Long-Term Care Insurance: An In-Depth Guide and Options for 2023

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:

• Extended nursing home stays
• Assisted living communities
• Alzheimer’s or memory care facilities
• Adult day care centers
• Home health provided by a professional
• Home care (some policies)
• Respite care
• Hospice

What to know before you choose a policy

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).^[01] 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:

• $950 for a single male
• $1,500 for a single female
• $2,080 for a married couple ^[02]

The cost for a long-term care insurance plan depends on the following factors:

• Your age and health. The older you are and the more health issues you have, the more expensive your premiums will be.
• Your gender. Women live longer and therefore are more likely to make a long-term care claim, so their premiums are usually higher.
• Your marital status. Married couples who buy coverage together pay less.
• Your benefit amount. This is the amount of money the insurance provider would pay for your long-term care (for example, $150,000 per year). If the plan you choose covers a high cost of care, your premium will be higher than the premium for a plan covering a lower cost of care.
• Your benefit period. The period of coverage — or how long the insurer will pay out — varies from one plan to the next. The more years your plan covers, the more expensive your premium.
• Your elimination period. Like a deductible amount, this is the amount of time you must pay for your care out of your own pocket before your insurance begins paying. For long-term care insurance, it’s usually between 30 and 180 days.
• Inflation protection option. This is an optional feature that protects your benefit amount from inflation, so if your care gets more expensive each year, your benefit amount increases as well.

Let our care assessment guide you

There are two important things to consider when deciding whether to buy long-term care insurance:

• Your risk of needing long-term care
• What long-term care would cost without insurance

The risk of needing 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.

The cost of long-term care without insurance

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:

• Adult day health care: $20,280
• Home health aide services: $61,776
• Nursing home semi-private room: $94,900
• Nursing home private room: $108,405

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:

• Assisted living: $57,684
• Memory care: $71,940
• In-home care: $62,400 (based on 40 hours of care per week)

How to decide if long-term care is right for you

Many people don’t buy long-term care insurance because premiums have increased noticeably.^[04] 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:

• Increasing availability of care options. If Medicaid helps pay for care, a nursing home is one of your few choices. With long-term care insurance, you can decide where you want to receive care, whether it’s at your home, in a nursing home, or in an assisted living facility.
• Expanding the range of services you receive. This could mean care from visiting nurses or home health aides, long-term care at home, home-delivered meals and some chore services, time in adult day care centers, and respite services for caregivers.
• Relieving family and friends of caregiving tasks. With insurance to help pay for long-term care, you won’t need to rely on your loved ones for daily assistance, saving them from caregiver burnout and other related health concerns.

The best time to buy long-term care insurance is in your mid-50s, according to the American Association for Long-Term Care Insurance.^[04] 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.

Talk with a Senior Living Advisor

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.

1. Mutual of Omaha

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.

2. Brighthouse Financial

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.

3. Lincoln Financial Group

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.

4. New York Life

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.

5. Nationwide

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.

6. Genworth Financial

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:

1. Consult with a professional. Insurance is complicated, but if you spend time talking to your agent and insurance company representatives, it will start to make sense. Identify specific things you’re unsure about — whether it’s covered services or future premium rate increases — then ask and re-ask until you feel comfortable moving forward with that provider.
2. Ask about partnership programs. Many states offer a “partnership” program where privately owned senior care insurance companies collaborate with the state Medicaid program. The idea behind this collaboration is to provide long-term care assistance that’s protected against inflation and also protects more of your assets when you’ve used up long-term care benefits and need assistance through Medicaid. Certain criteria must be met for eligibility. Your state department of insurance can provide additional information about your state’s program and insurance companies that sell partnership policies.
3. Get quotes from at least three different companies. You can often buy a nearly identical plan for much cheaper depending on the company. Compare policies with several different insurance providers. Check to see what’s covered under each policy, what the benefits and limits are, what types of facilities you’d have to be in to get coverage, and what the premiums would be for different types of coverage.
4. Take the time you need to make an informed decision. If an agent tries to rush you or isn’t giving you all the information you need, work with another agent. Make a list of the essential features you’ll need before meeting with an agent, and compare the agent’s suggestions against your list. Usually, agents are required to provide you outlines of coverage for all the plans they offer. Once you’ve narrowed a list of policies down to three to five, review them with a family member or friend you trust.
5. Think ahead. Once you’re ready to select a policy, make sure your budget can accommodate the expense of it. Make sure you receive a paper copy of your policy within 60 days, then put it in a safe place. You may also want to consider setting up automatic premium payments so that you don’t accidentally miss a payment and lose your coverage. Nearly all insurers will help you set these up. ^[06]