According to published statistics, roughly 7 ½ million Americans currently have long-term care insurance policies in force. Yet other data suggests that about 70 percent of Americans will need some form of long-term care at some point in their lives. There’s clearly a major disconnect between preparation and expectation. 

That’s why our focus this week concerns the need most of us will have for long-term care – and specifically how to pay for it. In a companion article this week on the Blog, we’re looking at the basics of long-term care insurance, or LTC policies, and we’ll repeat some of that info here. But traditional LTC insurance can be pricey, and it’s not your only option.  

In this recent article from Kiplinger, reporter Elaine Silvestrii offers a guide to covering your long-term care expenses. We lack the space to include every detail of her extended article, but we’ve done our best to cover the basics. Our most important take-away is this: when it comes to planning for your LTC needs, don’t be in denial. Uncovered long-term care costs can devastate individuals and their families who are caught unprepared. 

Longer Lifespan Means Greater Need for Long-Term Care 

“Chances are you will need some form of long-term care (LTC) during your lifetime,” Silvestrini begins. One major reason is simple demographics: we’re living longer. 

“For example,” she continues, “JP Morgan reports that if you are 65 and a non-smoker, your chances of living to age 85 are high: 78 percent for women and 64 percent for men. Considering this longevity, planning for potential care needs is crucial.” 

She cites a 2024 AARP report which estimates that 56 percent of people turning 65 between 2021 and 2025 will need some type of long-term care. Overall, the odds of aging Americans (those 65 and over) needing this type of care approach 70 percent. 

Majority of Middle-Income Boomers Have No LTC Plan 

Such dire statistics should prompt people to plan, but Silvestrini says that’s not the case. “Even more troubling,” she writes in her Kiplinger article, “is that most adults haven’t taken any steps to prepare for LTC when planning their retirement. A 2022 AARP report shows that only about 33 percent of middle-income baby boomers have a plan for long-term care.”  

This level of denial stands in stark contrast to another statistic: the population of long-term care facilities.  Kiplinger reports that, according to the National Center for Health Statistics, the number of people in assisted living, memory care, and skilled nursing facilities is expected to grow by over 75 percent by 2030, reaching 2.3 million residents. 

Ignorance and Fear Leave the Majority of Seniors Unprepared 

Why, Silvestrini asks, does a substantial portion of the population do no active planning for long-term care? The reasons, she says, are many: “financial restraints, underestimating their need for care, or misconceptions about the role Medicare plays in covering their health care costs.”  

It is true, Silvestrini notes, that higher-income individuals and those with access to a financial advisor are more likely to have LTC plans in place. 

What range of costs are we talking about? According to the 2024 Genworth Cost of Care survey (released in 2025), here are some nationwide averages, quoted from Silvestrini’s article: 

*Assisted living community costs increased by 10 percent to an annual national median cost of $70,800 per year. 

*It can cost up to $77,792 annually for a home health aide. That’s an increase of 3 percent from 2024. 

*The cost of homemaker services has increased 10 percent to an annual median cost of $75,504. 

*A semi-private room in a skilled nursing facility now costs $111,325, up 7 percent. 

*The cost of a private room in a skilled nursing home rose 9 percent to $127,750. 

Expecting Medicare to Help? Better Think Again 

Just last summer, USA Today reported that nearly 60 percent of American adults believe Medicare will cover the cost of long-term care. Those folks are in for a rude awakening. 

“What many Americans don’t realize,” Silvestrini warns, “is that Medicare doesn’t cover long-term-care expenses, and therefore, they are on their own to fund their care.” 

The rest of her article covers the basic ways to foot the LTC bill. There are various types of insurance. Some people can self-pay out of their savings. Others who have depleted (or otherwise protected) their assets can qualify for Medicaid. Many end up selling or mortgaging their home to pay for care. A high percentage become reliant on their family for care, but that, the article notes, can “disrupt your life and theirs, and jeopardize their financial security, too.” 

We’ll consider a few of these options in greater detail. 

Traditional LTC Insurance: Good for Some, If They Qualify 

For her Kiplinger article, Silvestrini spoke with Jesse Slome, director of the American Association for Long-Term Care Insurance. He said that the traditional long-term care insurance policy is suitable for a small percentage of consumers – perhaps a reflection of the fact that fewer than 4 percent of those over 50 have traditional LTC coverage. 

“First, you have to apply at an age where you can get the insurance,” Slome told Kiplinger. “You have to be in good health, and you have to have the financial wherewithal.”  

(As noted above, we have a companion article on the Blog this week explaining long-term care insurance in greater detail.) 

When it Comes to LTC Insurance, Cost is the Biggest Deterrent 

It comes as no surprise that a major deterrent for those considering traditional LTC insurance is cost.  

“Stand-alone long-term-care insurance is expensive and difficult to get on the open market,” Silvestrini writes. “Poor pricing decisions and inaccurate forecasts of policyholder dropout rates, longevity, and need for care whittled down the number of insurers that offer new long-term-care insurance policies.”  

There are currently eight players in the LTC marketplace: Mutual of Omaha, Thrivent, National Guardian Life, New York Life, Northwestern Mutual Life, Bankers Life, Genworth Financial, and MassMutual. Just 25 years ago, the roster of LTC insurers totaled over 100. 

The Younger the Applicant, the Lower the Rate 

Again, Silvestrini goes into greater detail than we have the space to include. However, one point bears emphasis: getting a policy when you’re younger will almost certainly keep the premiums down. Not only will older LTC applicants face higher premiums, but they may find themselves denied coverage based on health requirements and other stipulations. One 2020 study reported that nearly 40 percent of applicants in their seventies were rejected. 

The American Association for Long-Term Care Insurance compared average annual rates for a $165,000-benefit policy with no inflation protection. For a couple where both are age 55, the average combined annual premium would be $2,080. But waiting just five years pushes the premium to $2,600, and it rises rapidly from there. 

Of course, there’s a downside to early purchase. “Determining the best age to buy LTC insurance is tricky,” the Kiplinger article acknowledges. “Buy too young, and you’ve wasted money. Buy too old, and you risk being underinsured or denied.” 

Premiums Can Rise, and Policy-Holders Have Options 

Buyers need to know that LTC premiums are not locked in. “Over time,” says Silvestrini, “monthly premiums increase.  One analysis of thousands of rate increases found the average LTC insurance policy rate rose by 112 percent over 25 years, although premiums may have risen less sharply in recent years as the companies that remain in the market have gotten better at pricing policies.” 

We know of one Genworth-insured couple whose rates have remained unchanged since they purchased their policies 13 years ago. 

If a policy-holder can’t handle the premium, companies will generally allow the terms to be adjusted, cutting the cost. One strategy is to opt for a longer waiting period before coverage starts. You can also reduce the coverage period or opt for a smaller monthly benefit. Some firms offer a discount if you can pay an annual premium instead of monthly or quarterly. 

Find Out if Your Employer Offers an LTC Insurance Benefits 

Silvestrini notes that, just like buying life insurance through your workplace, you might find your employer offering LTC insurance. This option may let you buy long-term-care insurance without undergoing a health assessment. 

“There is no recent, comprehensive data pinpointing the exact percentage of companies offering LTC insurance as an employee benefit in 2025,” she writes. “However, a 2000 survey by the U.S. Department of Health and Human Services (the most recent data to date) found that among employers offering group LTC insurance, about 65 percent offered it to all employees.” 

Jesse Slome with the American Association for Long-Term Care Insurance agrees that this is a good option. For some, it might be easier to get a policy through your employer than on your own. “The policies are generally portable, which means you can keep them after you leave your job, though you’d have to continue paying the premiums to maintain coverage,” he explains. 

Hybrid Policies Combine LTC Benefits with Life Insurance 

As the number of companies offering traditional LTC insurance has declined, says Silvestrini, insurance companies have gotten creative. One attractive option for some people is generally called a “hybrid policy,” bundling long-term care and life insurance into one policy. 

“Primarily, this is taking the form of life insurance with an LTC component,” Silvestrini explains. “With these policies, if you need long-term care, you use some or all of the death benefit to pay for it. If you pass away without needing long-term care, your heirs receive the full death benefit.” 

Costs for hybrid LTC insurance is high but overall costs are dropping, says Jesse Slome. Because hybrid insurance requires a large upfront investment, experts urge consumers to talk to a financial advisor to get the full cost-benefit picture. 

Annuities Can Be Part of a Long-Term Care Solution 

Annuities are growing in popularity for a variety of reasons. Now, some income annuities are being offered that can include a provision for a higher payout if you need long-term care. 

But there’s a caveat, says Silvestrini. “The payout may not cover the full cost of care,” she warns, “and the added cost of this provision, known as a rider, can reduce the standard payout from the annuity.” She adds that an LTC rider “may double or even triple your monthly payout for a certain period of time,” but it will reduce your standard payout considerably.  

According to industry leader Slome, the annuity option can be better than hybrid life insurance, because policy-holders are receiving annuity payments regardless of whether they need long-term care. What’s more, buying an annuity with a rider is simpler than purchasing long-term care insurance due to less stringent health requirements and age restrictions. 

“Traditional long-term-care insurance accepts new applicants up to age 75,” Slome says, “while annuities with long-term-care riders accept applicants up to age 85.” 

Pay as You Go: The Pros and Cons of Self-Insuring 

Most of the options listed in the Kiplinger article are targeted at those who need to protect themselves and their estates against the high cost of uncovered care. However, as Silvestrini notes, that’s not everybody. 

“Some retirees have sufficient assets to self-insure,” she says, “meaning they pay the cost of any needed long-term care out of pocket without relying on an insurance policy.” 

No matter what, self-insurance is a gamble, and a potentially costly one. According to Jesse Slome, “Generally, you should have anywhere from $300,000 to $700,000 in liquid, cashable assets. This may include funds from your traditional IRAs and Roth IRAs, 401(k) plans, and taxable accounts. You can also factor in income from Social Security and a pension, if you have one.” 

Many people use home equity to help fund long-term care. This week on the Blog, we have posted an article about reverse mortgages, for example. It’s also common for seniors to sell their family home in order to pay for the cost of moving into a retirement community. 

Probability is High That Your Loved Ones Will Be Involved in Your Care 

Silvestrini ends her article by addressing the critical issue of your family. Unless you’re entirely on your own, odds are high that your family will be involved in your l0ng-term care, at least to some degree. Whatever choices you make to pay for care needs to take your loved ones into account. 

Last month here on the Blog, we wrote about the caregiving crisis for families. Our article put it this way: 

“[Approximately] 63 million Americans—nearly 1 in 4 adults—provided ongoing care for an adult or a child with a complex medical condition or a disability in the past year,” AARP reports. What’s more, the total number of caregivers actually grew by 20 million in the decade between 2015 to 2025 – a truly astounding statistic. The overwhelming majority of these 63 million caregivers – 59 million – were caring for someone over 18.”  

“Family caregivers are a backbone of our health and long-term care systems—often providing complex care with little or no training, sacrificing their financial future and their own health, and too often doing it alone,” said AARP CEO Myechia Minter-Jordan.  

Are You Preparing Your Family to Address Your Care Needs? 

No matter what preparations you make for long-term care, your family needs to be involved in, and informed about, your choices, says Rajiv Nagaich. 

“The numbers are staggering,” he notes. “About one-quarter of all family caregivers are providing 40 hours of care or more per week. About a third are also raising children under 18 at the same time as they’re caring for an older loved one. The impact on their health, their finances, their emotions is simply impossible to measure.” 

The bottom line: planning for long-term care, says Rajiv, is “about much, much more than money. You need to make certain your heirs, your kids, know what kind of care you want and how you’ve planned to cover the cost. I guarantee, we can help you do that planning. There’s an old saying: the best time to start planning was yesterday. The second-best time? Today.” 

Age on, everyone! 

(originally reported at www.kiplinger.com)