Takeaways
- Long-term care insurance covers the cost of home and nursing home health care.
- Long-term care insurance is available to purchase before you turn 75 years old.
- The average length of long-term care for men is 2.2 years and 3.7 years for women.
- Long-term care insurance covers more than regular health insurance.
- Long-term care insurance policies are cheaper when you are younger and healthy.
You might find it hard to believe that you will need help taking care of yourself as you age. However, recent data shows that 70% of 65-year-olds eventually need long-term care support or services.[1] The big question is how you are going to pay for those costs. The answer is long-term care insurance.
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What Is Long-Term Care Insurance?
Long-term care insurance is coverage that pays for home health care, adult daycare, and nursing home care for policyholders. You might need this type of insurance policy if you have a chronic illness, disability, or Alzheimer’s disease. It is designed to pay for care and services needed when you can no longer perform basic daily activities like bathing, getting dressed, and eating.[2]
Ideally, you purchase a policy with these benefits before you reach an age when such health conditions become commonplace. Most private insurance companies will not issue long-term care insurance once you reach 75. Once you get the policy you need, you must pay insurance premiums to keep your policy active.
If you eventually require in-home care or the services of an assisted living facility, nursing home, or nursing facility, your policy should reimburse you for those costs. You are not restricted to using specific care but can instead use the coverage on a wide range of services that can fit the needs of your changing health.
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How Long-Term Care Insurance Works
To get long-term care insurance, you select a policy that outlines what it covers, and the duration of coverage. You pay premiums depending on a variety of factors, including your age, general health, and specific benefit choices.
Once you are unable to complete a set number of daily activities without assistance, you then become eligible to begin receiving benefits from the policy. You then create and submit claims to the insurance company for reimbursement for the qualified services you receive going forward.
The insurer will reimburse you up to applicable daily or monthly limits after you meet any waiting period requirements. Be sure to make note of any exclusions the policy contains, like pre-existing conditions or specific medical treatments. You must keep paying premiums for as long as you want to maintain coverage, and any payment failure could lead to a lapse in coverage.
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When You Need Long-Term Care Life Insurance
The best time to purchase long-term care insurance is when you are younger and in relatively good health, and you will get the best premiums. If you wait until you are older or have already been diagnosed with a chronic condition, you may face either substantially elevated costs or be denied a policy.
The right time varies, but many people find themselves looking into long-term care insurance in their 50s and 60s. Consider also digging into your family medical history since that can indicate the likelihood of when you might need extended care.
Related: What Is Disability Insurance?
What Long-Term Care Insurance Covers
Long-term care insurance covers a wide range of services and support that assist you in carrying out your regular daily activities. Here is what policies can cover:
- Home health aides who can assist you with activities like cooking and cleaning.
- Assisted living facilities that can give you a community setting for social interaction as well as full-time living support.
- Nursing homes may be covered when more intensive medical services are needed.
- Adult daycare services help those who need more acute care and assistance.
- Respite caregivers that can give relief to the policyholder’s primary caregiver, which could be your spouse or family member.
- Hospice care if you become terminally ill and care needs to focus on the comfort of life versus curing any disease.
Every long-term care insurance policy can be different, especially if you opt for additional coverage with insurance riders. Your policy will dictate the waiting periods before claim benefits can be processed and the policy’s maximum coverage. Before you sign up for a policy, be sure you read your policy closely.
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What Affects Long-Term Care Insurance Costs
When you are pricing long-term insurance policies, several variables impact your premiums. Some of the most significant factors include your:
- Age: Younger policy applicants receive lower insurance premiums, while older policyholders pay more. This is because the “time to event” is closer for older policyholders.
- General Health: With less health complications, applicants can secure lower-cost policies and premiums
- Gender: According to data from the U.S. Department of Health and Human Services, for those that need coverage, women need an average of 3.7 years of care while men need 2.2 years. As a result, female policyholders tend to pay more than men.
- Marital Status: Costs are higher for single people and lower for married couples.
- Duration of coverage: Prices vary widely depending on your insurance company. Get quotes from top carriers to shop for the best coverage and price.
- Amount of coverage: Your premiums will be higher for plans with higher cost-of-living adjustments, shorter elimination periods, and less restriction on long-term care reimbursement.
Smart Tip:
$3,700 or $3,690 is the annual cost of an LTC plan for a single 55-year-old female and male, respectively, based on a policy where benefits grow an average of 3% annually, according to the American Association for Long-Term Care Insurance.[4]
How Much Does LTC Cost
While you might not need it in your 20s or 30s, it is coverage you should consider as you age. The sooner you purchase the long-term care insurance, the better. Here’s an example of what your monthly and annual premiums would be:
| Age | Monthly Premium | Annual Premium |
|---|---|---|
| 55 Year old Male | $173 | $2,075 |
| 60 Year old Male | $215 | $2,585 |
| 65 Year old Male | $261 | $3,135 |
| 55 Year old Female | $308 | $3,700 |
| 60 Year old Female | $367 | $4,400 |
| 65 Year old Female | $439 | $5,265 |
Source: American Association for Long-Term Care Insurance [3]
It’s important to note that insurance premiums are not static. Insurance providers can increase your premiums due to inflation or an unexpected surge in claims.
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Tax Advantages of Long-Term Care Insurance
If you itemize deductions, you can claim a tax deduction for a portion of the premiums you pay for a qualified long-term care plan. Your qualified long-term care premiums are included as medical expenses on Form 1040 (Schedule A).
Deductible amounts scale as you get older. Here are the maximum qualified long-term care premiums for 2024:
| Age at End of Year | Maximum Deductible Premium |
|---|---|
| 40 or under | $470 |
| 41 to 50 | $880 |
| 51 to 60 | $1,760 |
| 61 to 70 | $4,710 |
| 71 and over | $5,880 |
Source: Internal Revenue Services [4]
To get a deduction, you must use a plan that is labeled as a tax-qualified plan. Ask your insurance company if you don’t know whether your long-term care insurance plan is tax qualified.
Pros of Long-term Care Insurance
- Reduces Healthcare Costs for in-home care, assisted living, nursing homes, and other expenses to get the care you or your loved one needs.
- Shields Savings, like your cash and retirement investments, that healthcare costs might otherwise deplete.
- Peace of Mind knowing you have a safety net for your potential long-term care needs.
- Professional Healthcare Assistance shoulders the full cost of your care or provides hands-on support for you and your family.
Cons of Long-term Care Insurance
- Insurance Premiums might be paid over several years, and you might never need the coverage if you do not require long-term care.
- Price Increases can occur on your premiums, depending on your policy terms and the insurance provider’s rate adjustments. These increases hedge against inflation and protect the insurance companies.
- Policy Exclusions limiting the effectiveness of your policy can be discovered later in your care to find out that certain conditions or treatments are excluded.
Smart Summary
Long-term care insurance helps bridge the gap for healthcare costs that your health insurance doesn’t cover. It’s designed to provide reimbursement for assisted living, nursing homes, respite services, and more. Designing your financial plan to meet potential future healthcare costs and retirement needs is a delicate balance. Consider meeting with a financial advisor to walk through your options.
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(1) LongTermCare.gov. How Much Care Will You Need. Last Accessed April 9, 2025.
(2) Texas Department of Insurance. Long-term care insurance guide. Last Accessed April 9, 2025.
(3) American Association for Long-Term Care Insurance. 2024 Long-Term Care Insurance Facts – Prices – Data – Statistics – 2024 Reports. Last Accessed April 9, 2025.
(4) Internal Revenue Service. Eligible Long-Term Care Premium Limits. Last Accessed April 9, 2025.
