Long-Term Care Insurance: What You Need to Know
Long-term care insurance is one of the most misunderstood—and often overlooked—types of insurance. Many assume they’ll never need it, or that Medicare will cover their care. The reality? Long-term care is an increasing financial burden for families, and without a plan in place, it can quickly drain savings and retirement funds.
The Truth About Long-Term Care Costs
Nearly 70% of people over age 65 will require some form of long-term care during their lifetime. Whether it’s home health aides, assisted living, or full-time nursing home care, the costs are staggering.
Home health aide: $5,000/month (national median)
Assisted living facility: $4,500/month
Nursing home (private room): Over $9,000/month
Without a plan in place, these expenses can deplete savings, force families into difficult financial decisions, and leave individuals without the care they need.
Does Medicare Cover Long-Term Care?
This is one of the biggest misconceptions about long-term care. Medicare does not cover long-term custodial care, such as assistance with bathing, dressing, or eating. However, it may provide limited coverage for:
Short-term skilled nursing care, typically up to 100 days after a hospital stay
Rehabilitative services like physical therapy
Certain in-home health services if prescribed by a doctor
But once ongoing, non-medical care is needed, those costs fall entirely on the individual. That’s why it’s essential to plan ahead.
Who Needs Long-Term Care Insurance?
Long-term care insurance isn’t right for everyone, but here’s who should seriously consider it.
You May Need Long-Term Care Insurance If
You have assets to protect, such as retirement savings, property, or investments.
You want more options for care beyond Medicaid-covered facilities.
You have a family history of health conditions requiring extended care.
You don’t want to rely entirely on family for caregiving.
You May Not Need Long-Term Care Insurance If
You have minimal assets and would qualify for Medicaid.
You already have family members who are committed to providing care.
You are wealthy enough to self-insure and cover costs out of pocket.
How Does Long-Term Care Insurance Work?
Long-term care insurance provides a daily or monthly benefit to cover care costs, either at home or in a facility. Policies typically include:
Waiting period, often 30-90 days before benefits begin
Benefit period, which determines how long coverage lasts (e.g., 3 years, 5 years, or lifetime)
Inflation protection, to help benefits keep up with rising care costs
Types of care covered, including in-home care, assisted living, adult day care, and nursing home care
How Much Does Long-Term Care Insurance Cost?
Premiums vary based on age, health, and coverage amount. On average, a 55-year-old couple might pay between $3,000 and $5,000 per year for a solid policy. Costs increase with age, so purchasing coverage earlier can lead to significant savings.
Alternatives to Traditional Long-Term Care Insurance
Long-term care insurance isn’t the only way to prepare. Here are a few other strategies.
Hybrid Life Insurance with Long-Term Care Benefits
Some life insurance policies include a long-term care rider. This allows you to use the death benefit to cover care expenses if needed. If you never need long-term care, your heirs receive the full payout.
Self-Insuring with Savings
If you have substantial assets, you may choose to set aside funds specifically for long-term care. This strategy works best for those with a high net worth who can afford to pay out of pocket.
Medicaid Planning
Medicaid covers long-term care, but only for those with very limited assets. Some individuals work with financial planners to structure their assets in a way that allows them to qualify while preserving wealth for their spouse or heirs.
When to Buy Long-Term Care Insurance
The best time to consider long-term care insurance is in your mid-50s to early 60s. Waiting too long can mean:
Higher premiums
Greater risk of denial due to health conditions
Fewer coverage options
Final Thoughts: Should You Buy Long-Term Care Insurance?
Long-term care insurance isn’t a one-size-fits-all solution. But having a plan—whether it’s insurance, savings, or Medicaid planning—is critical to protecting your finances and ensuring you receive quality care if needed.
What’s Next?
This is part of our ongoing insurance series. If you missed previous posts, check them out here.
The Pastor’s Guide to Insurance
Health Insurance Options
Life Insurance: What You Really Need
Disability Insurance: Do You Need It?
Next up, we’ll explore umbrella insurance and why it might be the most underrated protection you’re missing.
