Costs Of Long-Term Care Insurance

The Department of Health and Human Services (HHS) estimates that “more than 10,000 people turn 65 every day in the United States.” Active lifestyles and medical advancements contribute to overall health and longevity. Planning for the day when you need help staying engaged is an excellent strategy to implement while you are in good health.

A study conducted by The Associated Press-National Opinion Research Center (NORC) found that most Americans aged 40 and above have done little if any planning for their long-term care (LTC) needs. Perhaps you can attribute this reluctance to:

• The incorrect assumption that Medicare covers LTC
• Cost of insurance premiums

Medicare only covers medically necessary skilled nursing care for a limited time but does not cover LTC. To put the value of LTC insurance in perspective, think about the level of care you may need and how you plan to pay for it.  

LTC can take the form of:

• Aging in place
• Institutional care

Aging in place

The 2021 AP-NORC study found that “88% of Americans would prefer to receive any ongoing living assistance they need as they age at home or with loved ones.” Nonmedical professional caretakers make this possible.

Caretakers help with chores, such as light cleaning, meal preparation and laundry. Home health aides assist with activities of daily living (ADL) that can range from feeding and dressing to grocery shopping and giving medication.

Long-term care facilities

LTC facilities:

• Nursing home: 24/7 supervision with meals, personal care and rehabilitation on-site
• Assisted living: often comprised of apartments with a communal dining room, housekeeping services and medication management
• Memory care: units typically attached to nursing homes or assisted living facilities for people with dementia or Alzheimer’s disease
• Continuing care retirement communities: a blended community encompassing different levels of care on one site

Long-term care costs

Based on the 2020 Genworth cost-of-care survey, the following are annual median rates. These are national figures, so the cost where you live may be higher or lower.

In-home care:

• Homemaker: $53,768
• Home health aide: $54,912

Care outside the home:

• Assisted-living facility: $51,600
• Nursing home (semi-private room): $93,072
• Nursing home (private room): $105,850

Cost of long-term care insurance

The following annual premium rates reflect 2019 averages from leading LTC insurers, based on a survey conducted by the American Association for Long-term Care Insurance (AALTCI): 

• 55-year old single male: $2,050
• 55-year old single female: $2,700 
• 55-year old couple (both same age): $3,050

Factors that influence the cost

Your age, health condition and location influence the premium. Here are questions you can ask insurers to learn more:

• Do you offer a discount to couples?
• Do you cover in-home care as well as care in an institution?
• Are benefit limitations tied to a daily amount, a specific number of years, or a maximum disbursement over the life of the policy?
• What is the waiting period before benefits kick in?
• Do you adjust the benefits for inflation?

The type of policy you buy will also impact the cost: 

• Individual policy you buy from a private insurance company
• Group plan through an employer or professional association
• Hybrid life insurance policy with an LTC rider that allows you to tap into your death benefits for LTC needs

Before you decide, you may want to consult with a team of professionals, including an elder care attorney and a financial advisor, as well as your family.