Best Long-term Care Insurance Companies

Long-term care insurance helps cover the cost of medical and nonmedical care in settings including your home, an assisted living facility, a memory care facility and a nursing home. Generally, the costs associated with long-term care are not fully covered by traditional health insurance providers or government programs like Medicare. Instead, many opt to add long-term care insurance to their senior care plan to avoid paying 100% out of pocket. If you don’t have long-term care benefits, the cost of long-term care can quickly deplete your savings.

Long-term care insurance policies consider your ability to perform activities of daily living (ADLs) and/or the presence of cognitive impairment to determine your benefits eligibility. ADLs include basic functions like dressing and grooming, toileting, bathing, eating and continence.

What does long-term care insurance cover and not cover?

Long-term care insurance covers expenses for personal or custodial care in your home or another care setting, such as an adult day care center, an assisted living facility, a memory care community or a nursing home. Long-term care insurance can also pay for home modifications, such as wheelchair ramps and safety grab bars. Care coordination services are included in some of the best long-term care insurance policies.

Long-term care coverage exclusions

Long-term care insurance is not intended to cover medical expenses or care for preexisting conditions, including heart disease, cancer, diabetes and some mental disorders. Most long-term care policies also exclude coverage for long-term illness or injuries caused by things like alcoholism, drug abuse, self-inflicted wounds or mental disorders.

Long-term care insurance probably won’t cover your phone, cable or internet bill if you are in an assisted living facility or nursing home. Additionally, long-term care insurance doesn’t cover in-home care provided by a family member.

Government policies like Medicare and Medicaid only cover long-term care services in very specific situations, so older adults and families on tight budgets often have to pay for daily care services out of pocket. Long-term insurance care covers these expenditures so you can save money for other living expenses. 

To apply for long-term care insurance, you need to select a suitable program and fill out details about your medical history. Once your application is approved, you pay a fixed amount, known as a premium. This fee is used to reimburse you in the future when care services are needed. However, there is often a 30- to 90-day gap, or an “elimination period,” where you have to wait for your insurance policy to begin reimbursing your costs. This waiting period starts once you meet the criteria for starting to receive benefits. Costs during the elimination period must be paid out of pocket.

Long-term care insurance costs can range from $1,000 to $5,000 or more per year, depending on the age when it was purchased, the applicant’s health and the amount of coverage chosen. The average long-term care insurance premium is about $2,200 each year and provides daily benefits of $150 to $160 for a period of two to five years.

The earlier you buy long-term care insurance, the less you have to pay in premiums each year. Long-term care insurance costs also vary by your location, gender and marital status. Shared care policies, which allow a couple to combine their benefits for both or one to use, are popular with married couples who also want a discount for enrolling at the same time. With a shared care long-term care insurance policy, the total coverage for each policy is combined and available between the two people named on the policy.

Long-term care insurance rates also depend on the level of coverage you want. Premium or upgraded insurance tiers come with a higher price tag, but the additional cost might be worth it if you end up needing professional custodial care for an extended period.

Most long-term care insurance companies offer monthly payment options, but you may get a better deal by paying for the year upfront. Long-term insurance policy options are sometimes “guaranteed renewable,” meaning the insurance company cannot cancel your policy. The company can, however, raise your premiums as part of long-term care insurance rate increases for a class of policies.

It’s important to know that an insurance company must first seek approval from each state insurance department for a rate increase, and the rate can only be increased to the amount approved by the department. If this happens, you are given the choice to accept the rate increase, accept changes in benefits to keep your cost the same or forfeit your policy and receive a paid-up policy equal to the amount of premiums you have paid. While nearly every insurance company has had to raise rates in the past, the policies sold today are priced much more accurately and much less likely to need a rate increase. However, it is always good to be prepared for these increases.

Tax advantages help balance out the cost of long-term care insurance. You can deduct part or all of your long-term care insurance premiums as medical expenses if you itemize them as deductions on your federal income tax return. Eligibility premiums, or the amount that may be claimed as a medical expense, are set by certain age thresholds. For example, those under the age of 50 can deduct up to $810, while those older than 71 can deduct up to $5,430. Business owners have additional tax advantages if they pay for LTC insurance through their company. Finally, LTC insurance premiums can be paid with pre-tax HSA dollars for all individuals.

To get the best price on long-term care insurance, you should work with an experienced agent or broker that offers insurance products from multiple carriers. Be sure to get the best deal by comparing multiple long-term care insurance quotes. And remember, it never hurts to ask for a discount.