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Feb. 19, 2021, 3:47 p.m. EST

Long-term care insurance cost: Everything you need to know

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Whether provided in a nursing home, assisted living facility, or inside the home, long-term care (LTC) services offer daily assistance for people with chronic illness or disabilities. They help patients with various essential tasks, from eating, bathing, and dressing to housekeeping, grocery shopping, and even money management.

Most employer-sponsored private insurance plans don’t cover long-term care services, nor does Medicare . And without a stand-alone LTC insurance policy, your annual out-of-pocket costs could range from $20,000 to $100,000, depending on the type of care you need.

The reality is that around 7 out of every 10 seniors will need long-term care at some point during their lifetime. But if you start planning early, you can avoid mountains of medical bills and associated debt.

This article will cover how long-term care insurance works, who might need it, the services it covers, and a review of average LTC premium costs.

Key takeaways:

  • Long-term care refers to services received from nursing homes, assisted living facilities, in-home care providers, and adult day care centers. These services help with eating, bathing, mobility, and other custodial tasks that patients can’t complete independently.

  • Without long-term care insurance, annual LTC costs in 2020 range from $93,075 to $105,850 for care in a nursing home, $53,768 for homemaker services, $54,912 for a home health aide, $51,600 for an assisted living facility, and $19,240 for adult day health care.

  • Most medical and disability insurance policies, including Medicare, don’t cover long-term care, which is why you need a separate LTC insurance policy.

  • LTC premiums vary by age, gender, and the type of plan and carrier you choose. On average in 2021, a single 55-year-old male purchasing a $165,000 policy benefit will pay $950 per year, while a single 55-year-old woman will pay $1,500 annually. Adding 10 years, a 65-year-old single male will pay $1,700 per year for the policy, while a single female of the same age will pay $2,700.

  • LTC insurance eligibility and pricing varies depending on your age and health condition. Experts recommend signing on to a long-term care policy in your mid-50s.

What is long-term care insurance?

Long-term care insurance policies serve people with chronic medical conditions or disabilities, such as Alzheimer’s disease, who need assistance with daily living activities.

Long-term care is provided by professional home health aides, adult day care services, nursing homes, and assisted living facilities. Another common source is family and friends who are caring for a loved one without pay. In fact, 80% of at-home care comes from unpaid caregivers, according to the U.S. Department of Health and Human Services (DHHS).

What services does long-term care insurance cover?

Long-term care services offer both medical and non-medical assistance. On the medical side, they help with Activities of Daily Living (or ADLs ), such as:

  • Bathing

  • Dressing

  • Using the toilet

  • Transferring (moving short-range from one position to another, like from a bed to a chair)

  • Incontinence

  • Eating and drinking

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