Long-term care insurance can help seniors cover personal and medical expenses throughout their retirement years. Even if an aging adult is still in great health and not thinking about senior living or future care, planning ahead can reduce financial and emotional burdens for themselves and their families later on. Long-term care insurance can help fund essential services like nursing homes, assisted living, memory care, and more. Because insurance policies can vary greatly from person to person, it’s important to understand what they cover, what they cost, and how they can help senior family members.

Key Takeaways

Long-term care insurance helps seniors cover personal and medical expenses as they age. Policyholders can use it to pay for a wide range of care needs in various settings.
Long-term care insurance policy prices vary greatly. Significant factors include a beneficiary’s age, gender, plan benefits, and more.
Nearly 70% of seniors will need some type of long-term support. Having long-term care insurance can help cover the ever-increasing costs of senior care.
Insurance policies benefit some more than others. If it’s likely that a senior will need long-term care that retirement funds or personal savings can’t cover, insurance can be a lifesaver.

What is long-term care insurance?

Long-term care insurance, also known as nursing home insurance, covers personal care and medical expenses for aging adults who need any kind of in-home care, assisted living, memory care, or nursing home care. To understand long-term care insurance, it’s important to first understand the components of long-term care.

Long-term care is a broad term for services and support provided to seniors who need daily help. It can be provided by a family caregiver at home, in an assisted living community, or in a nursing home. One of the most common components of long-term care is help with activities of daily living (ADLs).

What does long-term care insurance cover?

Long-term care insurance covers a wide variety of senior services and supports, from in-home therapies and assistance with ADLs to skilled nursing services. Long-term care can often help seniors age in place by covering in-home care until a move to senior living becomes necessary.

Senior care options covered by long-term care insurance generally include the following:

Assisted living
Adult day programs and respite services
Memory care
Home care services
Nursing home stays

What isn’t covered by long-term care insurance?

Individual policies may limit what medical conditions are covered. Many insurers will deny applicants who report alcoholism, drug addictions, or disabilities stemming from self-inflicted injuries. Some policies also don’t provide coverage for patients with certain mental illnesses.

Long-term care usually isn’t covered by traditional health insurance or state and federal programs, so long-term care insurance fills this gap. Many Americans mistakenly believe Medicare will pay for long-term care. In actuality, Medicare only covers short-term nursing home stays under particular circumstances.

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How much does long-term care insurance cost?

Policy prices differ significantly based on a beneficiary’s age, gender, and the specific plan benefits they choose. The following examples reflect annual rates as of 2022^[02] for a range of beneficiaries with a 0% growth plan:

$950 for a 55-year-old single male
$1,500 for a 55-year-old single female
$2,080 for a 55-year-old couple

Many aging adults choose to wait to purchase long-term care insurance until they’re older and have a better idea of the senior services their health requires. However, annual prices increase significantly based on a policyholder’s age:

$1,700 for a 65-year-old single male
$2,700 for a 65-year-old single female
$3,750 for a 65-year-old couple

These pricing examples reflect a long-term care policy with a $165,000 benefit. Policies will offer plans with different percentages of annual growth, so expect these costs to increase significantly with higher-growth plans. Additionally, rates will vary depending on which insurance company a senior selects.

Understanding long-term care insurance pricing

Many considerations play into long-term care insurance costs. Because insurance plans and premiums differ for every senior, it’s essential to keep the following factors in mind:

Age and gender. Premiums are typically lower for adults under 60 and increase with age. Insurance providers also take into consideration that women live longer than men and are more likely to file long-term care claims.
Existing health conditions. Insurance premiums rise with any reported health issues. If you have a preexisting condition, care related to that illness may not be covered during the insurance company’s exclusion period — which can last for several months after a policy is purchased. Many insurers don’t accept applicants with pre-existing conditions like dementia.
Personal policy and benefit amount. Each unique policy has a daily benefit amount recipients can receive, and most set a limit on the number of years that policyholders can claim benefits. While there are lifetime benefit policies, they typically cost even more than term-limited coverage.
Inflation. Long-term care expenses are increasing rapidly, around 3% each year. Protection can be added to long-term care insurance to help ensure a person’s benefit amount increases along with inflation.

Each person’s policy is different, so seniors and their families will need to work closely with a broker or agent to make sure they choose proper coverage at a reasonable cost.

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Who needs long-term care insurance?

Nearly 70% of people age 65 and older will need long-term care at some point.^[01] But after looking at the costs, you may be wondering: Is long-term care insurance worth the price, and is it something everyone actually needs? The answers depend on a person’s unique situation.

If it’s likely that a senior family member will need long-term care that retirement funds or personal savings can’t cover, then having long-term care insurance can be a lifesaver. By learning about long-term care coverage now, seniors are more likely to get the care they need in the setting they prefer later on.

Here are the median annual prices for various senior care options as of 2021:

$54,000 for assisted living
$59,488 for homemaker services
$61,776 for home health aide services
$108,405 for a private room in a nursing home ^[03]

While it may be possible for some seniors to comfortably pay out of pocket for home care, long-term care insurance for nursing home care could be essential considering the jump in pricing for their round-the-clock skilled nursing services.

Seniors and their families also need to consider how long they’ll likely have to pay for long-term care. A year? Maybe two? The answer could surprise you. According to the U.S. Department of Health and Human Services, the average duration of long-term care is 3.7 years for women and 2.2 years for men, but 20% of seniors who need care will require it for more than five years.

Before talking to an insurance broker or agent, be prepared with a list of questions to ask about policies, and have a good understanding of what senior services your family member will likely need.

Understand senior care options for your unique situation

When financial planning is involved, it’s understandable to feel confused and overwhelmed. If you’re ready to get a better understanding of senior care options and how to pay, we’re ready to help.

Our Senior Care Advisors can assist you in exploring personalized senior living options, from in-home care and assisted living to memory care and nursing homes. Talking with an expert, even if you’re just in the planning stages for a family member’s future care, can reduce anxiety and help families feel equipped with the knowledge needed to take the next steps.

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References

Modglin, L. (2022, February 15). Long-term care statistics 2022. The Checkup by SingleCare
American Association for Long-Term Care Insurance. (2022). Long-term care insurance facts – Data – Statistics – 2022 Reports.
Genworth. (2022, June 2). Cost of Care Survey.

Meet the Author

Leah Hallstrom

Leah Hallstrom is a copywriter at OurParents, crafting articles on senior living topics like home health, memory care, and hospice services. Previously, she worked as a communications professional in academia. Leah holds bachelor’s degrees in communication studies and psychology from the University of Kansas.

Reviewed byDenise Lettau

The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom (of which OurParents is a trademark) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.

Long-Term Care Insurance: An In-Depth Guide