It’s normal to worry about whether you can afford your senior years. Your retirement savings may cover the cost of living, but the cost of long-term care is something else entirely. There’s a good chance that somewhere down the road you’ll need medical care beyond regular doctor visits and short hospital stays, which can get very expensive very quickly. Long-term care insurance can help with the cost of senior living or chronic health issues that require ongoing medical care. Here’s a guide to the costs and benefits of long-term care insurance, along with an overview of some leading providers.
Long-term care insurance — often referred to as senior care insurance or nursing home insurance — is one way to pay for long-term care. Many people think of long-term care as strictly nursing home care, but that’s false. It can include much more, including help with activities of daily living, home care, and adult day care.
You’re generally eligible for senior care insurance benefits when you’re no longer able to perform two activities of daily living (ADLs) on your own. ADLs include bathing, continence, dressing, mobility, eating, and toileting. Another common eligibility trigger is cognitive impairment.
Coverage varies depending on the plan purchased but often includes:
It’s important to know exactly what services and types of facilities a senior care insurance policy covers. Personal care homes, for example, are often not covered, according to the National Association of Insurance Commissioners (NAIC). Always talk to your insurance provider about coverage before choosing care communities or services.
Many factors affect the cost of long-term care insurance, but the most important are age and health. Premiums range widely: A single male aged 55 could pay as little as $950 per year, whereas a couple, each aged 55, on a plan with benefits that grow at a rate of 5% annually, could pay $8,575 or more.
The average annual premiums in 2022 for 55-year-olds buying a $165,000 policy were as follows:
The cost for a long-term care insurance plan depends on the following factors:
Our free tool provides options, advice, and next steps based on your unique situation.
There are two important things to consider when deciding whether to buy long-term care insurance:
A person who turned 65 in 2022 has at least a 70% chance of needing some type of long-term care, according to A Place for Mom’s research. For residents in a long-term care facility, 20% need to stay for at least five years. Women typically need care longer (3.7 years) than men (2.2 years), and the average length of time spent in long-term care is 3.2 years.
Medicare, the federal health insurance plan for individuals 65 and over, does not cover long-term care, though it may cover short-term care in a nursing home after a hospital stay. This means the cost of long-term care falls to the recipient.
According to the most recent annual survey by Genworth, a long-term care insurance provider, the median annual costs for different long-term care services in 2021 were as follows:
Based on A Place for Mom’s 2023 Cost of Care Report, the median annual national costs for additional types of long-term care in 2023 were as follows:
Many people don’t buy long-term care insurance because premiums have increased noticeably. Additionally, fewer insurance companies now offer the coverage.
A person’s decision to buy senior care insurance depends on their financial situation, which is usually the primary factor in determining if they will elect to buy a policy. If you have savings to pay out of pocket for the care associated with a disability or chronic condition, then paying for insurance premiums may be unnecessary.
Keep in mind that the numbers listed above reflect median costs, so the costs of your care could fall well below or above those numbers. The cost of care at an assisted living community or nursing home depends on the level of care you need. For example, if you require specialized memory-care services on top of daily food and housekeeping services, the cost of your care will likely be higher than the median.
Your location also matters. If you live in a state with a large population of senior citizens and an abundance of senior living communities with a high turnover rate, and you only need basic care, you might find much lower prices for a room at a nursing home or other facility that can support long-term care needs.
The main benefit of buying senior care insurance is cost savings. Your rates for premiums will be far less than what you’d pay for long-term care without insurance. If you buy an insurance policy early enough and end up needing to file a claim later in life, you can preserve your savings, assets, and financial independence.
Other benefits of long-term care insurance include:
The best time to buy long-term care insurance is in your mid-50s, according to the American Association for Long-Term Care Insurance. Insurance companies know that most people begin to develop more serious health issues after age 55, so premiums are higher for older applicants. But if you’re around 55 and in relatively good health, you’re still young enough that insurance providers are likely to offer the best rates.
|50-70||Within this range, you’ll have many companies and policies to choose from. Premiums will be more affordable.|
|80-84||Only a few companies market to this age range. Some companies sell only one year of coverage to people 80 and older.|
|85 and older||Few companies sell to people older than 84. Very elderly people should carefully consider the benefits of purchasing long-term care insurance compared to its cost.|
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When you’re shopping for long-term care insurance, it’s important to consider the reputation of the provider, the cost of premiums, and, perhaps most importantly, how the plan or provider will meet your needs when the time comes to find care. Here’s a list of long-term care insurance providers in 2023, plus a description of how they address common concerns of people considering a purchase.
A leader in the long-term care insurance space, Mutual of Omaha is a solid choice for people who aren’t sure if they’ll need long-term care in the future. The company offers numerous discounts, one of the widest ranges of policy riders, and an easy-to-use rate calculator on their website.
Brighthouse, a spinoff of MetLife, is relatively new to the insurance marketplace, but it has quickly become a standout for offerings such as annuities and life insurance. The company’s plans are hybrid, meaning they blend a life insurance policy with long-term care coverage. A Place for Mom knows that the need for care can approach unexpectedly and rapidly, and Brighthouse has earned a reputation for helping clients speed up the payment process: Most applicants can expect a decision within a day, labs and exams are waived for some clients, and many reviewers have noted that they received payouts quickly.
Lincoln is notable for having no elimination period, which can greatly reduce the time to payout (the elimination period can be 90 days or longer for other providers). As with many other providers now, Lincoln’s long-term care plan policies are hybrid. Lincoln’s reviews also note that the company often pays within three days of a claim.
New York Life offers long-term care plans that can be expensive, but many clients find that the company’s reliability is worth the cost. New York Life provides a money-back guarantee for unused benefits on some policies, and clients have the option to combine policies, which means one renewal date, one phone number to call, and one representative ready to take care of your needs.
Long-term care insurance premiums can be steep as you raise the coverage limit and add options. Recognizing that the use-it-or-lose-it nature of long-term care insurance can be off-putting to some customers, Nationwide offers plans with a death benefit that pays out when the insured dies. A policyholder is also guaranteed to receive 100% of their full monthly benefit at the time of a claim, and no receipts or bills are required as the full monthly amount is paid out.
Despite popular belief, senior living communities cater to couples in a variety of ways. If staying together with a spouse in senior living is a priority for you or your loved one, keep that in mind when you’re looking for long-term care insurance. Genworth is a well-established financial services company that now focuses on mortgage and long-term care insurance products. They remain a competitive insurer of couples and offer policies that allow benefit sharing if one partner needs more care than the other.
Here are few things the NAIC recommends when searching for a long-term care plan:
National Association of Insurance Commissioners. (2018). Shoppers Guide to Long-Term Care Insurance.
American Association for Long-Term Care Insurance.Long-term care insurance facts – data – statistics – 2022 reports.
Genworth. (2022, June 2). 2021 Cost of Care Survey.
Figuracion, K. E. (2022, August 29). Long-term care rate increases persist as Genworth, Mutual of Omaha hike in H1. S&P Global Market Intelligence.
American Association for Long-Term Care Insurance. What’s the best age to buy long term care insurance.
National Association of Insurance Commissioners. (2019). A Shoppers Guide to Long-Term Care Insurance.
The information contained on this page 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 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 endorse the contents of the third-party sites.
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