Long-term care (LTC) insurance is one way to cover these services. However, it’s essential to understand that the market has evolved significantly, with many policies becoming more expensive and the available options changing. Many people now prefer policies that combine long-term care with other benefits.

According to a 2022 study by the Department of Health and Human Services (HHS), about 49% of men and 64% of women reaching age 65 today will require substantial long-term care. While some may rely on unpaid family care, nearly half will need paid assistance. HHS estimates the average cost of care at $120,900, but individual costs can vary widely depending on several factors.

Traditional Medicare does not cover long-term care beyond skilled care following hospitalization for an injury or illness. However, some Medicare Advantage plans may offer limited supplemental coverage. Veterans might access long-term care through the U.S. Department of Veterans Affairs.

There is common confusion around payment for long-term care. Many mistakenly believe Medicare covers long nursing home stays. In reality, nearly half of adults aged 65 and older face challenges affording such care, according to a KFF survey. This gap between needs and available funds is where long-term care insurance becomes valuable, though it’s not the only solution. As Ryan Graham of Altfest Personal Wealth Management states, everyone should have a long-term care plan, but not everyone needs insurance.

Traditional LTC policies function like auto or home insurance: you pay premiums and claim benefits if needed. However, premium costs can rise over time. If you stop paying premiums, you typically lose coverage. If never used, the insurance company retains and invests your money.

Since 2010, most LTC policies sold are hybrid, combining long-term care coverage with life insurance or an annuity. Known as linked-benefit policies, they offer benefits whether or not you use the long-term care coverage. While more expensive than traditional policies, they eliminate rising premium risks by often requiring a lump sum or fixed payments.

LTC policies may limit coverage for certain conditions and often have a waiting period before benefits begin, typically after 90 days. Coverage is usually capped daily or monthly, with differences in amounts for various care settings.

Originally, LTC insurance only covered nursing home care, but it now includes home care, assisted living, and more. Insurers have adjusted policies and premiums to avoid past financial challenges, with newer policies offering more sustainable options.

Consider your budget, assets, and overall financial condition before purchasing a policy. Premiums should ideally not exceed 7% of your income. Evaluate your financial goals and explore all insurance options, including group policies or shared care for couples.

Consult with agents authorized to sell policies from various companies and financial advisers to understand how these policies fit into your broader financial plan. Your options may differ by state, affecting availability and pricing.

You might cover premiums with a health care savings account, or explore tax advantages by exchanging an existing life insurance policy for LTC coverage. Group policies or couple purchases can offer savings, and partnership policies with state Medicaid programs may protect more of your assets if Medicaid becomes necessary.

At All Insurance Community, we’re committed to helping you make informed decisions about long-term care insurance. Contact us for personalized guidance tailored to your needs and financial situation.