As life expectancy increases, so does the likelihood of needing long-term care (LTC). According to the U.S. Department of Health and Human Services, nearly 70% of adults aged 65 and older will require some form of long-term care in their lifetime. Yet, many people underestimate the financial and emotional toll of extended care, assuming Medicare or personal savings will cover the costs. Unfortunately, this misconception can lead to financial strain and reduced quality of life in later years.
Insurance can be overwhelming, especially when you’re thinking about policies that will protect you or your loved ones should something happen to you. It can be difficult to discuss the final expenses or costs your family will need to take on should you pass away. Long-term care insurance offers a practical solution by covering expenses associated with nursing homes, assisted living, in-home care, and other support services. Beyond financial protection, LTC insurance provides peace of mind for individuals and their families. This article discusses the key benefits and cost considerations surrounding LTC insurance.
Benefits of Long-Term Care Insurance
Financial Protection Against Skyrocketing Long-Term Care Costs
Long-term care insurance provides crucial financial protection against the rising costs of care, which can otherwise devastate retirement savings. In 2024, the median annual cost of a private nursing home room reached $127,750, while assisted living averaged $77,769 per year. Even in-home care, with a home health aide for 44 hours per week, costs approximately $75,000 annually. Without insurance, families often drain their retirement accounts, sell assets like homes, or rely on Medicaid only after depleting their resources. Long-term care insurance helps preserve wealth by covering a significant portion of these expenses, ensuring retirees don’t outlive their savings.
Greater Choice and Control Over Care Options
Unlike Medicaid, which limits care to approved facilities, long-term care insurance offers flexibility in choosing preferred care settings. Policyholders can opt for in-home care to age in place comfortably, assisted living communities, or specialized memory care for dementia patients. This freedom ensures individuals receive care in the environment that best suits their needs, enhancing their quality of life and maintaining independence longer.
Reducing the Burden on Family Caregivers
Nearly 53 million Americans provide unpaid care to aging relatives, often facing financial strain, emotional burnout, and lost wages from reduced work hours. Long-term care insurance alleviates this burden by covering professional care costs, allowing families to focus on emotional support rather than financial and logistical stress. This support helps maintain healthier family relationships and prevents caregiver exhaustion.
Tax Advantages of Long-Term Care Insurance
Long-term care insurance also offers valuable tax benefits. Premiums for tax-qualified policies may be deductible (subject to IRS age-based limits), and benefits received are typically tax-free. Business owners can further benefit by deducting premiums for employees, making it an attractive workplace benefit. These tax advantages make long-term care insurance a smart financial planning tool for individuals and employers alike.
A comprehensive LTC insurance plan will typically cover a variety of skilled nursing care, custodial care, intermediate care, adult daycare, and hospice care benefits. These services either take place at specialized facilities, like nursing homes, hospice facilities, assisted living facilities, or at the patient’s home. LTC insurance does not, however, cover any pre-existing conditions that were diagnosed or observed before the policy was taken out. It also does not cover mental and emotional disorders, except for certain forms of dementia and like diseases. Alcoholism, drug addiction, and injuries caused by self-harm are not covered by LTC insurance.
What does long-term care cost if I don’t get insurance?
Long-term care (LTC) insurance requires ongoing premiums, but the alternative—self-funding—can be financially overwhelming. The table below illustrates the differences in costs, highlighting savings for policyholders, as found in the 2025 Milliman LTC Rate Increase Survey.
Cost Scenarios: Insurance vs. Self-Funding
| Scenario | With LTC Insurance | Without LTC Insurance |
|---|---|---|
| 3 Years of Nursing Home Care | $150,000 (policy covers 80%) | $383,250 (2025 median cost*) |
| 5 Years of In-Home Care | $100,000 (policy covers 70%) | $388,845 (fully out-of-pocket) |
Securing long-term care insurance at an earlier age often leads to more manageable premiums, while waiting until later in life can result in significantly higher costs. Health status influences affordability, as those in good health may qualify for lower rates. Additionally, coverage choices impact overall expenses—stronger protections against future cost increases or higher daily benefits provide greater security but come at a higher price.
Ultimately, having an LTC plan in place helps safeguard financial stability by preventing the burden of unexpected care costs. Self-funding can lead to substantial financial strain and difficult trade-offs. Planning ahead ensures individuals have access to quality care while maintaining control over their financial future.
Final Thoughts on Long-Term Care Insurance
The rising costs of long-term care pose a significant threat to retirement security and family well-being. By investing in LTC insurance, individuals gain financial protection against exorbitant care expenses, greater autonomy in choosing care settings, and relief for loved ones who might otherwise shoulder the burden. While premiums require careful consideration, the alternative—depleting savings or relying on Medicaid—often proves far more costly in the long run. Planning ahead with LTC insurance isn’t just about covering future needs; it’s about preserving independence, safeguarding assets, and ensuring peace of mind for years to come. Click here to read our article on how to manage your savings in retirement.
A well-chosen LTC policy isn’t just about cost savings—it’s about preserving independence, ensuring high-quality care, and maintaining financial stability. Making decisions early can make all the difference. Call us today to explore your options.
Got Medicare Questions?
We hope this information on the benefits and basics of LTC insurance is helpful to you.
If you have questions about your Medicare coverage, call Empower Brokerage today. Let us help with your Medicare questions so you can get back to the activities you enjoy the most. (888) 446-9157 or click here to get an INSTANT QUOTE
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This article was updated on June 10, 2025.