Financial guidance and support, tailored for you.
Explore the benefits of working with a dedicated wealth team.
Key takeaways
Long-term care insurance covers daily living assistance, such as bathing, dressing, and moving safely at home, which standard health insurance and Medicare typically don't pay for.
Policies range from traditional "use it or lose it" plans to hybrid options that combine long-term care benefits with life insurance.
Buying a policy in your 50s typically means lower premiums and fewer health-related barriers to coverage.
Nearly 70% of people turning 65 today will need long-term care at some point, and the cost of that care can add up quickly. 1 While the need is common, figuring out how to pay for it can be a challenge.
That's where long-term care insurance comes in. It’s designed to help cover expenses that traditional health insurance and Medicare typically don't. Knowing your options now can help you stay in control of your care and better manage the retirement savings you've worked to build.
What is long term care insurance?
Long-term care insurance helps cover services that support basic daily activities over an extended period. These are often called "activities of daily living" (ADLs) and include tasks like bathing, dressing, eating, and moving safely around your home.
Most people picture nursing homes when they hear "long-term care," but 65% of care is actually received at home. 1 Long-term care insurance can give you more flexibility in where you get care, whether that's at home, in an assisted living facility, or in a nursing home.
It can also help reduce the financial strain that long-term care costs can place on your savings. It may also ease some of the caregiving pressure on your family.
How much does long-term care insurance cost?
Long-term care insurance costs vary based on several factors, including:
- your age, health, and gender when you apply,
- the daily benefit amount you choose,
- the waiting period before benefits begin (often called the elimination period), and
- how long benefits can be paid (your benefit period).
Buying earlier, often in your 50s, can mean lower premiums. According to the 2025 annual Price Index survey from the American Association for Long-Term Care Insurance, the following examples illustrate average annual premiums for a traditional policy with $165,000 in initial benefits. 2
|
Age when purchased |
Single man |
Single woman |
Couple (combined) |
|---|---|---|---|
|
55 |
$950 |
$1,500 |
$2,080 |
|
60 |
$1,200 |
$1,900 |
$2,600 |
|
65 |
$1,750 |
$2,700 |
$3,750 |
Age when purchased
55
Single man
$950
Single woman
$1,500
Couple (combined)
$2,080
Age when purchased
60
Single man
$1,200
Single woman
$1,900
Couple (combined)
$2,600
Age when purchased
65
Single man
$1,750
Single woman
$2,700
Couple (combined)
$3,750
If you wait to apply, premiums may be higher. You may also be more likely to be declined if your health changes. Applying earlier can give you more options.
Long-term care insurance vs. Medicare: what’s covered?
Many people assume Medicare will pay for most long-term care needs. In reality, Medicare mainly covers medical treatment and short-term skilled care. Long-term care insurance is designed to help pay for ongoing assistance with daily activities, which Medicare usually doesn’t cover.
|
Feature |
Long-Term Care Insurance |
Medicare |
|---|---|---|
|
Purpose |
Help pay for extended care needs and help you manage out-of-pocket costs |
Medical and skilled care needs |
|
Primary funding source |
Private insurance policy |
Federal health insurance program |
|
Length of coverage |
Based on your policy terms |
Limited |
|
Ongoing help with bathing, dressing and eating |
Often covered when policy requirements are met |
Generally not covered |
|
Skilled nursing care after a hospital stay |
May be covered, depending on policy |
Covered for a limited time under specific conditions |
|
Home care assistance |
Often covered |
Limited coverage for skilled services |
|
Assisted living facility care |
Often covered |
Generally not covered |
|
Nursing home custodial care |
Often covered |
Generally not covered |
Feature
Purpose
Long-Term Care Insurance
Help pay for extended care needs and help you manage out-of-pocket costs
Medicare
Medical and skilled care needs
Feature
Primary funding source
Long-Term Care Insurance
Private insurance policy
Medicare
Federal health insurance program
Feature
Length of coverage
Long-Term Care Insurance
Based on your policy terms
Medicare
Limited
Feature
Ongoing help with bathing, dressing and eating
Long-Term Care Insurance
Often covered when policy requirements are met
Medicare
Generally not covered
Feature
Skilled nursing care after a hospital stay
Long-Term Care Insurance
May be covered, depending on policy
Medicare
Covered for a limited time under specific conditions
Feature
Home care assistance
Long-Term Care Insurance
Often covered
Medicare
Limited coverage for skilled services
Feature
Assisted living facility care
Long-Term Care Insurance
Often covered
Medicare
Generally not covered
Feature
Nursing home custodial care
Long-Term Care Insurance
Often covered
Medicare
Generally not covered
What types of long-term care insurance are available?
There are two main categories: traditional policies and hybrid policies. Each comes with different features, costs, and trade-offs.
Traditional long-term care insurance
Traditional long-term care insurance is a standalone policy designed solely to cover long-term care services. It’s often described as “use it or lose it.” That means if you never need long-term care, you won’t get back the premiums you paid.
These policies usually pay a set daily or monthly benefit for covered services, up to the policy’s limit.
Traditional policies may be a fit if you want straightforward coverage and a lower initial cost, and you’re comfortable with the trade-off that you may not use the benefit.
Hybrid long-term care insurance
Hybrid policies combine long-term care coverage with another product, usually life insurance. They’re popular because they can provide value whether or not you end up needing care.
- Hybrid life and long-term care insurance: Pairs permanent life insurance with long-term care benefits. If you need care, you can draw on the policy's benefits. If you pass away without using the long-term care portion, your beneficiaries receive a life insurance death benefit. Many policies also let you surrender the policy for cash value, and premiums may be guaranteed not to change.
- Permanent life Insurance with a long-term care rider: Adds a long-term care benefit to a permanent life insurance policy. It may be a fit if your main goal is leaving a death benefit for your beneficiaries, with long-term care coverage as added protection.
Hybrid policies may work well if you want flexibility and can handle higher upfront costs. Traditional policies may be a better fit if you want the lowest initial premium.
Long-term care insurance can help you receive care in your preferred setting, whether that’s at home, in an assisted living facility, or a nursing home. It can also help protect your savings and relieve financial and caregiving pressure on your family.
Do I need long-term care insurance?
If paying $70,000 or more per year for care would put pressure on your retirement savings, long-term care insurance may be worth a closer look. Here are four reasons people consider it.
It covers a broad range of care services.
Long-term care may include home health care, adult day care, assisted living facilities and nursing homes. That flexibility can help you choose the setting that fits your needs.
It can help protect your savings.
Long-term care can be expensive. The national average cost for an assisted living community is over $76,000 per year, while a semi-private room in a nursing home averages more than $118,000 per year.3 These costs are expected to rise over time. 3 Without a plan, care costs could reduce retirement savings faster than you expect.
It can fill gaps Medicare leaves open.
Medicare may cover short-term skilled nursing care, rehabilitation services, or home health care under specific conditions, often after a qualifying hospital stay. Medicare generally doesn’t cover ongoing custodial care, such as help with bathing, dressing, or eating. If you’re counting on Medicare for that support, it’s worth reassessing.
It can reduce the burden on your family.
Caregiving can put real pressure on families. According to the National Alliance for Caregiving and AARP, 47% of caregivers report a negative financial impact from providing care. 4 Long-term care insurance can provide funds to hire professional help, which may reduce the strain on family members.
Frequently asked questions
Who may benefit most from long-term care insurance?
Long-term care insurance may be worth considering if you:
- have retirement savings you want to help protect,
- want more flexibility in where you receive care,
- don’t want family members to shoulder most of your care,
- are concerned about future health care costs, and
- are healthy enough to qualify at a cost that fits your budget.
When is the best time to buy long-term care insurance?
Many financial professionals recommend buying long-term care insurance in your mid-50s. At that age, you’re more likely to qualify, and premiums are often lower than they would be at 65. Waiting can increase the cost and the risk of being declined due to health changes.
Does Medicare cover long-term care?
Medicare doesn’t cover most long-term custodial care. It may pay for short-term skilled nursing care after a qualifying hospital stay, but only under specific conditions. Ongoing help with daily activities, such as bathing or dressing, usually isn’t covered.
What's the difference between traditional and hybrid long-term care policies?
Traditional policies are designed solely for long-term care. They’re often lower cost upfront, but you typically don’t recover premiums if you never need care.
Hybrid policies combine long-term care benefits with life insurance. That can help the policy provide value whether or not you ever use the long-term care benefit.
How do I know how much long-term care coverage I need?
The right amount of coverage depends on your assets, expected retirement income, family caregiving capacity, and local care costs. A financial advisor can help you compare scenarios and determine a benefit amount and coverage period that aligns with your retirement strategy.
Can I be denied long-term care insurance?
Yes. Insurers usually require a health screening. Some pre-existing conditions can lead to higher premiums or denial of coverage. That’s one reason many people apply earlier, when they’re more likely to qualify.
Planning for long-term care now can give you more options later. Consider talking with a financial advisor about how traditional or hybrid long-term care insurance policies might fit into your retirement strategy.
Learn about insurance protection through U.S. Bancorp Advisors.
Explore more
Term vs. permanent life insurance: Which is right for you?
Life insurance can ensure your loved ones will be financially protected after you die, but there are many types to consider. Review term vs. permanent life insurance and the stipulations of each.
Insurance coverage for what matters most.
Insurance protection from U.S. Bancorp Advisors can help you, your family or your business feel more prepared, no matter what lies ahead.
Start of disclosure content
Disclosures
Start of disclosure content
Start of disclosure content