As your senior loved one grows older, you may be wondering how they’ll be able to afford costly long-term care options, such as nursing homes or assisted living communities. It’s important to consider a variety of payment options prior to your loved one requiring care, as some of them may not be available once your loved one needs long-term care services. One such option to pay for care may be long-term care insurance, also commonly referred to as nursing home insurance or assisted living insurance.

Key Takeaways

Long-term care insurance has multiple names. It can also be called nursing home insurance or assisted living insurance.
Premium costs vary widely based on specific factors. Age, health status, and sex play a role in costs.
Policies may cover a large variety of senior care options, not just nursing homes. Some policies will cover in-home care, assisted living communities, and adult day services.
It's best to apply for a policy prior to developing major health conditions. Some policies may automatically decline coverage for people with serious conditions, such as dementia or multiple sclerosis.

How much does long-term care insurance cost?

The cost of long-term care insurance varies significantly. This is because policies are based upon a variety of factors, such as age, health, and location. In addition, each long-term insurance company is able to set their own rates and create their own unique policies.

The following examples reflect annual pricing as of 2022 for policyholders with a 0% growth plan, according to the American Association for Long-Term Care Insurance (AALTCI):

$950 for a 55-year-old single male
$1,500 for a 55-year-old single female
$2,080 for a 55-year-old couple ^[01]

Annual prices typically increase based on a policyholder’s age, as you can see in the following examples:

$1,700 for a 65-year-old single male
$2,700 for a 65-year-old single female
$3,750 for a 65-year-old couple ^[01]

How are long-term care insurance premiums determined?

Long-term care insurance premiums are determined by a number of factors including:

Age
Sex
Health status
Coverage amounts
Benefit length
State the insured lives in

Because these factors can differ from person to person, the rates for long-term care insurance vary greatly.

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How much does senior care typically cost?

As of 2021, nursing home care in the U.S. had a median yearly cost of $108,405, while an assisted living community and in-home care services each cost around $50,000 to $60,000 annually.^[02]

It’s impossible to guess how much or what type of long-term care your loved one may need as they age. However, a person who turned 65 in 2020 has an almost 70% chance of needing long-term care services or support during their lifetime.^[03] It’s also not unusual for a person’s care needs to change throughout the aging process. It may be more beneficial to think of long-term costs as a whole instead of piece by piece.

In 2019, researchers estimated that a person with dementia would spend $366,593 in the last five years of life, while a person without dementia would spend an estimated $233,721.^[04]

Long-term care insurance can potentially be used to ease the financial burden on your loved one and your family.

Finding the right policy at the right price

You can think of buying long-term care insurance in the same way as you would think of buying a pair of shoes. You’re looking for the right size, the right price, and the right coverage.

For example, you wouldn’t pick a flimsy pair of flip-flops if you are anticipating running a marathon. You would likely focus on shoes for athletics. An expensive pair of running shoes may come with more bells and whistles, while a pair of sneakers from a budget-friendly retailer may offer just the basics. Both pairs cover your feet and allow you to run safely, but they do so in different forms and for different prices.

Similarly, it’s up to you and your loved one to determine the right fit when it comes to long-term care insurance, taking into consideration their budget and unique needs. The right policy for one person may not be the right policy for another person. There’s truly no one-size-fits-all policy for long-term care insurance.

To get the most accurate cost estimate for your loved one’s unique situation and coverage needs, you should speak with a representative at a long-term care insurance company.

Are there discounts on long-term care insurance?

Couples or partners may be able to find better rates through a combined policy. However, companies may vary when it comes to these discounts.

People may also be able to find more affordable rates and better policy benefits through state-run long-term care insurance partnerships, such as the Indiana Long Term Care Insurance Program.^[05]

If your loved one is still working, they could also find more affordable rates through their employer’s long-term care insurance plan (if one is offered).

Are long-term care insurance premiums tax deductible?

Yes, a portion of eligible long-term care insurance premiums may be tax deductible. The amount allowed varies by a beneficiary’s age and may change from year to year per IRS guidelines.^[06]

Your loved one should consider consulting with a tax attorney or tax accountant to determine if taking a tax deduction for long-term care insurance premiums is beneficial for their unique financial situation.

Talk with a Senior Care Advisor

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What does long-term care insurance cover?

While coverage and benefits may vary, most policies will cover a variety of senior living options. These include, but may not be limited to, the following:

Adult day services
Assisted living communities
In-home care, such as home care and home health care
Hospice care
Memory care communities
Nursing homes
Respite care ^[07]

Long-term care insurance typically doesn’t cover independent living. However, you may want to confirm that with an insurance company prior to committing to a policy.

What to consider when applying for long-term care insurance

If your parents are interested in long-term care insurance, it’s ideal for them to apply before they have major health issues, need significant support, or reach their 60s.^[08] This is because the percentage of applicants declined coverage increases significantly with age.

For example, adults between the ages of 50 to 59 have an average declined coverage rate of 13.9%, while people 80 and older have an average declined coverage rate of 69.8%.^[08]

Disqualifying lifestyle factors

Certain lifestyle factors may cause your parent to be declined coverage. For example, if your parent uses an assistive mobility device, such as a wheelchair or a walker, they may be automatically declined for a long-term care insurance policy.^[08]

It’s important to note that if your parent already needs assistance with activities of daily living, uses home health care, or goes to adult day care, they may be declined coverage.^[08]

Disqualifying health factors

In addition to lifestyle factors causing coverage to be declined, health factors also play a role in whether your loved one can qualify for a long-term care insurance policy.

The following health conditions may cause an applicant to be declined, according to the AALTCI:

AIDS or HIV infection
Alzheimer’s disease or another dementia diagnosis
Cystic fibrosis
Autoimmune diseases, such as lupus
Multiple sclerosis
Muscular dystrophy
Paralysis or post-polio syndrome
Sickle cell anemia ^[08]

Insurance companies may vary on which health conditions can cause coverage to be declined. If you want to learn more, you’ll need to reach out to insurance providers to find out if your loved one’s health situation could result in a decline in coverage.

Making an informed decision

Seniors may want to consult with a financial advisor, an elder law attorney, or another financial or legal expert before applying for a long-term care policy. These experts will be able to assess your loved one’s individual situation on a one-on-one basis.

How to find long-term care for your parents

Whether your loved one decides to apply for a long-term care insurance policy or not, the compassionate Senior Care Advisors can help you and your loved one find senior care options for today or for the future. Our helpful experts can provide meaningful advice on different care types and will even set up tours of senior living communities — all at no cost to you.

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References

American Association for Long-Term Care Insurance. (2022). Long-term care insurance facts – Data – Statistics – 2022 Reports.
Genworth. (2022, June 2). Cost of Care Survey.
Administration for Community Living. (2020, February 18). How much care will you need?
Alzheimer’s Association. (2020). Alzheimer’s disease facts and figures: Special report: On the front lines: Primary care physicians and Alzheimer’s care in America.
Administration for Community Living. (2020, February 18). Where to look for long-term care insurance.
Internal Revenue Service. 26 CFR 601.602: Tax forms and instructions.
Administration for Community Living. (2020, February 18). What long-term care insurance covers.
American Association for Long-Term Care Insurance. Long-term care insurance health qualifications. Are you even insurable?

Meet the Author

Melissa Lee

Melissa Lee is a copywriter at OurParents, where she primarily creates content for veterans and caregivers. She pairs over a decade of writing experience with expertise gained from her time as a military programs volunteer and military spouse. She studied journalism at the University of Kansas.

Edited byDanny Szlauderbach

Reviewed byDenise Lettau

The information contained in this article 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 (of which OurParents is a trademark) 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 recommend or endorse the contents of the third-party sites.

Long-Term Care Insurance: Understanding the Costs and Benefits