Political risk in your discussions with clients can be tricky – Not because it isn’t real, but because it’s often tainted with bias and misunderstanding.   Most advisors are comfortable acknowledging political risk in markets, tax rates, capital gains rules, estate exemptions, etc., and how these regulations reshape entire industries overnight.  So, there’s no argument that elections and policy shifts directly affect portfolios, so planning must accommodate various outcomes rather than betting on one.

Yet that same logic quietly disappears when the conversation turns to healthcare in retirement and long-term care (LTC), even though LTC is a car crash at the intersection of public policy, labor regulation, healthcare reimbursement, and state budgets.  Medicaid eligibility rules change.  Staffing mandates change.  Immigration policy affects caregiver supply.  Reimbursement rates get squeezed.  Benefits are reinterpreted, delayed, or means-tested.  These are not theoretical risks — they are political decisions that directly affect access to care, cost of care, and timing of care. 

Over the last 15 years, most states have used Medicaid provider rate cuts or freezes as a primary cost-containment tool, which directly affects nursing-home viability and access. Federal labor rules extending minimum wage and overtime protections to home-care workers have also increased private-pay caregiver costs and made staffing more volatile. At the same time, around half of states still have “filial responsibility” laws on the books, and a handful of cases have shown they can be used to pursue adult children for a parent’s unpaid care costs — even when families assumed Medicaid would fill the gap.  Regardless of how loud some want to make their opinions known, it won’t change one simple universal fact:  Biology and 75 million Americans aging together.

The problem is not that clients misunderstand political risk, but how their planning often waves if off where it matters most.  The only logical endpoint of a pure self-funding strategy is eventual reliance on a government program once private resources are exhausted.  But from a planning perspective for LTC, that’s far from risk-free; it is literally a political bet.  Self-funding care is not insulated from politics; it concentrates exposure to it.  When policy shifts, families absorb the impact in real time — through higher costs, fewer options, or delayed access.  This is why political risk belongs in every serious LTC Planning discussion, but not as a partisan argument, but as a planning reality.  Neither you nor your clients can predict elections 2,4, or 10 years into the future to anticipate policy preferences, and your clients need a LTC Planning mechanism that works regardless of who is in office. 

Advisors and clients are used to thinking about political risk through a market lens.  However, when policy changes affect taxes, capital gains, or regulations, portfolios adjust, and there is time to respond, rebalance, and recover.  Political risk in planning is real, but it is generally slow-moving, financial in nature, and adaptable within an ongoing planning process. LTC operates under an entirely different set of conditions, as Care needs do not wait for policy clarity, budget cycles, or regulatory transitions.  

When health declines, decisions must be made immediately. Delays are not merely inconvenient — they have direct human consequences for the individual and their family. And once a care path begins, it is rarely reversible.  That is the critical distinction and why it must be planned for in advance.  Ignoring political risk in long-term care doesn’t make it disappear.  It simply widens the gap between what a plan assumes and what families actually experience when care is required.  So, when it comes to LTC Planning in 2025 and beyond, prudence is not predicting policy outcomes.

Prudence is planning for policy uncertainty where human consequences are immediate.

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