It’s estimated that 51% of women and 39% of men age 65 and older will need some form of paid long-term care during their lifetimes. That care doesn’t come cheap, either.
The national median cost of a private room in a nursing home is about $129,575 per year, and people who need long-term care typically require it for 3.2 years (women) or 2.3 years (men). If you end up needing care, there’s a chance it could pose a big risk to your retirement savings.
Long-term care insurance is one way to help protect yourself from those expenses. Here’s what it is and how much it could cost.
What is long-term care insurance?
Long-term care insurance can help you pay for a nursing home, in-home aid, assisted living facility, and other services if you can’t care for yourself on your own due to age, illness, injury, or a cognitive condition.
Health insurance helps you pay for the cost of medical treatments, but long-term care insurance helps cover custodial care, which is the day-to-day assistance you could eventually need as you age.
What long-term elder care insurance covers
Long-term care insurance can help pay for care in a variety of settings (not just nursing homes).
Depending on the policy, covered services may include:
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In-home care (help with bathing, dressing, eating, moving, preparing meals, and other daily tasks)
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Assisted living facilities (where you live in a residential community that allows you to maintain some independence)
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Nursing home care (where you receive around-the-clock skilled nursing and personal care)
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Memory care services (for those with Alzheimer’s disease or other forms of dementia)
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Adult day care (these are supervised daytime programs that provide meals, activities, and personal care when family caregivers need a break)
Who needs long-term care insurance?
According to the American Association for Long-Term Care Insurance, 43% of married adults and 51% of unmarried adults age 65 and older will require paid long-term care during their lifetimes. Women are also more likely than men to need care and to need it for longer.
That doesn’t mean everyone should buy long-term care insurance. The premiums can be expensive, and some people have enough retirement savings to comfortably pay for care on their own.
The Federal Long Term Care Insurance Program says it may be worth considering if you:
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Have accumulated retirement savings or other assets you’d like to help protect
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Want to avoid relying on family members to provide or pay for your care
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Want more flexibility in where you receive care, such as at home, in an assisted living community, or in a nursing home
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Can comfortably afford the premiums, even if they increase over time
Why Medicare and health insurance usually aren’t enough
Long-term care expenses are generally not covered by Medicare. Medicare is for health care expenses, including doctor visits, hospital stays, and surgeries.
One of the only times it will cover nursing home care is for short-term skilled nursing or rehabilitation after a qualifying illness or injury. For example, if you’re hospitalized for a broken hip and need a few weeks of rehabilitation in a skilled nursing facility before returning home, Medicare could help cover those costs.
How long-term care insurance works
How long-term elder care insurance works depends on how you set up these four parts of your policy:
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Elimination period: This represents how long you must wait before your long-term care insurance benefits begin (often 0 to 90 days). Choosing a longer elimination period could lower your premiums.
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Benefit amount: Many long-term care insurance policies provide benefits up to a daily or monthly limit. As you compare policies, make sure the benefit amount reflects the typical cost of care where you live.
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Benefit period: This defines how long your policy will continue paying benefits once you qualify. Many policies offer benefit periods of two to five years, although some provide lifetime coverage.
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Inflation protection. An inflation protection rider automatically increases your benefits over time to help keep pace with rising care costs.
What long-term care insurance costs
According to the American Association for Long-Term Care Insurance’s Price Index, a healthy couple purchasing a policy with $165,000 in initial benefits would pay about:
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$2,080 per year if they purchased coverage at age 55
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$2,600 per year if purchased at age 60
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$3,750 per year if purchased at age 65
Policies with inflation protection typically cost more because the benefit amount grows over time. That said, how much you’ll pay depends on factors like your age, health, sex, where you live, and the amount of coverage you choose. But buying a policy while you’re younger and healthier can help keep premiums lower.
Those premiums can seem steep until you compare them with the cost of care. According to Genworth’s 2025 Cost of Care Survey, the national median annual cost of care is approximately:
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Nonmedical caregiver: $80,080
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Adult day health care services: $24,700
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Assisted living: $74,400
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Semi-private nursing home room: $114,975
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Private nursing home room: $129,575
When to buy long-term care insurance
Many financial professionals suggest purchasing long-term care insurance in your mid-50s to mid-60s as the sweet spot.
Many policies require medical underwriting. During the application process, they’ll review your health history and may ask about existing medical conditions, medications, mobility, or cognitive health. So purchasing before any major medical issues arise could help you qualify and save the most on premiums.
Traditional vs. hybrid long-term care insurance
If you decide long-term care insurance is right for you, you’ll generally have two options: a traditional long-term care policy or a hybrid policy.
Alternatives to long-term care insurance
Long-term care insurance isn’t the only way to prepare for future custodial care needs. Depending on your situation, one of these strategies may be a better fit.
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Self-funding: You could choose to pay for long-term care using your retirement savings, investments, or home equity. This approach generally makes the most sense if you have enough assets to absorb several years of care costs without it affecting your long-term financial security.
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Medicaid: Medicaid covers long-term care for eligible individuals, but qualifying typically requires meeting strict income and asset limits. You may not become eligible until you’ve spent down much of your savings.
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Life insurance with living benefits: Some permanent life insurance policies allow you to access part of your death benefit to help pay for qualifying long-term care expenses while you’re still living.
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Health savings accounts (HSAs): If you have an HSA, you can generally use those funds tax-free to pay qualified long-term care insurance premiums (up to IRS limits) and certain long-term care expenses.
Read more: Types of life insurance: A complete guide
Is long-term care insurance worth it?
Whether purchasing long-term care insurance is right for you is a highly personal decision. However, answering these questions can help you decide:
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Could I afford $100,000 or more per year for care if I needed it?
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Who would provide my care if I couldn’t live independently?
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Would paying predictable premiums today give me more peace of mind than taking the risk of paying out of pocket later?
How to choose a long-term care insurance policy
Weigh these features as you compare long-term care insurance policies:
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Benefit amount: Will it cover the typical cost of care where you live?
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Benefit period: How many years of care does the policy provide?
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Elimination period: How long can you afford to pay for care before benefits begin?
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Inflation protection: Will your benefits keep pace with rising care costs?
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Covered services: Does the policy include home care, assisted living, and memory care if those are important to you?
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Financial strength: Choose an insurance company with strong financial ratings, since you may not use the policy for decades.
Long-term care insurance FAQs
Does Medicare cover long-term care?
Medicare generally covers medical care and short-term skilled nursing or rehabilitation after a qualifying illness or injury, but it typically doesn’t pay for ongoing custodial care, such as help with bathing, dressing, eating, or other daily activities. That’s one of the main reasons some people choose to purchase long-term care insurance.
How much does a nursing home cost without insurance?
The national median cost of a nursing home is about $114,975 per year for a semi-private room and $129,575 per year for a private room, according to Genworth. However, your actual costs will depend on where you live and what level of care you need.
Can you get long-term care insurance after age 65?
Yes, it’s possible to buy long-term care insurance after age 65, but it may be more expensive and harder to qualify for. Most policies will require medical underwriting, so many people choose to apply in their 50s or early 60s, before age-related health conditions are more likely to affect eligibility.
Is long-term care insurance tax-deductible?
Premiums for qualified long-term care insurance policies may be tax-deductible, although the amount you can deduct depends on your age and is subject to IRS limits. If you have an HSA, you may also be able to use those funds tax-free to pay qualified long-term care insurance premiums.
What’s the difference between traditional long-term care insurance and a hybrid policy?
The biggest difference is what happens if you never need care. With a traditional policy, you may never receive benefits if you don’t need long-term care. With many hybrid policies, your beneficiaries may receive a death benefit, or you may receive another policy benefit, depending on the contract.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
