Long-Term Care Insurance: Do You Need It?
🇩🇪 Diesen Artikel auf Deutsch lesenMedicare generally doesn't pay for long-term custodial care, and Medicaid helps only after most assets are spent down. Long-term care insurance can protect savings, but premiums are significant and can rise. It's most often considered by people in their 50s and early 60s with moderate to substantial assets they want to protect.
Many people will need help with daily activities such as bathing, dressing or eating at some point in their lives. That care is costly — a private room in a nursing home can cost well over $100,000 a year in many states.
Who pays for long-term care?
| Source | What it covers |
|---|---|
| Medicare | Short-term skilled care after a hospital stay, not long-term custodial care |
| Medicaid | Long-term care for people with very limited income and assets |
| Long-term care insurance | Care at home, assisted living or nursing homes, up to policy limits |
| Personal savings | Everything else |
Types of policies
- Traditional long-term care insurance: pays a daily or monthly benefit for a set period. Premiums can increase over time.
- Hybrid life/LTC policies: life insurance or annuities with long-term care benefits; if you don't need care, heirs receive a death benefit.
Key features to compare
- Daily or monthly benefit amount
- Benefit period (for example, three years)
- Elimination period before benefits start
- Inflation protection
- Coverage for home care as well as facilities
Alternatives
People with large assets may choose to self-insure; people with few assets may rely on Medicaid. Everyone benefits from planning ahead: discussing wishes with family, setting up powers of attorney and building savings.
Compound Interest CalculatorSee how your savings grow over timeTry the calculator →Frequently asked questions
Are long-term care premiums tax-deductible?
Part of qualified long-term care premiums may be deductible as a medical expense, subject to age-based limits and itemizing rules.
Can premiums go up?
For traditional policies, insurers can request rate increases for entire groups of policyholders, subject to state approval.