How Much Does Long-Term Care Cost in 2023?
The cost of long-term care insurance (LTCI) ranges from $950 to $7,225 for one person, depending on your age and current health status. Finding the sweet spot of when to buy LTCI can be difficult as you don’t want to pay premiums longer than necessary and you don’t want to wait too long as premiums increase with age.
Long-term care (LTC) refers to non-medical help and care and is not covered by Medicare or typical private insurance plans. The duration and type of care you may need are impossible to predict which is why an LTC insurance policy is important for your peace of mind.
Long-Term Care Insurance
Long-term care, also called custodial care, is not medical care, and therefore, is not covered by regular health insurance or Medicare. LTC is the non-medical help of routine activities like eating and getting dressed. Long-term care insurance must be purchased to cover custodial care. Medicaid covers long-term care for seniors and people with disabilities who meet their state’s eligibility requirements.
Long-Term Care Insurance Coverage
Type of Health Insurance | Does it Cover Long-Term Care? |
|---|---|
Private Health Insurance | No. You need to purchase a separate LTC insurance or hybrid plan. |
Medicare | No. Medicare only covers medical care, not custodial care. |
Medicaid | Yes. For seniors and people with disabilities who meet their state’s eligibility requirements. |
Long-Term Care Insurance | Yes. When to purchase LTC depends on your current health status and age. |
Hybrid Long-Term Care Insurance | Yes. This type of plan combines LTC insurance and benefits of life insurance. This is good if you have family or heirs you’d like to pass money onto after you pass. |
Long-Term Care Provided through Medicaid
Medicaid offers LTC on a needs-based basis for persons of all ages as long as they meet their state’s eligibility requirements. Medicaid will cover the cost of LTC in a nursing home and has expanded to include home and community-based services (HCBS) through Medicaid waivers.
Medicaid waiver programs are not guaranteed even if you meet eligibility requirements and instead have participant enrollment caps, with the wait for these services ranging from several months to years. To apply, call the toll-free, state-wide number for the Area Agency on Aging to be screened by a staff member who will determine eligibility and urgency of need by asking questions about your situation.
Hybrid Long-Term Care Insurance
Hybrid long-term care is the fastest-growing segment of the LTC business. Hybrid long-term insurance addresses several issues of traditional LTCI and shares some features of life insurance.
What makes hybrid LTCI an attractive option is that If you don’t use it in your lifetime, rather than feeling like the money is “going to waste”, a death benefit allows your beneficiaries to receive the unused portion of the insurance when you pass. You can also cancel your insurance, get your premiums back, use it for a variety of care settings, and the cost of the policy may be locked in from the initial purchase so you don’t have to worry about premiums increasing.
You should consider hybrid long-term care insurance if you would like the unused money from premiums to go to your beneficiaries rather than go unused like in a typical LTCI plan.
Only 16 percent of all long-term care policies purchased in 2019 were traditional LTCI while 84 percent were hybrid long-term care insurance (linked-benefit coverage).
Cost of Long-Term Care Insurance
Below we break down some cost data and statistics from the 2022 American Association for Long-Term Care Insurance Reports (AALTCI). The data is from the AALTCI annual Price Index survey of leading LTC insurer(s) selected by consumers using an initial policy benefit of $165,000.
Annual Premium of LTCI when Purchased at Age 55 | ||
|---|---|---|
Single Male | Single Female | Couple |
$950 | $1,500 | $2,080 combined |
$1,375 | $2,150 | $3,000 combined |
$1,750 | $2,815 | $3,870 combined |
$2,220 | $3,700 | $5,020 combined |
$3,685 | $6,400 | $8,575 combined |
Annual Premium of LTCI when Purchased at Age 60 | ||
|---|---|---|
Single Male | Single Female | Couple |
$1,175 | $1,900 | $2,600 combined |
$1,600 | $2,550 | $3,525 combined |
$2,000 | $3,300 | $4,525 combined |
$3,525 | $4,300 | $5,800 combined |
$3,800 | $6,600 | $8,750 combined |
Annual Premium of LTCI when Purchased at Age 65 | ||
|---|---|---|
Single Male | Single Female | Couple |
$1,700 | $2,700 | $3,750 combined |
$2,165 | $3,400 | $4,735 combined |
$2,600 | $4,230 | $5,815 combined |
$3,135 | $5,265 | $7,150 combined |
$4,200 | $7,225 | $9,675 combined |
Cost of Hybrid Long-Term Care Insurance
Linked-benefit products vary significantly which makes them difficult to compare. Below are examples of LTC insurance plans from the AALTCI annual Price Index survey of leading LTC insurer(s) selected by consumers and is a good starting point.
Linked Benefit Life Insurance + Long-Term Care Policy | ||||
|---|---|---|---|---|
Consumer | Policy Benefit Limit | Minimum Death Benefit | One Upfront Premium Payment | Yearly Premium Payment |
Company A | ||||
Single Male, 55 | $180,000 | $120,000 | _____ | $4,625 |
Single Female, 55 | $180,000 | $120,000 | _____ | $4,600 |
Company B | ||||
Single Male, 55 | $180,000 | $130,000 | $75,900 | _____ |
Single Female, 55 | $180,000 | $130,000 | $77,000 | _____ |
Company C | ||||
Single Male, 55 | $167,000 | $167,000 | _____ | $5,010 |
Single Female, 55 | $167,000 | $167,000 | _____ | $4,550 |
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When to Buy Long-Term Care Insurance
Your age when you purchase long-term care insurance affects the cost of premiums. In general, rates increase three to five percent each year you wait to purchase coverage. Other factors that impact the price of LTCI plans include the development of health conditions or if you are taking prescription medications.
However, this doesn’t mean you should rush to buy long-term care insurance, as you could be paying premiums for two decades before filing a claim if you buy it in your 40s or 50s.
When to buy LTC Insurance Based on Your Age
Age | When to Purchase LTC Insurance Recommendation |
|---|---|
26-35 | Not recommended |
36-45 | Not recommended |
46-55 | Yes, if you have chronic health conditions or take prescription medications you can consider purchasing LTCI. Speak with a financial advisor who could help you make this decision. |
56-65 | Yes, if you are in good health. |
65+ | Yes, although this age range is not the peak time to buy LTCI as it is more costly. |
76 percent of new long-term care insurance buyers were between the ages of 50 and 69 with the optimal age being 60 - 65. This age group is the most popular since many are nearing retirement, are still in good health, and will be accepted at a lower rate.
If you are married, the cost of LTCI will likely be lower. When purchasing long-term care insurance, ask your insurance agent about discounts and compare the benefits, risks, and costs of the plan before deciding.
What are Common Long-Term Care Options?
Factors that contribute to who needs long-term care include age, gender, family and housing situation, health status, and lifestyle. Most people prefer to stay in the home they’ve always lived in, but that is not always the best choice depending on the care needed.
Long-Term Care Options
In-Home Care Options | Community Options | Facility Options |
|---|---|---|
|
|
|
Source: Genworth
Statistics about Long-Term Care
Approximately 70 percent of Americans over age 65 will need long-term care (LTC) at some point in their life and, on average, women require LTC for 3.7 years and men require it for 2.2 years. One-third of 65-year-olds may never use long-term care, but 20 percent will need it longer than 5 years.
Despite an aging population, only 7 percent of adults over 50 have an LTC insurance policy. Many individuals do not know what LTC is, when to plan for it, or cannot afford it. Planning ahead for your future and the futures of your loved ones can help save money in the long run.
Cost of Long-Term Care
Long-term care is expensive and has been increasing every year. Below is a breakdown of national median costs of services.
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Average Cost of Long-Term Care by Service Type
Type of Service | Rate | 2021 National Median Values |
|---|---|---|
Homemaker | Hourly | $26 |
Home Health Aide | Hourly | $27 |
Adult Day Services | Daily | $78 |
Assisted Living Facility | Monthly | $4,500 |
Nursing Home Semi-Private Room | Monthly | $7,800 |
Nursing Home Private Room | Monthly | $8,910 |
Source: Genworth Cost of Care Surveys 2017-2021
Long-Term Care Insurance Frequently Asked Questions (FAQs)
Below we answer some frequently asked questions regarding long-term care and alternative options to LTCI.
What is Long-Term Care?
Long-term care (LTC) is also known as “custodial care”, which is the non-medical help of routine activities. LTC consists of a range of services and supports to help with daily tasks or “Activities of Daily Living” (ADLs). This includes:
- Bathing
- Dressing
- Using the toilet
- Eating
- Transferring (to or from a bed or chair)
- Shopping for groceries
- Preparing meals
- Taking medication
- Managing money
- Using the telephone
What are alternative long-term care options if I cannot afford long-term care insurance?
Self-funding and relying on family and friends are common ways to get the long-term care you need. 66 percent of caregivers use their own savings or retirement funds to pay for care. Many people rely on their spouse or children, however, over time, solely relying on your children can take a toll physically, emotionally, and financially, and can have wide-reaching effects on the family.
How do I discuss long-term care options with my parents?
44 percent of adults under 60 years old discussed LTC or retirement with their parents, and 4 out of 5 reported having a conversation to plan for the future inspired action and positive feelings. Important topics to cover when having this conversation include:
- Lifestyle
- Legal considerations
- Finances
- Necessary Medical care
- Care options.
Some specific questions to ask are:
- How would you prefer to receive care?
- How are bills currently being paid?
- Do you have a will?
Be sure to have this conversation when you and your parent(s) have time and are in a comfortable setting. Plan for a follow-up conversation as well to make it an ongoing conversation and to not rush the process.
Bottom Line
It is important to prepare for long-term care as it will likely be needed at some point in your life or during the life of a loved one. Long-term care insurance can be expensive with the cost depending on numerous factors like age and current health status. Hybrid long-term care insurance is becoming increasingly popular as it combines aspects of life insurance. It is important to note that regular health insurance and Medicare do not cover long-term care costs.
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Erica graduated from Emory University in Atlanta with a BS in environmental science and a minor in English and is on track to graduate with her Master's in Public Health. She is passionate about health equity, women's health, and how the environment impacts public health.
