Long-term care insurance — what it covers and whether it's worth it

This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.

The conversation usually starts when you're going through a parent's paperwork, or a sibling calls at an odd hour with a question you can't answer, or you realize that everyone in your extended family seems to have a vague sense that aging care is expensive, but nobody really knows what that means. Long-term care insurance sits there at the intersection of fear and math—it's expensive enough to sting, but the alternative (paying out of pocket for years of professional help) sounds even more expensive. So you start looking at the paperwork, and the language makes it sound like you need an insurance degree to understand it, and then you have the uncomfortable thought: did mom already buy one of these when she was my age, or is this a problem we haven't solved yet?

This is one of those financial decisions that doesn't get easier by putting it off. Unlike some other insurance (which you hope never to use), long-term care is something most of us will actually need eventually. We're all living longer now, and that means we're more likely to need professional help with daily life at some point. But the decision about whether to buy it, when to buy it, and what to buy is so layered that people either rush into it without thinking or avoid it altogether because thinking about it feels overwhelming.

Here's what matters to understand: long-term care insurance is designed to cover one specific gap in the American healthcare system—the gap between what Medicare will pay for and what you actually need when you can no longer fully care for yourself. That gap is where the real money goes, and it's where families face the hardest choices. If you're here reading this, you're probably trying to figure out whether your parent needs this coverage, whether they already have it, or whether they're facing years of care without it. All of those situations are manageable, but the path forward is different in each case.

The stakes here are real. We're talking about money that could cover a house down payment, money that could be diverted from inheritances, or money that could mean the difference between your parent staying in their home with help and them moving to a facility they didn't choose. But we're also not talking about something mystical. It's insurance. You pay a premium. If you need the service, you file a claim. The rules are written down. Let me walk you through what actually happens.

What Long-Term Care Insurance Actually Pays For

When people say "long-term care," they don't mean what you get in a hospital. They mean the help you need over months or years when you can't manage your own daily life. That's nursing home care, yes, but it's also assisted living facilities where someone brings you food and helps you shower. It's home care, where a professional comes to your house and helps you get dressed, handle medications, go to the bathroom. It's adult day care centers, memory care facilities, hospice care. It's the help with activities of daily living,the things that aren't dramatic medical interventions but are everything to the person who needs them.

Long-term care insurance pays a daily amount toward these services. When you buy the policy, you choose that daily benefit. You might say, "I want this policy to pay $150 a day," or $250, or $500. That number becomes what the insurance company will reimburse every day you're receiving covered care. If you're in a nursing home that costs $200 a day and your policy covers $150, you pay the other $50. If you chose a $500 daily benefit and the facility costs less than that, the insurance company pays what the facility costs (up to your daily maximum).

The daily benefit you choose at the beginning really matters. It's not just a number. It determines how much the premium costs, but it also determines how much flexibility you have later. If you choose a low daily benefit to keep premiums affordable, you might find yourself paying a lot out of pocket anyway. If you choose a high daily benefit to feel covered, the monthly premium might be higher than you can sustain for thirty years. This is where the actual thinking happens. You're not buying something you're definitely going to use right away. You're buying something you hope your parent won't need for decades, and you're guessing about what care will cost in a world where costs change every year.

Along with the daily benefit, you choose how long the policy will pay. Some buy three-year coverage, others five years, some unlimited. Unlimited sounds perfect until you see the premium. The longer the period, the more expensive the policy. People sometimes buy three-year coverage thinking that's typical, forgetting "typical" is an average,some need six months, some fifteen years. If your parent is sixty with parents who lived past ninety, unlimited might make sense. If your family history suggests shorter lifespans or you're worried about affording premiums, three years is more realistic.

Inflation protection is also important. Care costs rise yearly. If you buy a $200 daily benefit today but don't use it for fifteen years, that $200 might cover half the actual cost then. Inflation protection means the benefit grows automatically, usually 3% per year. This costs more, but without it, you're planning to pay substantially more later.

Who Actually Buys This and When

The best time to buy long-term care insurance is when you're healthy and in your fifties or early sixties. That's when your premiums are lowest and you haven't accumulated health problems that will make you uninsurable or force much higher rates.

If your parent is sixty-five and healthy but doesn't have a policy, the decision gets complicated. Premiums have started rising steeply. If your parent is seventy and had a health incident,diabetes, heart problems, any number of common conditions,the insurance company might decline the application. Or they might approve it at double or triple the rate someone without health problems would pay. By seventy-five, long-term care insurance is either prohibitively expensive or unavailable.

This is why family history matters so much in the decision. If your parent's parents both needed nursing home care, or if there's Alzheimer's in the family line, that's a real signal that your parent might need long-term care later. On the other hand, if your parent's parents died in their seventies from heart attacks, or if there's no history of needing professional care, the probability shifts downward.

Affordability over the long term also matters. Insurance companies raise premiums as people age, and they can raise premiums on whole groups of policies if claims end up being higher than they projected. A $2,000 annual premium at sixty feels manageable. That same policy might cost $4,000 annually at seventy. What felt affordable then might feel impossible in retirement. Some people have stopped paying premiums after five or ten years because the cost kept climbing. Then if they later needed care, they weren't covered. The best policy is the one your parent can keep paying for.

The Cost Reality: What These Premiums Actually Look Like

Here's something that gets people's attention: a healthy sixty-year-old who buys a policy with a $250 daily benefit, a five-year benefit period, and basic inflation protection might pay roughly $1,500 to $2,500 annually. That's for a female. For a male the same age with the same coverage, it's often 20-30% lower because men statistically live longer than women and are therefore statistically less likely to use long-term care services.

Wait ten years. Same person at seventy, now they want to buy the same policy. The annual premium is $4,000 to $6,000. The reason isn't just that they're ten years older. It's also that the insurance company has ten more years of data showing that care costs more than they expected, people live longer than they expected, and premiums need to rise to stay solvent.

A few things about premium changes. First, they happen. The insurance company can't raise your parent's individual rate without authority, but they can raise rates for an entire class of policies. Thousands buying the same product might see increases together. Second, premiums can increase significantly over time,worst-case stories show premiums doubling or tripling over two decades. Third, once you stop paying, you lose coverage. You've paid for years, and if you stop, it's gone.

The gender difference is significant. Women live longer and are statistically more likely to use long-term care, so insurance companies charge more. A 55-year-old woman and man might pay a substantial annual difference for identical coverage. Multiply that by decades and it's tens of thousands of dollars. Some couples decide only one spouse should have coverage, while others buy both anyway.

The Complexity That Makes People Regret Purchases

If long-term care insurance were simple, everyone would either have it or not and we'd move on. Instead, many people buy it and later regret it, or don't buy it and later regret that decision. The regret usually comes from the parts that aren't obvious when you first buy the policy.

Some regret the purchase because premiums increased far beyond expectations. They paid $1,000 yearly for ten years, then the company announced a 25% increase. The affordable policy became expensive. Some people paid so long without a claim that the math shifted,they could have self-insured instead of giving money to the insurance company.

Others regret it because the policy is more restrictive than they understood. Maybe they planned to age in place, receive home care, but the policy has strict rules about what level of care triggers payment. Maybe they chose a daily benefit that seemed generous at the time, but care turned out to be more expensive than projected. Or the facility they wanted to use isn't on the insurance company's approved network.

The elimination period often comes as a shock. Most long-term care policies have a waiting period,usually 30 to 90 days,before benefits kick in. During that period, you pay all the costs out of pocket. A family might expect insurance to cover the full tab starting from day one, but instead they're on the hook for several thousand dollars for months before coverage begins.

Then there's the problem of changing needs. A policy might cover nursing home care but not assisted living, or vice versa. If a parent needs different care than what the policy covers, the family ends up paying out of pocket anyway. The person who didn't qualify also can't easily upgrade to better coverage.

On the other side, people who didn't buy it sometimes regret that decision later. A parent who was healthy at sixty-five but developed memory problems at seventy becomes uninsurable. Another parent's long-term care needs start sooner than expected, and suddenly the family is liquidating assets or taking out loans to cover costs. The decision not to buy feels very different in hindsight when you're facing actual bills.

If Your Parent Doesn't Have a Policy: Other Paths Forward

If your parent is already in their seventies or eighties, or if insurance seems unaffordable, there are still strategies for handling long-term care costs. None are ideal. All require planning and honesty about money.

Medicaid planning is the first strategy. Medicaid is needs-based, so you qualify only if income and assets are low enough. It pays for some long-term care settings (nursing homes more readily than others) but covers bare minimum. A parent usually has to "spend down" assets to get under the Medicaid threshold. An elder law lawyer can find legal ways to protect some assets while still qualifying. But it requires planning before crisis strikes.

Self-insurance is the second strategy. If your parent has significant savings, they might pay for care out of pocket. Assisted living might cost $5,000 monthly, nursing home care $8,000 to $10,000. If your parent has $300,000 in savings, that covers about six years at assisted living rates. You need to think through worst-case scenarios while respecting your parent's autonomy.

Family resources make up the third strategy. Some adult children contribute toward care costs. This only works if the family is honest about what's affordable and has emotional maturity about money,conversations most families avoid.

Another approach is reducing care costs. A parent staying home with part-time paid help might need less care than someone in a facility. A community with good senior programs might have cheaper options. Someone engaged and active might decline more slowly than someone isolated.

Without long-term care insurance, significant savings, or family contribution, a parent's care is usually covered by Medicaid,meaning moving to a facility that accepts Medicaid, not the preferred one. If that's unacceptable, long-term care insurance would have been the right move at fifty-five when it was affordable.

The Decision

There's no objectively correct answer to whether your parent should have long-term care insurance. But there are clear questions that point toward the right answer for your family.

Ask whether there's family history of needing long-term care. Ask whether your parent can comfortably afford premiums not just today but for the next thirty years. Ask what a long stay in a nursing home would cost in your parent's region and whether they have assets that could cover that without becoming destitute. Ask whether they have adult children willing and able to contribute toward care. Ask how much your parent values staying in their own home versus being in a facility. Ask what your parent's actual preferences are about aging, separate from what they think they should say.

If the answers suggest serious trouble paying out of pocket and your parent is young and healthy enough to get insured, that tips toward buying. If your parent has substantial assets or health problems making insurance unaffordable, that tips toward Medicaid planning. If you're somewhere in the middle, the decision is messier,which is probably why you're reading this.

Whatever your parent decided (or didn't decide) before now, you're not starting from nothing. You're starting from where you are. If they have a policy, your next step is actually understanding what it covers. If they don't, your next step is figuring out what comes next. Neither situation is a tragedy. Both are manageable with information and conversation.

How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.