Most people hope to stay healthy and independent as they grow older. We want to live in our own homes, spend time with family, and make our own choices. But sometimes an illness, injury, or change in memory makes it hard to manage daily life without help.
You might need someone to help you get dressed, take a bath, prepare meals, or move safely around your home. You might need care for a few months or several years.
This type of help is called long-term care.
Many people assume their health insurance or Medicare will pay for these services. In most cases, that is not true. Medicare covers certain medical and skilled nursing services, but it generally does not pay for ongoing personal care.
Long-Term Care Insurance, also called LTCI, is one way to prepare for these costs.
This guide is based on A Shopper's Guide to Long-Term Care Insurance, published by the National Association of Insurance Commissioners (NAIC). The NAIC helps state insurance departments protect consumers and understand insurance products. Its guide explains what to look for before buying coverage and why you should take your time making this decision.
1. What Is Long-Term Care?
Long-term care is help you receive when you cannot safely handle certain everyday activities by yourself.
Unlike medical care, which often focuses on treating an illness or injury, long-term care helps you live as safely and comfortably as possible.
You might need this help because of a stroke, a serious fall, a long-lasting illness, or memory loss caused by Alzheimer's disease or another form of dementia.
Long-term care can take place in several settings:
- At home: A caregiver helps you with daily tasks while you remain in your own home.
- Assisted living: You live in a community that provides housing, meals, and personal assistance.
- A nursing home: You receive more extensive care and supervision.
- Adult day care: You attend a program that provides daytime supervision, care, and activities.
- Respite care: A temporary caregiver gives a family member who normally cares for you time to rest.
Not everyone who needs long-term care will move into a nursing home. Many people receive help at home or in their communities.
2. Why Is Long-Term Care Insurance Important?
Long-term care can be expensive, especially when help is needed every day.
A family might be able to pay for a few hours of home care each week. But the cost of daily care, assisted living, or a nursing home can place a much greater strain on savings.
The NAIC's Shopper's Guide gives examples of care costs from 2018:
| Type of care | Historical national average |
|---|---|
| Nursing home, shared room | $89,297 per year |
| Assisted living, one-bedroom unit | $48,000 per year |
| Home health aide | $22 per hour |
These figures are historical examples from the NAIC guide, not current 2026 or 2027 prices. Actual costs depend on where you live, the services you need, and how often you receive care.
The guide also explains that care may last only a short time or continue for many years. No one can predict exactly who will need care or how long they will need it.
Long-Term Care Insurance helps address this risk. Rather than relying only on savings or family support, you may be able to use insurance benefits to pay for part of your care.
3. Doesn't Medicare Pay for Long-Term Care?
Medicare and Long-Term Care Insurance serve different purposes.
Medicare generally pays for covered medical services, such as doctor visits, hospital treatment, and certain skilled nursing services. Under specific conditions, it may also cover limited skilled nursing facility or home healthcare services.
However, Medicare generally does not pay for ongoing help with bathing, dressing, eating, or other daily activities when that personal care is the main service you need.
Medicare Supplement Insurance, also called Medigap, helps pay certain costs left by Original Medicare. It generally does not pay for long-term custodial care either.
Medicaid may help eligible people pay for nursing home care and certain home-based services. But eligibility depends on income, assets, care needs, and state rules.
This leaves an important gap for people who want to protect their savings or have more choices about where they receive care.
Long-Term Care Insurance is one possible way to help fill that gap.
Related reading: Does Medicare Pay for Long-Term Nursing Home Care?
4. What Does Long-Term Care Insurance Cover?
LTCI is a private insurance policy that may pay or repay you for qualifying long-term care expenses.
Depending on the policy, coverage may include nursing home care, assisted living, home care, adult day care, hospice care, and temporary care that gives a family caregiver a break.
Some policies also cover help with household tasks, such as preparing meals or running errands.
However, not all policies cover the same services. Some require care to come from licensed agencies or approved facilities. Others offer more flexibility.
For example, one policy may cover a professional home health aide but not a family member who provides care. Another policy may cover an assisted living community only if it meets specific licensing rules.
Before buying a policy, find out exactly where you can receive care and who is allowed to provide it.
The NAIC warns that an insurance company may refuse to pay if the care facility does not meet the policy's requirements.
5. What Are the Different Types of Long-Term Care Insurance?
There are several ways to obtain long-term care benefits. Two major choices are traditional LTCI and policies that combine life insurance or annuities with long-term care benefits.
Traditional Long-Term Care Insurance
A traditional LTCI policy is designed mainly to help pay for qualifying long-term care services.
You pay premiums to keep the policy active. If you later qualify for benefits, the insurance company pays according to the policy's terms.
Traditional policies may let you choose how much coverage you want, how long benefits can last, and how much of the cost you are willing to pay yourself.
One important risk is that premiums may increase over time. Also, if you never need long-term care, a traditional policy generally does not pay benefits simply because you paid premiums for many years.
Some policies offer added features that preserve limited value if coverage ends, but these can increase the cost.
Hybrid Life Insurance and Long-Term Care Policies
A hybrid policy combines life insurance with benefits that can be used for qualifying long-term care expenses.
For example, imagine a life insurance policy with a $150,000 death benefit. If the policy allows you to use $60,000 of that benefit for long-term care, the amount left for your beneficiaries may be reduced.
Some hybrid policies also provide extra long-term care benefits after the original life insurance benefit has been used.
These policies may appeal to people who want life insurance protection as well as a way to pay for care.
However, the cost, benefit limits, and effect on the death benefit must be reviewed carefully.
Annuities With Long-Term Care Benefits
Some annuity contracts also provide long-term care benefits.
An annuity is an insurance contract that can be used for savings or retirement income. Certain contracts provide an increased benefit when the money is used for qualifying long-term care expenses.
The rules depend on the contract. Withdrawals, surrender charges, taxes, and available benefits should be reviewed before choosing this approach.
Other Ways to Obtain Coverage
The NAIC also describes policies offered through employers, associations, and certain government employee programs.
Some states offer special Long-Term Care Partnership policies that may help eligible policyholders protect additional assets when applying for Medicaid after using insurance benefits.
Availability and requirements vary by state.
Traditional LTCI vs. Hybrid LTCI: Quick Comparison
| Feature | Traditional LTCI | Hybrid life insurance with LTC benefits |
|---|---|---|
| Main purpose | Pay for qualifying long-term care | Combine life insurance with long-term care benefits |
| Premiums | Usually ongoing; may increase | Depends on the contract and payment design |
| If you need care | Pays covered benefits within policy limits | Provides covered care benefits, often using some or all of the life insurance benefit |
| If you never need care | Usually no payment unless the policy includes a special feature | May provide a death benefit to beneficiaries |
| Main concern | Keeping premiums affordable over time | Higher cost or reduced life insurance benefits when care benefits are used |
Neither option is right for everyone. The better choice depends on your needs, savings, health, and financial goals.
6. When Will Long-Term Care Insurance Start Paying?
Buying a policy does not mean it will pay as soon as you need help. You must first meet the policy's rules for receiving benefits.
Insurance companies call these rules benefit triggers.
Many tax-qualified LTCI policies use two main ways to decide when you qualify.
You Need Help With Daily Activities
A common rule is that you are expected to need substantial help with at least two of six activities of daily living for at least 90 days.
These six activities are:
- Bathing
- Dressing
- Eating
- Using the toilet
- Controlling your bladder or bowels
- Moving from a bed to a chair or another position
For example, a person who can no longer bathe or dress safely without another person's help may meet this requirement.
You Have a Serious Memory or Thinking Problem
A person may also qualify if they have a severe cognitive impairment, such as Alzheimer's disease or another form of dementia, and need substantial supervision to remain safe.
This matters because someone with dementia may still be able to walk, eat, and dress independently but may not be safe living alone.
The insurance company will review the policy's requirements and any needed medical records or care plans before approving benefits.
7. What Is a Waiting Period?
Most LTCI policies have a waiting period, also called an elimination period.
This is the amount of time you must wait, or receive qualifying care, before insurance payments begin.
Common waiting periods include 30, 60, and 90 days.
For example, suppose your policy has a 90-day waiting period. You begin receiving care that costs $200 per day. If you must pay for 90 full days of care before benefits start, your cost during that period would be $18,000.
Some policies count calendar days, while others count only the days you receive qualifying paid services. This difference can affect how long you must wait.
A longer waiting period usually lowers your premium, but it means you may need more savings to pay for care before your insurance starts.
8. How Much Will a Policy Pay?
Long-Term Care Insurance does not always pay the full cost of care.
When comparing policies, pay attention to three important numbers.
Daily or monthly benefit: This is the maximum amount the policy may pay for care during a day or month. For example, a policy with a $200 daily limit may pay up to $200 for qualifying care each day.
Total benefit amount: This is the maximum amount of coverage available over the life of the policy. Some policies describe this as a total dollar amount. Others use a benefit period, such as three or five years.
Waiting period: This determines when benefits may begin after you qualify.
Policies may also pay claims in different ways. Some reimburse actual care expenses up to a limit. Others pay a fixed amount when you meet the policy's conditions.
You should know how your policy pays before you buy it.
9. What Is Inflation Protection?
The cost of care is likely to change over time.
A policy that provides enough coverage today may not provide enough coverage 20 years from now.
Inflation protection is an optional feature that increases your available benefits over time. The NAIC describes both automatic benefit increases and options that let you purchase more coverage at certain times.
For example, a $200 daily benefit that grows by 3% each year would reach about $361 per day after 20 years.
Without an increase, that same benefit would remain $200.
Inflation protection usually makes a policy more expensive. However, it can be especially important for people who purchase coverage many years before they expect to use it.
10. How Much Does Long-Term Care Insurance Cost?
There is no single price for LTCI.
The cost depends on your age, health, the type of policy, and the benefits you choose. Higher benefit amounts, longer coverage periods, shorter waiting periods, and inflation protection can all increase the premium.
Buying coverage at a younger age may result in a lower starting premium. However, you may also pay premiums for more years.
Traditional LTCI policies are generally guaranteed renewable. This means the insurance company cannot cancel your coverage simply because your health gets worse, as long as you meet the policy's payment requirements.
Guaranteed renewable does not mean the premium is guaranteed to stay the same. Premiums may increase for an approved group of similar policies under applicable state rules.
The NAIC advises shoppers to consider whether they could afford future premium increases before purchasing coverage.
11. Can You Get LTCI If You Already Have Health Problems?
Insurance companies generally review your health before deciding whether to approve an LTCI application. This process is called medical underwriting.
They may ask about your medical history, medications, recent treatments, and ability to manage daily activities. Some companies may also review medical records or contact your doctor.
Certain serious health conditions may make it difficult to qualify for coverage.
For this reason, it is often easier to explore LTCI before you develop a condition that requires ongoing care.
You must answer application questions fully and correctly. Leaving out important medical information can create problems with future claims and may lead to cancellation of a policy under applicable rules.
12. What Happens If You Can No Longer Afford Your Policy?
This is an important question to ask before buying LTCI.
Some policies offer a feature called a nonforfeiture benefit. It may allow you to keep a smaller amount of coverage even if you stop paying premiums after meeting certain requirements.
Other policies may let you lower your benefit amount or shorten your coverage period to reduce your premium.
You may also be able to name a trusted person who will receive notice if your coverage is about to end because of missed payments. This can be helpful if you develop memory problems later in life.
Not all policies offer the same protections, and some features cost extra. Review these options before buying coverage.
13. Is Long-Term Care Insurance Right for You?
LTCI can be useful, but the NAIC makes an important point: Not everyone needs or should buy long-term care insurance.
A policy may be worth considering if you have savings or other assets you want to protect, can afford premiums over time, and want more choices about where you receive care.
It may be less suitable if paying the premium would make it difficult to afford housing, food, medicine, or other essential expenses.
Some people have enough resources to pay for care themselves. Others may qualify for Medicaid. Still others may choose to combine insurance with personal savings.
The decision should reflect your finances, family support, health, and goals for retirement.
14. Questions to Ask Before Buying LTCI
The NAIC encourages consumers to compare policies carefully and avoid making rushed decisions.
Use these questions when speaking with an insurance agent:
- What types of care and facilities does the policy cover?
- Will it pay for care in my home?
- Can family members provide paid care?
- What must happen before benefits begin?
- How long is the waiting period?
- How much will the policy pay each day or month?
- What is the total amount of coverage?
- Does the policy include inflation protection?
- Can premiums increase in the future?
- What happens if I stop paying premiums?
- Is the policy tax-qualified or eligible for a state Long-Term Care Partnership program?
- How financially stable is the insurance company?
Ask for an Outline of Coverage, which explains the policy's main benefits and limits. Compare similar benefits from more than one insurer.
The NAIC also recommends checking the company's financial strength, reviewing the completed application, and reading the policy during the allowed free-look period.
Do not let anyone pressure you into purchasing a policy before you understand it.
15. Where Can You Get Help Understanding LTCI?
Choosing Long-Term Care Insurance can be confusing because policies may have different benefits, costs, and rules.
A licensed insurance advisor can help explain the available options and how they may fit into your retirement plans.
At Beacon Senior Health Advisors, we believe people should understand what they are buying before making a decision. That includes understanding the limits of Medicare, the cost of long-term care, and the types of insurance that may help pay for it.
If you would like to explore long-term care coverage, you can visit Beacon Senior Health Advisors to learn more or request a consultation.
The Bottom Line: Plan for Care Before You Need It
Long-Term Care Insurance can help pay for services that Medicare generally does not cover. Depending on the policy, those services may include help at home, assisted living, or nursing home care.
But LTCI is not one-size-fits-all insurance. Policies differ in price, coverage, waiting periods, and the rules for receiving benefits.
The best place to begin is by thinking about your future needs, the care you would prefer, and how much you could afford to pay.
You do not need to predict exactly what will happen as you age. You simply need to understand your choices so you can make a thoughtful decision.
Beacon Senior Health Advisors Guiding you. Securing your future.
Sources and References
Primary source: National Association of Insurance Commissioners (NAIC), A Shopper's Guide to Long-Term Care Insurance, revised 2019, ©2022. The uploaded guide covers long-term care services, insurance policy types, benefit triggers, waiting periods, inflation protection, premiums, consumer protections, and shopping tips.
The guide's cost and premium examples are historical. They should not be treated as current insurance quotes or current care prices. Some program descriptions and tax rules may also have changed since publication.
Additional resources:
This article is for educational purposes only. It is not a quote, offer of insurance, or personal financial, tax, or legal advice. Coverage depends on the insurance contract, the issuing company, and applicable state laws. Consult a qualified professional when reviewing insurance, tax, or Medicaid planning decisions.
Beacon Senior Health Advisors is not affiliated with or endorsed by the U.S. government or the federal Medicare program.