As people live longer, the chance of needing long-term care increases significantly. Whether it’s in-home support, assisted living, or nursing home care, the cost can quickly overwhelm retirement savings. Long-term care insurance helps protect your assets and provides greater control over your care options. However, how much coverage is enough?
Determining the right amount of long-term care insurance depends on several personal and financial factors. The best time to consider a policy is before health issues arise, since premiums tend to rise with age and a deteriorating health status.
Understanding Long-Term Care Insurance Coverage
Long-term care insurance covers services that assist with daily activities, such as bathing, dressing, eating and mobility. These are known as activities of daily living (ADLs). Coverage usually begins when you need help with at least two ADLs, or when you receive a diagnosis for cognitive impairments, like dementia.
Policies may cover:
- Home health aides and personal care workers
- Assisted living facility costs
- Nursing home care
- Adult day care services
- Some home modifications or caregiver training
It’s important to note that Medicare does not cover most long-term care services. Medicaid does, but only after you meet strict income and asset limits. Private insurance can help bridge this gap and give you more choices in where and how you receive care.
Estimating How Much Coverage You Need
The right level of coverage depends on your anticipated needs, financial resources and risk tolerance. Begin by considering:
- Your family’s health history
- Whether you want to receive care at home or in a facility
- The cost of care in your area
- How much can you afford to pay out of pocket
According to the Administration for Community Living, the average woman will need long-term care for 3.7 years, while the average man needs it for 2.2 years. In Arkansas, for example, the average monthly cost of a private nursing home room exceeds $9,000. Assisted living may cost between $4,000 and $6,000 per month, depending on the location, and home care services are also rising in cost.
If you want to cover a significant portion of these expenses with insurance, a policy that pays $200 to $250 per day for three years might be a starting point. Some people choose shorter durations to lower premiums, while others opt for lifetime coverage for complete protection.
Customizing Your Policy
Long-term care policies are flexible and can be customized to meet your specific needs. Key components to review include:
- Benefit Amount: The daily or monthly maximum the policy will pay
- Benefit Period: The length of time the benefits will last
- Elimination Period: The waiting period before coverage begins (commonly 30, 60, or 90 days)
- Inflation Protection: A feature that increases benefits over time to keep pace with rising care costs
Inflation protection is critical if you purchase a policy in your 50s or 60s and don’t expect to use it for 20 years. Without it, your benefits could fall short of actual costs.
When to Purchase Long-Term Care Insurance
Most people buy long-term care insurance between the ages of 55 and 65. Earlier, the premiums may not have been worth the long wait before using the coverage. Later, the cost becomes higher, and the risk of being declined for health reasons increases.
Premiums are generally more affordable if you are in good health and lock in a policy early. Delaying too long may limit your options or make insurance unaffordable altogether.
Estate Planning with Confidence
Choosing long-term care insurance is a personal decision that should fit into your broader estate and retirement plan. You don’t have to insure the full cost of care—just the amount that could jeopardize your financial security.
An elder law attorney can help assess your options, explain how long-term care policies fit into Medicaid planning and create legal tools, like powers of attorney and trusts, to ensure that your plan works as intended.
Key Takeaways
- Long-term care costs are rising: Insurance helps protect savings and ensure access to quality care.
- Coverage needs vary: Your age, health, finances and care preferences influence the correct benefit amount and duration.
- Inflation protection matters: Without it, benefits may not keep up with rising costs.
- Buy at the right time: Policies are more affordable and easier to qualify for between the ages of 55 and 65.
- Legal guidance supports your plan: An elder law attorney can integrate long-term care coverage into a broader estate and asset protection strategy.
References: Administration for Community Living, “What Is Long-Term Care Insurance?” and National Council on Aging (Feb 13, 2025) “How Much Does Long-Term Care Insurance Cost and Is It Worth It?”