The cost of long-term care insurance

4 mins readLast updated October 4, 2023by Rachel Carey

How much does long-term care insurance actually cost? Read on to find out:

The chances are that most of us will need long-term care at some point in our lives – whether that’s in a nursing home, in an assisted-living facility, at a daycare center, or at home.

According to the Office of the Assistant Secretary for Planning and Evaluation, the average 65-year-old has a 70 percent chance of needing long-term care eventually.

Men typically need care for an average of 2.2 years, while women need it for 3.7 years on average. Around 20 percent of Americans will need long-term care for more than five years.

Long-term care insurance (LTCI) is therefore an important investment, reassuring you that you’ll receive adequate support as you grow older.

It also gives you more choice about the type of care you receive and means you’re less likely to dip into your savings or retirement account or depend on family members for help.

What is the average cost of long-term care insurance?

The cost of long-term care insurance can vary widely, depending on multiple factors, including age, gender, current health status, and your family’s medical history. You might pay as little as $1,000 per year or as much as $10,000.

Premiums tend to cost more for women because they typically live longer (by an average of five years), but couples can save money by taking out joint cover.

The following table gives a rough idea of average costs by gender for 55-year-olds taking out long-term care insurance:

Single manSingle femaleCouple
$1,700 $2,675 $3,050

These statistics are for a three-year policy that covers up to $164,000 in care costs.

You can also pay more in premiums to mitigate against inflation. This ensures that your policy covers the cost of care as it increases, typically by around three percent per year.

What does long-term care insurance cover?

Most long-term care insurance policies are comprehensive, meaning they cover all types of care, including in a nursing home, a day facility, and at home.

Long-term care insurance can also pay for short-term care in a hospice for individuals who are terminally ill and need palliative support. Note that hospice care is usually covered by Medicare as well.

Long-term care insurance also covers respite care, which allows time off for family members or friends who are acting as caregivers. Policies typically provide compensation for between 14 and 21 days a year.

If a family member is caring for you at home, your policy may not pay them for their services.

Long-term care insurance does not cover care for existing health conditions during the exclusion period, which may last for a few months after your purchase. The coverage also doesn’t cover the cost of medical care, which falls under your health insurance plan.

Who should buy long-term care insurance?

The short answer is everyone. Long-term care is expensive – a month’s care in a nursing home is now estimated to cost an average of $7,698 and the average American will pay $172,000 for long-term care. This can quickly start to have an impact on your savings or retirement income.

Unless you have a high enough net worth to self-insure, long-term care insurance is usually the best way to pay for care. Medicare won’t cover it, and Medicaid is generally only available if you have no other assets.

But even though most Americans will need some kind of long-term care, only around 7.5 million Americans currently have long-term care insurance.

When should I buy long-term care insurance?

None of us wants to think about getting older, but it’s better to take out long-term care insurance sooner rather than later.

Age is one of the primary factors that impact the cost of long-term care insurance, and by purchasing a policy at a younger age, you may be able to lock in a lower premium for the duration of the policy.

Long-term care insurance policies can also be tax deductible where they count as medical expenses. The limit for the amount you can deduct in premiums increases with your age.

The following table shows federal tax-deductible limits for long-term care insurance in 2021:

Age at the end of the yearMaximum deductible premium
40 or under $450
41 to 50 $850
51 to 60 $1,690
61 to 70 $4,520
71 and over $5,640

Be aware that only tax-qualified long-term care insurance policies count as medical expenses. You can check this with your insurance company if you’re not sure.

What else should I think about?

It’s worth being aware that a standard long-term care insurance policy typically includes a waiting period of 30 to 90 days before the insurance starts being paid.

That means it’s important to have three months’ worth of savings available to cover this period when you first start needing long-term care.

Next steps

Want to purchase long-term health insurance but worried about the medium-term impact on your finances?

Connected with qualified, SEC-regulated financial advisor can help you find comprehensive and affordable long-term health insurance to preserve your savings in the future.

They can also advise you on reducing your tax liabilities and maximizing your income to make it easier to pay for a policy that works for you.

Get matched with a financial advisor now.

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.