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How Much Does Long-Term Care Insurance Cost?


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Most people plan to have adequate health insurance and enough money to enjoy their golden years upon retirement. However, the average adult spends $140,000 on long-term care by the end of their life, and long-term care is not covered by most health insurance policies.

Without insurance, long-term care can become one of the biggest out-of-pocket healthcare costs a person ever has. To avoid this heavy burden, many people opt for long-term care insurance.

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Long-term care is the term for medical care that occurs on a daily or weekly basis. Long-term care can consist of a range of services, including home care, home health care, skilled nursing facilities, assisted living facilities, and adult daycare centers. This type of care helps individuals with the basic daily activities necessary to lead a safe and healthy life. This can include bathing, cooking, cleaning, and taking medications.

Long-term care can also provide more specialized medical treatment, such as palliative care, hospice care, physical therapy, or wound care. Long-term care insurance is a specific type of health insurance policy that covers these very unique and specific needs.

What Does Long-Term Care Insurance Cover?

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The exact coverage of a long-term care insurance policy depends on the terms of the policy. Generally, long-term care insurance covers home care, home health care, adult daycare, and any live-in medical facilities, such as assisted living, rehabilitation centers, and nursing homes. 

Long-term care policies do not always pay immediately. For example, a person who is recovering from surgery may need home care for six weeks. Long-term care insurance is only for long-term needs. To differentiate between short and long-term care, many insurance policies have an elimination period of 30-90 days. During the elimination period, policyholders are required to pay the entire cost of their long-term care on their own. 

Similar to life insurance, long-term care insurance policies are for a specific dollar amount. Some insurance companies will reimburse 100% of any long-term care costs after the elimination period until the policyholder reaches the limit of their coverage. Other companies have a daily maximum payout, so the company will only pay the daily maximum and the policyholder will be responsible for any additional costs.

Who Needs Long-Term Care Insurance?

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It is recommended that all adults purchase long-term care insurance between the ages of 60 and 65. Paying out of pocket for long-term care can be crippling for the average post-retirement household. Adult daycare costs an average of $68 per day. Home care costs at least $20 per hour. Live-in facilities can cost $3,000-$6,000 per month. 

As part of the natural aging process, the majority of people need help with activities of daily living at some point or another. So, it is wise for all adults to purchase long-term care insurance. Buying a long-term care insurance policy can mean the difference between affording needed care and being unable to afford it.

How Much Does Long-Term Care Insurance Cost?

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The costs of long-term care insurance are specific to the individual. Insurance companies charge more for people who are statistically more likely to use the policy. The cost of long-term care insurance is an annual premium, and some insurance companies allow for monthly payments. 

Long-term care insurance costs $1,175 – $3,800 for a single 60-year-old man. For a woman of the same age, the annual premium ranges from $1,900 – $6,600. For a 60-year-old couple, a premium would cost around $2,600 – 8,750 per year. 

There are specific factors that contribute to the cost of a long-term care insurance policy. 

Age

A person is more likely to need long-term care the older they get. The likelihood of children or relatives who could provide care for free decreases with each passing year of a person’s life. Long-term care insurance policies cost more for people who are older. Even if a person opens a policy when they are young, the annual premium will increase each year to account for their age. 

Gender

Long-term care insurance policies are up to 40% more expensive for women than they are for men. Statistically, women live longer than men. The older a person is, the higher the likelihood that they will need long-term care at some point in their lives. Since women are more likely to need to use their policy, long-term care insurance companies generally charge higher annual premiums for female applicants. 

Health Staus

Since long-term care insurance is not a basic health insurance policy, insurance companies have the right to deny coverage based on health status. This is one reason not to put off buying long-term care insurance until someone is sick. Some long-term care insurance companies require medical exams for anyone signing up for a new policy. People who have diagnoses such as diabetes, or risk factors such as high blood sugar or chronic diseases, are charged more expensive premiums. 

Coverage Limit Increases

Since healthcare needs only grow as people age, long-term care insurance can grow with the individual. Each year, the maximum coverage limit increases by at least 1%. Some policies have increases that go up to 5%. Policies with a higher percentage of annual coverage increases have a higher annual premium. Policyholders who do not select a policy that increases over time will have cheaper annual premiums.

Where to Buy Long-Term Care Insurance?

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The Department of Insurance website for the state one lives in is an excellent source for finding companies that sell long-term care insurance in the state. While there are some companies that specialize in long-term care insurance, many companies that are more well known for offering other types of insurance sell long-term care insurance as well.

State Farm and Genworth Life Insurance sell long-term care insurance in some states. TransAmerica and Northwestern are two national companies that specialize in long-term care insurance. The first step to purchasing a long-term insurance policy is to contact a company to get a quote. 

There are many kinds of insurances to consider, but long-term care insurance is one that may just be worth looking into.

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