As life expectancy increases, more Americans are living well into their 80s and 90s. While that’s good news, it also comes with a reality many people aren’t financially ready for: the rising cost of long-term care. Whether it’s in-home assistance, assisted living, or nursing home care, the price tag can quickly drain your retirement savings.
That’s where long-term care insurance comes in. It’s one of the most overlooked yet essential tools for securing your financial stability and dignity in retirement. But how does it work, and is it worth it?
This article breaks down long-term care insurance in simple terms—what it covers, how much it costs, when to buy it, and how to prepare for medical expenses as you age.
What Is Long-Term Care Insurance?
Long-term care insurance is a policy that helps cover the cost of services that assist with daily activities as you age. These services are not typically covered by traditional health insurance, Medicare, or Medicaid until you’ve depleted most of your assets.
Covered services may include:
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In-home care (bathing, dressing, meal prep)
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Adult day care
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Assisted living facilities
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Nursing home care
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Home modifications (wheelchair ramps, medical equipment)
It kicks in when you can no longer perform a certain number of “activities of daily living” (ADLs) like eating, bathing, or dressing.
Why Long-Term Care Is a Growing Concern in 2025
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Costs Are Rising
In 2025, the average annual cost of a private room in a nursing home exceeds $110,000. Even home care services can cost $25–$35 per hour. -
Medicare Doesn’t Cover Long-Term Custodial Care
Many retirees mistakenly believe Medicare will pay for long-term care. It won’t. Medicare only covers short-term skilled care, usually up to 100 days after a hospitalization. -
People Are Living Longer
More Americans are living 20 to 30 years post-retirement. While that’s great for enjoying life, it also increases the chance of needing extended care. -
Family Support Is Less Reliable
Modern families often live far apart, and not everyone has relatives who can provide care. Professional help is becoming more essential.
What Does Long-Term Care Insurance Typically Cover?
A standard long-term care policy may reimburse costs for:
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In-home personal care aides
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Skilled nursing care
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Hospice or respite care
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Physical and occupational therapy
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Adult day care programs
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Memory care facilities for Alzheimer’s or dementia
Policies usually set daily or monthly benefit limits (e.g., $200/day) and a lifetime cap on total benefits (e.g., $250,000).
Some plans offer inflation protection, meaning your benefits grow over time to keep up with rising costs.
How Much Does It Cost?
Premiums depend on:
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Age at purchase
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Gender (women generally pay more)
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Health condition
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Amount and type of coverage
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Length of benefit period
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Elimination period (waiting period before benefits start)
Average cost in 2025 for a 55-year-old couple:
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$3,100/year combined for a shared policy
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Individual policies for the same couple: $1,600–$2,000/year each
Buying earlier locks in lower rates. Waiting until your 60s or 70s can double your premiums—or worse, make you ineligible due to health issues.
When Is the Best Time to Buy Long-Term Care Insurance?
Most experts recommend purchasing between ages 50 and 60. Here’s why:
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You’re more likely to qualify for good health discounts
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Premiums are more affordable
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You lock in coverage before age-related conditions arise
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You’ll be covered when the risk of needing care rises in your 70s or 80s
Waiting too long can mean higher costs or denial of coverage due to pre-existing conditions like diabetes, heart disease, or early-stage dementia.
Types of Long-Term Care Policies
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Traditional Long-Term Care Insurance
Pure coverage, lower initial premiums, but “use it or lose it.” If you never need care, there’s no refund. -
Hybrid Long-Term Care Policies
These combine life insurance or an annuity with long-term care benefits. If you don’t use the care benefit, your heirs receive a death benefit.
Pros: Guaranteed payout
Cons: Higher upfront cost, less flexibility
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Short-Term Care Insurance
Covers care for up to 12–24 months. More affordable and easier to qualify for, but only offers limited coverage.
What to Look for When Choosing a Policy
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Benefit Amount: Choose daily/monthly limits that reflect local care costs
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Benefit Period: Longer periods mean more protection but higher premiums
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Elimination Period: Shorter waiting periods cost more but kick in sooner
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Inflation Protection: Especially important if buying before age 60
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Waiver of Premium: Premiums stop once you start receiving benefits
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Spousal or Shared Coverage: Allows couples to share benefits and save money
Alternatives to Long-Term Care Insurance
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Self-Funding: Requires a large retirement nest egg and discipline
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Health Savings Accounts (HSAs): Tax-free savings for medical expenses (before Medicare age)
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Medicaid Planning: Medicaid will cover nursing home care, but only after you spend down most of your assets
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Family Caregivers: Some rely on children or relatives, but this comes with emotional, physical, and financial stress
Is Long-Term Care Insurance Worth It?
For many retirees, yes—especially those who want to:
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Protect retirement savings
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Avoid burdening family with caregiving or financial costs
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Maintain independence and dignity in old age
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Have more choices in care facilities and services
Without insurance, one serious health event could quickly deplete your savings or force you into Medicaid.
However, it’s not for everyone. If you have very limited assets, Medicaid may be your fallback. If you’re wealthy, you may choose to self-insure.
Final Thoughts: Planning Now Protects Your Future
Long-term care is one of the biggest financial risks you face in retirement. It’s unpredictable, expensive, and emotionally challenging. But by planning ahead with the right insurance policy, you can reduce stress, protect your finances, and ensure you’ll be cared for on your own terms.
Don’t wait until it’s too late. Talk to a licensed insurance agent or financial planner to explore your long-term care options—and give yourself and your family peace of mind for the future.