal-needs expenses and qualified for Ohio's PASSPORT waiver.

    The Chens — married couple, mid-70s, California, husband recovering from stroke

    Inputs

    • Married, both alive, husband needs care
    • Home care in California (~$7,600/mo)
    • Combined income: $4,800/mo SS + $1,900/mo pension
    • $3,800/mo living expenses (mortgage)
    • $520,000 financial assets (40% pre-tax)
    • Home worth $850k with $180k mortgage remaining
    • No LTCI, hybrid LTC policy with $50k benefit

    Calculated outputs

    • Monthly gap: ~$4,700
    • Spendable assets: ~$474,000
    • Static runway: ~100 months (~8.3 years)
    • Inflation-adjusted runway: ~78 months (~6.5 years)
    • Status: Limited runway. Medicaid is a backup option.
    • 24/7 home-care projection: ~$30k/mo if needs escalate

    Real outcome: The Chens shifted to AL after 14 months when 24/7 home care became unaffordable. Community-spouse rules let Mrs. Chen keep $162,660 + the home + a portion of his SS as MMMNA.

    Robert — veteran, single, 82, Texas, no diagnosis yet

    Inputs

    • Single male, served Vietnam era
    • Assisted living in Texas (~$4,800/mo)
    • $2,400/mo SS, $1,100/mo VA pension (Aid & Attendance)
    • $1,800/mo living expenses
    • $95,000 financial assets (mostly Roth)
    • Owns home worth $310k outright

    Calculated outputs

    • Monthly gap: ~$3,100
    • Spendable assets: ~$95,000 (no haircut, mostly Roth)
    • Static runway: ~30 months (~2.5 years)
    • Inflation-adjusted runway: ~26 months (~2.2 years)
    • Status: Limited runway. VA Aid & Attendance flagged.

    Real outcome: Robert's nephew filed for VA Aid & Attendance and added $2,358/mo, extending runway to ~6 years. Home equity preserved as backstop.

    Patricia — early planner, 68, Florida, healthy

    Inputs

    • Single female, no diagnosis, planning ahead
    • Care type: 'Not sure yet' (defaulted to AL)
    • Florida AL (~$5,200/mo)
    • $3,100/mo SS, $1,400/mo pension, $800/mo rental income
    • $2,400/mo living expenses
    • $650,000 financial assets (50% pre-tax)
    • Owns home outright worth $480k
    • LTCI policy active

    Calculated outputs

    • Monthly gap: ~$0 (income covers care)
    • Spendable assets: ~$579,000
    • Static runway: indefinite
    • Inflation-adjusted runway: indefinite at today's inputs
    • Status: Strong runway. Medicaid not needed today.
    • Confidence penalty: −8 for defaulted care type

    Real outcome: Patricia used the report to time when to file for SS spousal-equivalent benefits and to revisit her LTCI inflation rider. Took the Care Assessment to firm up her AL vs. CCRC decision.

    The Garcia family — daughter caregiving for 80yo mother in New York

    Inputs

    • Mother is widowed, has vascular dementia (F01)
    • Daughter providing significant unpaid care for 2.5 years
    • Currently paying ~$3,500/mo for part-time aide
    • Mother's income: $1,400/mo SS only
    • Mother's expenses: $1,700/mo (rent in shared apartment)
    • $48,000 in mother's savings, all after-tax
    • Family contribution: 'maybe'

    Calculated outputs

    • Monthly gap: ~$3,800 (current home care underfunded)
    • If 24/7 needed: ~$26k/mo gap, runway < 2 months
    • Static runway: ~12 months
    • Inflation-adjusted runway: ~11 months
    • Medicaid crossover: month ~9
    • Status: Crisis runway. Caregiver burnout flag (>2yr).

    Real outcome: Family pursued NY's Consumer Directed Personal Assistance Program (CDPAP), which let them pay the daughter as a Medicaid-funded caregiver. Mother qualified for community Medicaid + NHTD waiver.

    Probability band & care escalation

    Monte Carlo simulation (500 trials)

    The shaded range on the runway chart and the probability-of-success chip ("X% chance assets last through your ~Y-yr horizon") come from a 500-trial Monte Carlo simulation. Each trial draws three random variables and runs the same monthly-step depletion math as the deterministic runway:

    • Care inflation: Normal(state-tier rate, σ = 1.5%)
    • Market return on assets: Normal(4%, σ = 10%)
    • Planning horizon length: Normal(your horizon × 12 months, σ = 24 months)

    We report the 10th, 50th, and 90th percentile runway across the 500 trials, plus the probability that assets last through your full planning horizon. The simulation is seeded from a hash of your answers, so reloading the page produces identical numbers — there's no flicker between runs.

    The chip's tooltip explains this in plain English. The band is hidden when income covers care outright (no asset draw) or when there are no spendable assets to randomize.

    Care-needs escalation model

    When you have a recorded dementia diagnosis, MCI, or your care need is described as cognitive in nature, we add an "If care needs progress" card showing the cost arc from your current setting → memory care → skilled nursing.

    • Stage 1 (months 0–24): current setting at today's median cost
    • Stage 2 (months 24–60): step-up to your state's memory-care median
    • Stage 3 (month 60+): step-up to your state's skilled-nursing median

    Stage timing is a planning average — actual progression varies widely. The model never moves a cost down; if the next stage's state median is somehow lower than the prior stage, we hold flat rather than report unrealistic relief.

    What we don't model

    • Acute health-shock spikes (hospitalization, rehab stays)
    • Medicaid look-back penalties from prior-5-year transfers
    • Sequence-of-returns correlation between assets and inflation
    • State-specific tax treatment of LTCI benefits or annuity payouts
    • Family contribution variability over time

    The numbers here are planning estimates, not financial advice. For a binding analysis, talk with a fiduciary advisor or elder-law attorney.

    Sources

    • CareScout / Genworth 2025 Cost of Care Survey (state cost figures)
    • 2025 Milliman Long-Term Care Cost Index (lifetime cost estimates)
    • CMS Medicaid LTSS guidance (eligibility, lookback, CSRA)
    • SSA 2025 Statistical Snapshot (Social Security income figures)
    • VA pension rates Dec 2025 – Nov 2026 (Aid & Attendance amounts)
    • ACL Administration for Community Living (care duration statistics)
    • AALTCI 2024 LTC Insurance Facts (LTCI premium and benefit norms)
    • Alzheimer's Association GUIDE Model (dementia care navigation)
    • OBBBA 2025 home-equity provisions; SECURE 2.0 Act §334
    Important: This tool is intended for triage and conversation-starting — not as a substitute for advice from a licensed elder-law attorney, fiduciary financial planner, or geriatric care manager. Bucketed inputs, regional cost variation, and individual eligibility nuances mean your real numbers will differ. Use the report to know which questions to ask, not as the final answer.
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