Here's the long-term care problem for many middle-income people: They want to buy a long-term care policy to defray the staggering care costs they could incur in the future but lack the cash for its premiums. There may be a solution, thanks to the SECURE 2.0 law of 2022.

Roughly 70% of people over 65 will eventually need help with the activities of daily living, according to the U.S. Department of Health and Human Services. That care can be pricey. According to the latest Genworth Cost of Care study, the median cost of a private room in a nursing home is over $116,000 a year; more than $64,000 for an assisted living facility and close to $76,000 for home care.

Medicare, Medicaid and Long-Term Care

But long-term care costs generally aren't covered by Medicare. Although Medicaid pays for long-term care, you typically must be near the poverty level to qualify. So, older Americans who aren't eligible for Medicaid and want to prepare for potential long-term care expenses, either need to pay for the care out of their savings or buy a long-term care insurance policy.

The American Association for Long-Term Care Insurance estimates a 55-year-old couple who each buy a total of $800,000 in protection for their needs at age 85 will likely pay around $5,000 a year. (Premiums get higher if you don't buy a policy until your 60s.)

Brian Gordon, president of the long-term care insurance brokerage Gordon Associates in Bannockburn, Illinois, says if you can't scrounge up that amount, you could pay for the premiums through a tax-free rollover from your IRA.

That's where the SECURE 2.0 law kicks in.

Before that law, if you died and your children inherited your IRA rollover from your 401(k), they could liquidate the account over their lifetime. But "with the SECURE Act 2.0, they have to liquidate that account within 10 years," Gordon said on a recent episode of the Friends Talk Money podcast(full disclosure: I co-host that podcast with Terry Savage and Pam Krueger).

The New Strategy for Long-Term Care Premiums

To avoid making your heirs liquidate your entire IRA within 10 years of your death, Gordon said, you could take out some of that money while you're alive to buy an annuity paying premiums for 10 years for a small whole-life insurance policy and a long-term care insurance rider.

It's known as a hybrid policy. With this strategy, any long-term care benefits will be tax-free to you and your heirs will get a death benefit.

"A couple who wanted a long-term care policy with $6,000 of monthly benefits could move about $164,000 from their IRA into an annuity funding the whole life policy," Gordon said.

Savage, a personal finance columnist and author, noted that this purchase will guarantee to pay the long-term care insurance premiums for 10 years. After that, the hybrid long-term care/life insurance policy will be fully paid up.

Hybrid Long-Term Care Policies

If you'd rather not take a large chunk out of your IRA rollover to buy a hybrid policy, you could just take enough out each year every year for 10 years to buy it.

"More people today are finding the idea of a hybrid long-term care/life insurance policy a little more palatable than just a long-term care policy, thinking that 'OK, if I don't use it, then at least my family gets money back upon my death,' " Savage said.

There's one catch: If you do this before turning 59½, you will owe a 10% tax penalty on the IRA withdrawal, but by waiting until your 60s, your long-term care premiums will be higher.

Delaying purchasing a long-term care policy also raises the chance of being denied the coverage due to your health.

"If you're 60 to 64, you've got about a 30% chance of not getting a policy issued to you," said Gordon. If you're 65 or older, there's about a 50-50 chance of being turned down, he noted.

Keep in mind that using an IRA rollover to pay long-term care insurance premiums probably won't cover all your potential long-term care costs.

"Most people are still going to need to come up with the other $6,000 a month that it takes to live in a really nice long-term care facility," said Krueger, CEO of WealthRamp, a service that evaluates financial advisors.