Long-Term Care Insurance

Long-term care (LTC) refers to a range of services and support for people who need help with daily activities over an extended period. These activities, known as Activities of Daily Living (ADLs), include bathing, dressing, eating, transferring (moving in and out of a bed or chair), toileting, and continence. Long-term care also covers cognitive impairments that require supervision. Medicare covers only limited skilled nursing care after a hospital stay, and it does not cover custodial (non-medical) care, which is what most people think of as long-term care.

Long-term care insurance is designed to fill this gap. Traditional LTC insurance policies pay a daily or monthly benefit when you qualify for care, typically after being unable to perform two or more ADLs or having a qualifying cognitive impairment. Policies vary in their benefit amounts, duration, waiting periods (elimination periods), inflation protection, and whether they cover home care, facility care, or both.

The cost of long-term care can be substantial. In 2025, the national median annual cost for a private room in a nursing home exceeds $100,000, and costs in the Philadelphia metro area tend to be higher than the national average. Assisted living, home health aides, and adult day care are less expensive but still represent significant costs that may persist for years. The average need for long-term care services is approximately three years, though some individuals require care for much longer.

Traditional long-term care insurance has faced challenges, including significant premium increases for existing policyholders and fewer insurers offering standalone policies. As a result, hybrid or combination policies have become increasingly popular. These products combine long-term care coverage with either life insurance or an annuity, providing an LTC benefit if needed and a death benefit or annuity value if care is never required. Hybrid policies generally have fixed premiums that do not increase over time.

The ideal time to purchase long-term care insurance is typically in your mid-50s to early 60s, when premiums are more affordable and you are more likely to qualify medically. Premiums increase with age, and health conditions may disqualify you from coverage. Some states offer tax incentives for LTC insurance premiums, and premiums on tax-qualified policies may be partially deductible as a medical expense if you itemize deductions.