Long-term care insurance.
The retirement expense most people do not plan for.
The median annual cost of a private nursing-home room exceeds $100,000. Medicare does not cover most long-term care. Approximately 70% of people turning 65 will need some form of long-term care. This page explains what LTC insurance covers, what it costs, when to buy, and the alternatives.
This page covers US Medicare, Medicaid, and private LTC insurance. Other countries (Canada, UK, Australia) have different long-term care frameworks built around their public health systems.
A private nursing-home room costs a median of more than $100,000 a year, and Medicare does not cover custodial care when that is the only care needed. About 70% of people turning 65 will need some long-term care, averaging about 3 years. If buying LTC insurance, the window is 55 to 60, before premiums spike after 65.
On this page
Section 1 · What long-term care costs
Median annual costs from the Genworth Cost of Care Survey (most recent edition):
verify×DON'T TRUST, VERIFYClaim: Cost figures from Genworth Cost of Care Survey.Verify at: genworth.com/aging-and-you/finances/cost-of-care.html ↗ Source 1 in the list belowGenworth publishes the survey annually with state-by-state and metro-level breakdowns. Costs vary 2x or more between low-cost and high-cost areas.
What Medicare does NOT cover
Medicare covers skilled-nursing-facility care for up to 100 days after a qualifying 3-day hospital stay. Days 1-20 are covered in full; days 21-100 require a daily copay (approximately $217/day in 2026) verify×DON'T TRUST, VERIFYClaim: Medicare SNF coverage limits and daily copay for days 21-100.Verify at: medicare.gov SNF coverage ↗ Source 2 in the list belowCoinsurance amount is published annually. The 100-day limit per benefit period and the 3-day prior-hospital-stay requirement are statutory.. After day 100, Medicare pays nothing for skilled-nursing care.
Critically, Medicare does not cover custodial care when that is the only care needed. Custodial care is help with the activities of daily living: bathing, dressing, eating, toileting, transferring. Custodial care is most of what people in long-term care need. The bill falls on private resources, family caregivers, or Medicaid for those who qualify.
What Medicaid covers
Medicaid covers long-term care, but only for people with very limited assets. Most states limit countable assets to approximately $2,000 for a single applicant verify×DON'T TRUST, VERIFYClaim: Most states cap Medicaid countable assets near $2,000 for single applicants.Verify at: medicaid.gov ↗ · American Council on Aging eligibility tool ↗ Source 3 in the list belowLimits vary by state and program (Medicaid for the Aged, Blind and Disabled vs Modified Adjusted Gross Income Medicaid). Spouse asset rules differ. Always check your state.. Some assets are exempt: a primary residence (up to a state-set equity limit), one vehicle, household goods. Medicaid planning (deliberately spending down assets to qualify) is complex, has a 5-year lookback period for asset transfers, and should be done with a qualified elder-law attorney.
Section 2 · Who needs long-term care insurance
Approximately 70% of people turning 65 will need some form of long-term care during their lives, with an average length of about 3 years. About 20% need care for 5 years or more verify×DON'T TRUST, VERIFYClaim: ~70% of 65-year-olds will need some long-term care; average ~3 years; 20% for 5+ years.Verify at: HHS Administration for Community Living ↗ Source 4 in the list belowHHS ACL data is the most-cited source. Numbers vary slightly by methodology and update year..
- $250k - $2M net worthnet worthEverything you own (assets) minus everything you owe (debts). The most comprehensive measure of financial health.Full definition. Too much for easy Medicaid qualification, not enough to absorb $100k+/year of care without significant risk.
- Households without large assets outside the home. If liquid net worth is under $500k, care costs can wipe it out within 5 years.
- People with specific legacy goals. If passing assets to heirs matters, LTC insurance protects the estate from being consumed by care.
- Liquid assets above $5M. Self-insuring is reasonable. Premiums over 20+ years may exceed expected care benefit.
- Very low net worth. If you would qualify for Medicaid quickly anyway, premiums are wasted.
- Strong family caregiver capacity. Spouse or adult children able and willing to provide care reduces the cash need substantially. Consider the toll on caregivers.
Section 3 · How LTC insurance works
Key benefits to understand:
- Daily or monthly benefit. What the policy pays per day or month of qualifying care.
- Benefit period. How long benefits last: 2, 3, 5 years, or unlimited (rare and expensive today).
- Elimination period. Your deductible in days, typically 30, 60, or 90 days, before benefits begin.
- InflationinflationA general increase in prices over time, meaning each dollar buys less than it did before.Full definition protection. Critical. Care costs rise faster than general inflation. A policy without inflation protection becomes nearly useless 20 years out. The standard option is 3-5% compound inflation protection.
Show the data as a table
| Month | Nursing homes and adult day services (Dec 1996 = 100) | All items (Dec 1996 = 100) |
|---|---|---|
| Dec 1996 | 100.0 | 100.0 |
| Dec 1997 | 103.9 | 101.7 |
| Dec 1998 | 108.4 | 103.3 |
| Dec 1999 | 113.4 | 106.1 |
| Dec 2000 | 119.0 | 109.7 |
| Dec 2001 | 124.3 | 111.4 |
| Dec 2002 | 129.8 | 114.1 |
| Dec 2003 | 137.3 | 116.2 |
| Dec 2004 | 142.1 | 120.0 |
| Dec 2005 | 147.1 | 124.1 |
| Dec 2006 | 154.5 | 127.2 |
| Dec 2007 | 162.0 | 132.4 |
| Dec 2008 | 167.1 | 132.6 |
| Dec 2009 | 173.1 | 136.2 |
| Dec 2010 | 178.5 | 138.2 |
| Dec 2011 | 183.8 | 142.3 |
| Dec 2012 | 190.4 | 144.8 |
| Dec 2013 | 196.1 | 146.9 |
| Dec 2014 | 201.9 | 148.1 |
| Dec 2015 | 208.4 | 149.1 |
| Dec 2016 | 215.6 | 152.2 |
| Dec 2017 | 222.1 | 155.4 |
| Dec 2018 | 230.5 | 158.4 |
| Dec 2019 | 237.0 | 162.0 |
| Dec 2020 | 243.9 | 164.2 |
| Dec 2021 | 252.2 | 175.8 |
| Dec 2022 | 264.0 | 187.1 |
| Dec 2023 | 276.9 | 193.4 |
| Dec 2024 | 291.0 | 199.0 |
| Dec 2025 | 303.4 | 204.3 |
| Aug 2026 | 315.6 | 211.2 |
A price index, not the cost of care: from December 1996 to August 2026 the price of the same nursing-home and adult-day services rose 216% (3.95% a year, compounded), against 111% (2.55% a year) for all items. The dollar costs above come from the separate Genworth survey. October 2025 prices were never collected (the 2025 lapse in appropriations), so both lines break there.
Three policy types
Covers gaps Medicare leaves, usually 360 days or less. Cheaper than full LTC. Useful for filling the Medicare 100-day cliff, not for catastrophic multi-year care.
Premium estimate (rough)
Healthy 55-year-old, $150/day benefit, 3-year benefit period, 3% inflation protection: approximately $2,000-$3,000/year. Married-couple rates are typically 30-40% lower per person verify×DON'T TRUST, VERIFYClaim: Healthy 55-year-old LTC insurance premium ~$2,000-3,000/yr for the spec quoted.Verify at: American Association for Long-Term Care Insurance ↗ Source 5 in the list belowAALTCI publishes annual premium surveys with age and benefit-level breakdowns..
Premium increase risk. LTC insurance premiums are not guaranteed level. Insurers have historically raised premiums significantly mid-life when claims exceeded projections. Many policyholders have dropped coverage in their late 60s or 70s due to unaffordable premium increases, losing all premiums paid. This is the biggest weakness of traditional LTC insurance.
Section 4 · When to buy
The optimal age window: 55-60.
- Before 55: premiums are lower but you are paying for 20-30 years before likely need.
- After 65: premiums spike sharply and health issues may make you uninsurable. Many applicants over 70 are declined entirely.
- Sweet spot 55-60: reasonable premiums while most people are still healthy enough to qualify.
If you have a family history of dementia, Alzheimer's, or Parkinson's: consider buying earlier. These are the conditions most likely to lead to long, expensive long-term care, and once diagnosed they make insurance harder to obtain.
Section 5 · Alternatives to LTC insurance
Where to go from here
Sources
Verify badges in the text link to these sources. Figures, rates and rules change: check each source’s date before acting on it.
- Genworth Cost of Care Survey · genworth.com/aging-and-you/finances/cost-of-care.html. ↩
- Medicare Skilled Nursing Facility coverage · medicare.gov. ↩
- Medicaid.gov for state-specific eligibility rules · medicaid.gov. ↩
- HHS Administration for Community Living, "How much care will you need?" · acl.gov/ltc/basic-needs/how-much-care-will-you-need. ↩
- American Association for Long-Term Care Insurance · aaltci.org. ↩
- IRS Publication 502 (Medical and Dental Expenses) · irs.gov/publications/p502. ↩
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