Personal Resource Center

Understanding Long-Term Care Insurance

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Many affluent people plan to cover long-term care out of pocket, but the cost of a private room in a nursing home can quickly deplete your assets.

However, keep in mind while some long-term care policies cover assisted living, not all do. Some policies only pay for care in a nursing home or in-home care. Policies that do provide assisted living benefits may require the policyholder to have a nurse or social worker assess their level of need, only providing benefits once the policyholder needs help with multiple activities of daily living or has a cognitive impairment.6

Avoid burdening your loved ones

Without long-term care insurance, many elderly, ill, or disabled people rely solely on family members for care, which can strain the caregiver — even when financial resources aren't an issue.

According to a study by the Johns Hopkins University School of Medicine, 90% of caregivers caring for an elderly relative report emotional strain from their caregiving duties.7 Family caregivers often balance minor children and careers with caring for a parent or grandparent. To make the situation work, they may need to cut back on work hours or quit their job entirely. This can lead to a loss in income, benefits and career mobility.

LTC insurance can help ensure your loved ones aren't burdened by the financial constraints of aging for a declining family member. It allows family members to continue to meet their other responsibilities (like work and parenting). And, most important, it ensures that family members can focus on enjoying their time with their elders rather than being burnout by the day-to-day demands of caregiving for someone with substantial needs.

You choose where you receive care

Long-term care insurance can also provide flexibility in managing care needs.

People who exhaust their financial resources and have to rely on Medicaid to cover long-term care expenses have fewer options. They generally have to find a Medicaid-certified nursing facility, get on a waitlist to receive a waiver for in-home services, or find out which types of care qualify under their state's Medicaid program.

A long-term care policy, on the other hand, can provide coverage wherever you need care — at home, in an adult day care, assisted living facility, or nursing home. While different policies provide different benefits, they generally offer more options for selecting the best care plan that meets your needs and budget, whether you want to age in place in your home or move into a facility of your choosing.

Questions to ask your insurance agent

Asking the right questions of your insurance agent is vital to making sure that you are getting the right LTC coverage. Here are some essential questions to ask when considering a policy:

  • What does the policy cover? For example, does it just cover skilled nursing facilities, or does it also take into account assisted living and home health care?
  • How much coverage can you receive for at-home care? Some policies limit amounts for care in your home.8
  • Under what conditions can you receive coverage? Insurance companies typically have an assessment process. For example, you may qualify for benefits once you can no longer perform a set number of activities of daily living, such as bathing, dressing and eating. It's crucial to understand what they are looking for and what it takes to qualify.
  • How soon does the policy kick in once you qualify for coverage? Many policies have "elimination periods" — usually 30 to 180 days9 — when you're responsible for paying for costs out of pocket.
  • Does the policy include a hospice rider? Some policies waive the elimination period if you go into hospice. However, this waiver only applies if the policy has a hospice rider.
  • How much does the policy cover? Some policies limit how much you can receive daily or monthly. Do those limits adjust for inflation? Some have a lifetime maximum or limit coverage to a certain number of years.

By investing in LTC insurance now, you'll have peace of mind knowing that you'll be taken care of no matter what the future holds. If you have any questions, reach out to a financial advisor who can help you choose solutions designed to meet your unique needs.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Medicare.gov, “How can I pay for nursing home care?" accessed March 29, 2023.

  2. American Council on Aging, "Answers to All of Your Questions About Medicaid Long Term Care," updated February 28, 2022, accessed April 17, 2023.

  3. Claire Samuels, “Assisted Living Statistics: Population & Facilities in 2023," A Place for Mom, updated October 13, 2023, accessed January 10, 2024.

  4. Chacour Koop, "Does Long-Term Care Insurance Cover Assisted Living?" A Place for Mom, updated March 27, 2023, accessed April 17, 2023.

  5. SummerHouse Senior Living, "What Is the Average Length of Stay in Memory Care?" published September 27, 2022, accessed April 17, 2023

  6. Jeff Hoyt, “Nursing Home Costs in 2024," SeniorLiving.org, updated February 5, 2024; accessed February 6, 2024.

  7. Judy F. Minkove, “Caregiving Strain: A Growing Concern for School of Medicine Faculty," published July 14, 2021, accessed March 29, 2023.

  8. Kim Painter, “Understanding Long-Term Care Insurance," AARP, published October 13, 2021, accessed March 29, 2023.

  9. Cindy Wong, “4 Tips for Understanding Long Term Care Insurance," Experience.care, published August 18, 2022, accessed March 29, 2023.