Long-term care insurance is a critical financial topic that many Americans avoid discussing. It is a product that requires a substantial financial commitment year after year. Currently, only a limited number of insurance companies offer these policies. Because of this, plenty of people seem to be gambling that they’ll never need it – yet statistics would suggest otherwise.
Moreover, while wealthy Americans can probably afford to pay for long-term care out of their own assets, and low-income Americans are more likely to qualify for government programs to fund long-term care, many middle-income seniors without LTC insurance may find themselves in a bind. They’ll end up spending away all their resources to pay for care – or else relying on family members to shoulder 100 percent of the emotional and financial burden.
This week on the Blog, we’re bringing back an article that provides an educational analysis of the shifting long-term care market. In this article from Kiplinger, written by freelance financial writer David Rodeck, we’ll consider some of the basic elements of the landscape of long-term care insurance. Rodeck covers key facts about LTC insurance, some of which may be a surprise to you. Take a look and see how much you know about this important topic.
Understanding Long-Term Care Statistics and Retirement Risks
“When you imagine your retirement journey, you likely picture trips to the beach, leisurely days with the grandkids and lots of time for hobbies,” Rodeck begins. “A lengthy stay in a nursing home probably isn’t part of that vision. Yet nearly 70 percent of Americans turning 65 will need some long-term care and support.”
Beth Ludden, senior vice president of long-term care product development at Genworth, agrees: “Everyone thinks they’ll be in the 30 percent, but the numbers say to plan otherwise.”
Evaluating Your Financial Options for Elder Payouts
While costs for long-term care vary widely nationwide, recent data from Genworth’s CareScout Cost of Care Calculator for 2025 reports that the average daily cost for a shared room in a long-term care facility sits at $315, putting the average annual cost at $114,975.
Rodeck notes that while Medicaid will generally pay for long-term care, it only does so when people have spent (or otherwise sheltered) most of their assets. Before that happens, says Jesse Slome—executive director of the American Association for Long-Term Care Insurance—you typically have three options: “You can either pay for everything yourself, a family member can take care of you, or you can buy long-term care insurance.”
Long-term care (LTC) insurance can protect and preserve your assets, making sure all of your life savings doesn’t go to a facility or home healthcare service. However, Rodeck notes, these products are expensive and have limitations. He offers the following advice for what to look for when you shop for LTC insurance. Let’s take a look.
How Daily and Monthly Policy Payouts Work
“When you buy LTC insurance, you decide how much coverage you want,” Rodeck explains. “It’s usually a maximum daily or monthly benefit, such as up to $6,000 per month for a nursing home or a home healthcare worker.”
Policies vary, he says: some will only reimburse you for what you spend on care, while others will send you the value of the benefit in cash once you start needing care, regardless of the actual cost.
“You also pick a waiting period, during which you need to cover costs before the coverage begins,” he writes. “A ninety-day period is the most common. For an added charge, your coverage amount can increase over time, so that your coverage keeps up with rising costs.”
Navigating Lifetime Caps and Average Benefit Durations
It used to be common for LTC insurers to offer unlimited benefits, but that has changed, Rodeck says. These days, coverage is typically limited to a period of three to five years. “You also pick the maximum possible payout from the policy,” he adds. “For example, a policy might pay out $165,000 total for care. If you spend past the policy limits, you’ll be back on your own.”
The need for coverage varies by gender. According to recent data, men need about 2.2 years of long-term care on average, while women need 3.7 years. About 20 percent of 65-year-olds need care for five years or longer.
Integrating LTC Insurance Coverage with Government Medicaid Payouts
Genworth’s Beth Ludden suggests that LTC insurance and government benefits can work well in tandem. If you have LTC insurance, you can use the policy to pay for a better facility that doesn’t accept Medicaid. Then, if your policy runs out and you do end up relying on Medicaid, some state governments will consider whether you bought insurance beforehand. This can allow you to retain more of your assets and still be Medicaid-eligible.
“For example,” Rodeck explains, “say you buy $250,000 of LTC insurance coverage and spend down the entire policy, forcing you to pay for care with your personal savings. Depending on the state, the government might let you qualify for Medicaid benefits before you spend the last $250,000 of your other assets.”
(Note that Washington State, home to AgingOptions and Life Point Law, is one of the states that allows LTC policy holders to protect more of their assets than would otherwise be allowed. This type of policy in Washington is called a “qualified LTC partnership policy.”)
Premium Cost Discrepancies by Age and Gender
Rodeck reiterates here that long-term care insurance is not a cheap product, and the cost depends heavily on age and gender. Because women typically live longer, they are more likely to need extended long-term care.
He explains, “A 55-year-old male in standard health would pay $2,075 per year for a $165,000 LTC policy with a 3 percent inflation rider, growing to about $400,500 by age 85. A 55-year-old female would pay $3,700 per year for the same policy, according to the American Association for Long Term Care Insurance. A 65-year-old male would pay $3,280 per year for the same coverage, while a 65-year-old female would pay $5,290 per year.”
He adds, “If you’re married or in a committed relationship, you can qualify for a discount on a joint policy that covers both of you.”
Also of note: LTC insurance policies use level premiums. That means, after you sign up, the insurer cannot raise rates on you based on your age and health. Therefore, buying younger can lock in a better deal.
But that doesn’t mean premiums will remain the same over the life of the policy. “Insurers can increase rates for all policyholders but only if they can prove to the government that it’s needed to support future payouts, not for extra profits,” Rodeck writes. These premium hikes have added to the image of long-term care insurance as an unpredictable product.
Analyzing Rate Stability in Modern vs. Legacy Policies
LTC has evolved over time. When it first came out, Rodeck explains, companies didn’t understand the market. Many offered lifetime coverage at premiums that were unrealistically low, having misjudged the effects of rising longevity and higher care costs. The resulting repricing triggered massive and controversial rate hikes for existing policyholders.
“The new policies sold today have factored in the things that caused issues with older policies. While no one can guarantee you won’t face a substantial rate increase due to a market adjustment, it’s very unlikely,” says Slome. (We know of one couple insured by Genworth whose premiums have not changed over the 14 years they have had the policy in force.)
Co-Funding Strategies: Mixing Insurance with Personal Retirement Savings
Industry executive Slome goes on to suggest that LTC insurance doesn’t have to be an all-or-nothing proposition. If you’re concerned about cost, you can get a policy for a lower amount and plan to cover the remaining costs with your savings.
“For example,” Rodeck writes, “if you think long-term care will cost you about $6,000 a month, you could get a policy for $3,000 and pay the remaining $3,000 out of your assets.”
Rodeck goes on to add that there are short-term care policies available which pay out benefits for one year and cost much less than long-term care insurance. “These policies charge both genders the same prices, making them a better deal for women. Medicare provides short-term care in a facility for a stay of up to 100 days, but not beyond that,” he writes.
However, many financial experts discount the value of short-term policies. As a related article in Kiplinger has reported, “Short-term care policies aren’t easy to find. A number of states, including California, Florida, Massachusetts and New York, ban the policies from their insurance markets in part because the benefits are considered too skimpy.”
Passing the Underwriting Process for Senior Healthcare Benefits
It’s important to note that LTC insurance companies do not accept every applicant, and you must meet health underwriting standards, so it’s best to apply while still reasonably healthy.
“You can’t wait until you’re in a facility and need help paying bills to apply. By then, it’s way too late,” Slome says, and adds that people aged 55 to 69 in overall good health are the best fit for LTC insurance. For most companies, 80 is the maximum age to apply – for others it’s 75.
“Once you qualify for LTC insurance, the coverage is usually guaranteed renewable for your entire life as long as you keep paying the premiums,” Rodeck writes. “If you let the policy lapse and reapply, you would need to pass health underwriting again.”
Comparing Market Rates Across Multiple LTC Insurers
Rodeck cautions that each insurance company has its own rates and health underwriting standards, so it’s wise to get a few quotes from a few different companies before signing up.
(Firms currently offering LTC policies as of the time of this article included Mutual of Omaha, Thrivent, National Guardian Life, New York Life, Northwestern Mutual Life, Bankers Life, Genworth Financial, and MassMutual.)
If this all seems like too much to handle on your own, you can call in professional help. Mangaliman suggests using an insurance broker who represents multiple companies to help speed things along. Compare each company’s A.M. Best rating—noting their financial stability to pay future claims—as well as their J.D. Power score for customer satisfaction.
“It’s not like one company will sell you a Mercedes while another is a Honda. With LTC insurance, they’re all Hondas,” says Slome.
Why Long-Term Care Planning Increases Healthcare Flexibility
Rodeck concludes his article by pointing out that LTC insurance gives you something irreplaceable: flexibility in your care choices. Whether you want to spend the money on home healthcare or a facility, long-term care insurance can cover whichever you prefer.
According to Slome, people with insurance are more willing to pay for better care and to get help sooner; those without tend to hold off, and this can be dangerous.
“If an earthquake destroys my house, I won’t cheap out on the repairs because I have homeowner’s insurance,” he says. “People do the same when they have long-term care insurance.”
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