How Much Does Long-Term Care Insurance Cost?
In 2023, you can expect to pay anywhere from $79 to $533 per month for a long-term care insurance policy. These premiums, however, vary greatly based on age, gender, health, and the coverage amount of the policy.
Each insurer will also charge you differently for long-term care insurance, so it’s important to compare providers before choosing a policy.
2023 Annual Premium Estimates
According to the American Association for Long-Term Care Insurance, you should expect to pay the following for a long-term care insurance policy with a $165,000 benefit:
Long-term care insurance can be significantly more costly than other types of insurance, but long-term care will likely cost thousands of dollars per month. The premiums can be expensive, but they’re definitely worth it for people anticipating a need for care.
Long-Term Care Costs Without Insurance
Without insurance, long-term care costs can be exceedingly high. In 2023, you can expect to pay the following monthly costs:
- $5,148 for a home health aide
- $1,690 for adult day care
- $4,500 for assisted living
- $7,908 for a semi-private room in a nursing home
- $9,034 for a private room in a nursing home
Individuals 65 or older have a 70 percent chance of needing long-term care services in the future, but only 11 percent purchase long-term care insurance. The rest are left scrambling to cover costs when the time comes.
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What Goes Into Long-Term Care Insurance Costs?
In addition to the provider, long-term care insurance prices depend on factors including health, age, marital status, gender, and policy type.
Most long-term care insurance policies require a medical exam. If you are in good health, then your premium likely will be lower. If you have a family history of chronic health conditions, then you will likely have a higher premium since it indicates to an insurer that there’s a greater chance you’ll need long-term care.
The earlier you purchase a long-term care insurance policy, the lower the premiums will be. If you purchase a policy when you’re older, then you are more likely to need the benefit to pay for care sooner, so premiums will be higher.
Studies show that married or partnered individuals have a lower risk of needing long-term care, so married people will have lower premiums. Couples can also bundle their policies together for a lower price.
Women tend to live longer than men and they make up nearly two-thirds of claims made on long-term care insurance policies, so women usually pay significantly more for long-term care insurance.
There are several types of long-term care insurance policies. Insurance carriers offer individual policies for purchase. They also may offer “hybrid” policies that combine life insurance with long-term care insurance, and some employers or associations offer group coverage that provides more benefits for lower premiums.
How Does Long-Term Care Insurance Work?
When you apply for long-term care insurance, the company may ask for medical records, request a medical exam, or ask some basic questions about your health. Once you’re approved, you then choose the type of coverage you want and any additional products. The coverage is based on the monthly (or daily) benefit amount to pay for care.
When researching, be sure to look up the average cost of care in your area and account for inflation to determine the amount of care you will need. The cost of care in 2023 will likely be lower than the cost of care in 2042, so inflation protection and similar riders are worthwhile investments.
Once you choose a policy, you begin paying yearly premiums. After the policy is issued, the carrier may raise premiums or you may elect to pay lower premiums for a lower benefit. You qualify for the benefit once a health-care practitioner certifies you are chronically ill or unable to perform activities of daily living and prescribes long-term care.
The insurer will then review medical records and, if approved, reimburse you for long-term care until your policy limit is reached. Each company has specific details on how the policy works, so be sure to read the fine print before purchasing a policy.
Tax Benefits of Long-Term Care Insurance
Most long-term care insurance policies are tax-qualified, meaning you may deduct premiums from your annual tax returns through the medical expense deduction.
The amount you can deduct in 2023 as a medical expense depends on your age.
- 40 or younger: $450
- 41 to 50: $850
- 51 to 60: $1,690
- 61 to 70: $4,510
- 71 or older: $5,640
These rates may change each year, so check with a trusted financial adviser before filing your medical expense deductions.
Are Hybrid Policies Worth It?
Some insurance carriers offer hybrid policies that combine life insurance with long-term care coverage. That allows you to use a death benefit while you’re still alive to pay for long-term care if it’s necessary. If not, then your loved ones will receive the full death benefit.
The downside is that hybrid policies typically are more expensive than traditional life insurance policies, and they don’t qualify for the tax benefits that long-term care insurance policies do. Hybrid policies also may not keep up with inflation like individual long-term care insurance policies do. If your health condition skyrockets your long-term care insurance premiums, however, then it may be cost-effective to purchase a hybrid policy as opposed to an individual long-term care insurance policy.
How to Shop for Long-Term Care Insurance
If you determine you need a long-term care insurance policy, then make sure to do your research before purchasing. Keep the following tips in mind while you’re shopping:
- Consult with an insurance agent. If you already have an insurance agent, then a trusted adviser can help you find the right policy for the best value.
- Bundle products if you can. If you’re married, then you can bundle your life insurance with your partner. A hybrid insurance option may make sense if you’re older or not in the best health.
- Consider inflation. The price of long-term care likely will rise by the time you need it, so keep that in mind when choosing the benefit amount you need covered.
- Policy types. Your employer (or ex-employer, if you’re retired) may offer group coverage that is less expensive than an individual policy. You also may belong to an association that offers group coverage rates. See if you’re eligible before purchasing a policy.
- Tax deductions. To get the most out of your long-term care insurance policy, make sure your preferred policy is tax-qualified so you can deduct premiums.
To learn more about long-term care insurance, check out our helpful guides.