As America ages, the conversation about how families plan for long-term care is becoming more urgent. Millions of older adults will require some form of supportive housing or assistance in the years ahead, yet many families are still unprepared for the financial realities of senior living.
Argentum is working to change that conversation by exploring how an existing, widely used savings tool could help families prepare for the future. One of the most promising ideas: expanding the use of 529 education savings plans to support long-term care and senior living expenses.
The Challenge: Planning for a Future Few Families Fully Understand
For decades, families have relied on 529 plans as a trusted way to save for college. These accounts offer tax-deferred growth and tax-free withdrawals for qualified education expenses, making them one of the most popular long-term savings tools in the country.
But while families have grown comfortable planning for college, far fewer are planning for long-term care. According to federal estimates, roughly 70% of Americans over age 65 will need some form of long-term care in their lifetime. Many will require years of assistance either in their homes or in residential senior living communities.
Yet the cost of that care often surprises families. Medicare does not cover most long-term care, and Medicaid typically requires individuals to spend down their assets before qualifying. This reality leaves many middle-class families in a difficult position where they may have savings, but not enough to comfortably afford quality care.
An Untapped Opportunity: Rethinking the Role of 529 Plans
529 plans have evolved significantly in recent years. Originally designed solely for higher education, lawmakers have gradually expanded their uses. Recent policy changes have allowed:
- Use of 529 funds for certain K–12 expenses
- Limited use for student loan repayment
- Rollovers of unused funds into Roth IRAs under specific conditions
These changes reflect a growing understanding that families need flexible, long-term savings tools that adapt to real life.
Argentum believes the next logical step is to allow unused 529 funds to be used tax-free for long-term care and senior living expenses after a certain age.
This would:
- Give families more flexibility in how they use their savings
- Reduce penalties on funds that were responsibly set aside
- Encourage earlier, more proactive long-term care planning
- Help more older adults access quality senior living options
Why This Matters for Families and the Senior Living Industry
Today, many families are stuck with leftover 529 funds once educational needs are met. If those funds are withdrawn for non-qualified expenses, they are subject to taxes and penalties. At the same time, those same families may be facing the high cost of senior living or long-term care.
Allowing 529 funds to be used for these expenses would:
- Remove unnecessary financial penalties
- Align savings tools with real-world needs
- Support aging with dignity and choice
- Help families avoid crisis-driven decisions
It also supports a broader national goal: encouraging personal responsibility and long-term planning for care needs that most Americans will eventually face.
Part of a Larger Conversation About Long-Term Care Financing
Lawmakers are already exploring multiple approaches to help Americans plan for long-term care. Current proposals include:
- Expanding the use of Health Savings Accounts (HSAs) for long-term care insurance
- Providing tax incentives for purchasing long-term care coverage
- Creating new retirement-based solutions for care expenses
Argentum believes 529 plans should be part of this conversation. These accounts are familiar to millions of families, already established and widely available, designed for long-term, tax-advantaged savings and easily adaptable through targeted policy changes. Expanding their use would not require building a new system from scratch, only updating an existing one to meet modern needs.
A Smarter Way to Plan Across Generations
One of the most compelling aspects of 529 plans is their flexibility across generations. Beneficiaries can be changed, allowing funds to move from one family member to another. With thoughtful policy changes, a single 529 plan could:
- Help pay for a child’s education
- Support a grandchild’s college costs
- Provide a financial cushion for long-term care later in life
This kind of multigenerational planning reflects how families actually live and how they support one another.
Argentum’s Role: Advancing Solutions for Affordability
Argentum is engaging policymakers, industry stakeholders, and financial experts to explore how 529 plan reforms could support senior living affordability. The goal is simple: Give families more tools to prepare for the care they or their loved ones may need.
By expanding the allowable uses of 529 plans, policymakers can:
- Encourage earlier planning for long-term care
- Reduce financial barriers to senior living
- Help more older adults access supportive housing and services
- Strengthen the long-term stability of the care ecosystem
Looking Ahead
America’s aging population is not a distant challenge. It is a present reality. The country needs new ideas, practical solutions, and smarter financial tools to help families prepare. Expanding the use of 529 plans for long-term care is one such idea. It builds on a familiar, successful savings vehicle and adapts it to meet one of the most pressing needs of the coming decades. For families, it means more flexibility. For older adults, it means more choices. And for the senior living sector, it represents a meaningful step toward a more affordable and accessible future.
Starting the Conversation in Washington
Expanding the use of 529 plans for long-term care was just one of the key affordability and policy issues Argentum discussed with lawmakers during the Argentum Public Policy Fly-In, that took place February 24–25 in Washington, D.C. This annual event brings senior living leaders together with members of Congress and their staff to address the policies that will shape the future of care, workforce, and affordability across the country. It’s an opportunity to ensure the voices of owners, operators, and industry partners are heard where decisions are being made. Watch for an event wrap-up in the next issue of AHEAD, Argentum’s leading policy newsletter, and in next month’s issue of Senior Living Executive magazine.