How to Save Money on Long-Term Care Insurance (2023)

As you age, you may need to begin thinking about what will happen when you start to lose your ability to care for yourself. Not everyone will reach this point, but most people will eventually need Long-term care (LTC). 

The costs of LTC are incredibly high. It is rare that someone can afford to pay for it without help. While you may have Medicare, it will not cover these costs. Your only other options are Medicaid, if you qualify, or Long Term Care insurance.

Long-term care insurance can be confusing. There is no standard insurance because every provider manages his or her offerings independently. To help you understand your LTC insurance options, we offer you information on what this insurance is, how it works, when you should get it, how much it costs, and what factors may influence the cost. We want to provide you with the ultimate guide to understanding Long Term Care insurance.

How Does Long-Term Care Insurance Work?

Long-term care insurance basically works like any other insurance where you pay premiums for the coverage, make a claim when you need it, and receive payments on your claims. According to Aging in Place, LTC insurance will reimburse you for the cost of personal care needs as you age. It also usually covers residential care if you choose to go into a nursing home.

You may not get the same coverage from all plans, so it is essential to read the policy before you sign up. Some policies will cover adult day care and in-home care while others will not. Long Term Care plans are not like a typical health insurance policy, so you need to be aware of this as you shop around.

You can expect costs to be higher with a plan that offers more options and coverage choices.

Types of Long-Term Care Insurance Policies

Long-term care insurance policies come in two types: 

  • Traditional
  • Hybrid

Traditional policies are a simple Long Term Care insurance. Essentially, it pays for LTC needs only. You can begin making claims when you meet the insurer’s requirements. Typically, this will be if you’re unable to perform Activities of Daily Living (ADL). For example, ADLs include eating on your own, personal hygiene tasks, and walking. It is common for a policy to require you to be unable to do at least two ADLs.

One thing to note about Long Term Careinsurance is there is a waiting period. It can be 30 to 90 days where once you make a claim, you must wait for the policy to begin paying. So, even though you have the insurance, it won’t pay for anything for a month to three months.

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Hybrid policies combine LTC insurance and life insurance. These policies cost more because they do offer a two-in-one option. However, they also provide more usability.

You will have the Long Term Care coverage available if you need it. You will draw what you need from the policy, and if there is anything remaining, your loved ones will receive that payout when you die. If there is nothing left, then there is no payout. If you don’t use the policy for Long Term Care expenses, then it will pay in full to your heirs upon your death.

Long term care insurance

Is It Worth It to Buy Long-Term Care Insurance?

You generally have two options when it comes to paying for LTC expenses. You can buy LTC insurance or use Medicaid, which is a government insurance that requires meeting strict income limits. Note that Medicare doesn’t pay anything towards Long Term Care needs.

Nobody can be sure they will need long-term care services, and it’s not something everyone has to have. However, if you do need LTC, it is incredibly expensive.

LTC insurance is a good investment if you have assets you want to protect or you want to have more choices in care options. It is also recommended if you know you won’t be able to pay out of pocket for your care and won’t meet Medicaid income limits. 

Long Term Care Insurance expenses can be financially overwhelming for families, so planning ahead and securing this insurance can be a lifesaver. It is important to assess your situation and determine if it is better for you to buy LTC insurance or rely on Medicaid.

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What Is the Best Age to Buy Long-Term Care Insurance?

This is a highly debated topic. What you should know is that the younger you are when you buy it, the lower your premiums will be. However, unlike life insurance, your premiums will usually increase over time. If you have a hybrid policy, you may be able to lock in rates.

With a traditional plan, you have to find the right balance. You want to get it when you don’t have preexisting conditions that could disqualify you from coverage, but not so early that you pay years of premiums without any benefit.

AARP states the right age for buying Long Term Care insurance is between the ages of 60 and 65 for the average healthy person. This sweet spot allows you to pay affordable premiums without paying before you will need to make a claim.

What Is the Average Cost of Long-Term Care Insurance Premiums?

One thing about LTC insurance is it is expensive. Smart Asset explains that as of 2020, for $164,000 coverage under a traditional plan, a man aged 55 will pay an average annual premium of $1,700. However, you should be aware there are many factors that will determine your rate.

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How Much Is Long-Term Care Insurance for a 20 to 80 Year Old?

Again, the only way to give a cost for Long Term Care insurance is through an estimate since situations differ so significantly, and insurers use a variety of things to determine your policy rates.

Age is an important factor. Considering it, let’s see the monthly costs for various age groups of single individuals for a $150 a day/ $4,500 a month policy with a three-year benefit and 90-day waiting period. 

Looking at these figures, you can see how the price increases with age. There is no other difference between these policies than the age of the applicant.

One important thing to note is the huge jump after age 60. The reason for this is due to the risk to the insurer. At age 70, a person may be more likely to need services soon. The insurer knows it will have to pay out before the person has paid a lot of money on the policy. This means the insurer will probably lose money on this policy, so it tries to recoup some of that through a higher premium.

Dave Ramsey Long-Term Care Insurance Reviews

Dave Ramsey is known for being a financial guru who offers advice on financial topics. One issue he’s spoken out about is long-term care insurance. According to him, you should not buy LTC insurance before the age of 60 because you will get the most benefit from the policy at that age without paying out premiums needlessly for too long before making your first claim.

The American Association for Long-Term Care Insurance agrees with Ramsey’s views on LTC insurance. The organization says buying around age 60 is the best option to get the best value.

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When to Buy Long-Term Care Insurance

With so many viewpoints on when to buy LTC insurance, you may not know what the best choice is. It’s a balancing act between buying it so early that you pay way more than you need to in premiums and waiting too long that you can’t get insured due to your health.

It is a personal decision. You can buy or not buy whenever you want. You have to look at your own circumstances. If you happen to have a genetic predisposition to health conditions that will cause you to need Long Term Care services, then you may want to buy it earlier than if you didn’t have these concerns.

You can also consider that most people will not use LTC insurance until they are in their 70s. Using this information, you need to determine based on your health when the best time to buy will be. For most people, it will be between the ages of 55 and 65.

Long-Term Care Insurance Options

You will have options for your Long Term Care policy other than buying an individual traditional plan. It is helpful to know what these options are before beginning your search for coverage.

Hybrid Option

If you like the idea of a hybrid policy, then you will need to look for life insurance rather than LTC insurance. You want to find a policy with an LTC rider, which is a feature that adds LTC coverage to the policy.

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Employer Policy

Your employer may offer you Long Term Care insurance. Getting the coverage through your employer can allow you to get group rates, which are usually cheaper than individual rates. Your employer might also contribute to your plan, reducing the policy cost even more. 

What Are Long-Term Care Costs for 2021

Long Term Care involves a variety of care options: 

Home health aide: A person comes into your home to offer basic care services, such as helping you bathe or preparing meals, and some minor healthcare services, like nail clipping. 

Homemaker services: A person assists you with various homemaking tasks, such as grocery shopping and laundry.   

Adult daycare: You attend a facility during the daytime. You’ll participate in activities, such as crafting or field trips. The facility has professionals who have training in the care of older adults.

Assisted living facility: This is a facility that is similar to an apartment with access to trained professionals who can assist you as needed. It allows you to be independent with medical help on site.

Long term care insurance

Nursing home care: A nursing home is a facility where you live with others and receive medical care and basic care on a regular basis. You may share a room with someone else or have your own room.

Cost of Long-Term Care Insurance

Starting off 2021 using figures from 2020, Genworth gives national median monthly costs for LTC needs:

  • Home health aid: $4,576
  • Homemaker services: $4,481
  • Adult daycare: $1,603
  • Assisted living facility: $4,300
  • Nursing home (semi-private room): $7,756
  • Nursing home (private room): $8,821

These are simple estimates. Your costs could be more or less depending on your circumstances. There are a variety of factors that will go into how the insurer determines your premium.

We’ve already discussed how age influences the cost, but gender and marital status can also impact it. Married individuals will have lower costs because they get a policy together. Women will usually pay more because they live longer on average than men.

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Another factor that will impact your premium is your health. If you have health conditions or a family history of ill-health, you can expect to pay more because there is a higher likelihood of you needing more care as you age than someone without such concerns.

The insurance company you choose will impact your rates because every insurer has a different formula for determining what you will pay. The amount of coverage directly influences your premium because the more coverage you get, the more you will pay. 

You will also need to choose the number of years the policy will pay out. If you choose more

years, you will pay more. Also, the waiting period will impact your rates. If you have a longer waiting period, then you can get a lower rate. Finally, some companies will offer inflation protection, which helps keep your rates from rising too dramatically, but you will pay more for this type of coverage than if you didn’t have that option.

Tax Advantages of Buying Long-Term Care Insurance

You can reap some tax benefits from buying LTC insurance. The IRS considers Long Term Care needs as medical expenses, which means it gives you the chance to deduct some of what you pay from your tax burden. You can take a deduction based on your age at the end of the tax year. For 2021, the deductions are as follows:

  • Age 40 or under: $450
  • Age 41 to 50: $850
  • Age 51 to 60: $1,690
  • Age 61 to 70: $4,520
  • Age 71 and up: $5,640

Do note that you cannot deduct any part of your premium paid for by your employer because your employer will already receive a deduction on that as a business expense.

How Much Will Long Term Care Cost You? 

Learn more about the cost of care in your area. Use this tool to understand how a long-term care event might affect you. 

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What Is the Difference Between Tax Qualified (TQ) and Non-Tax Qualified (NTQ) Policies?

Another important point to note is that you need a tax-qualified policy. You should receive a Form 1099-LTC for a TQ policy. You will need to meet some qualifications as well. You must be unable to do at least two ADLs or have a health diagnosis of a chronic illness that will last for at least 90 days. You also need to minimize your deductions on your health insurance.

A NTQ will not require a 90-day chronic illness diagnosis. It does not require you to have ADL restrictions. For an NTQ, you can’t claim it on your taxes, so you won’t have to itemize deductions.

In more simple terms, a TQ policy is a traditional policy. All traditional policies should be tax-qualified. On the other hand, a hybrid policy does not offer tax benefits, so it is an NTQ.

Employer-sponsored policies may be TQs or NTQs, depending on your employer’s contribution, as explained above.

Where to Buy Long Term Care Insurance?

You have three options for buying long-term care insurance:

  • Employer
  • Local agent
  • Online


Not every employer will offer this type of insurance coverage. You will need to check with your human resources department. Employer coverage can be the best option if it is available to you because it is generally much cheaper than an individual policy. Plus, your employer may pay part of your premium, which will reduce costs even more. 

If you get LTC insurance through your employer, the premium payments will usually come out of your paycheck directly, just as any other insurance coverage you have does. This is often an added benefit as it is automatic and makes it easier to budget.

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Local Agent

You can find an insurance agent in your area with whom you can meet and buy a policy. Keep in mind that most agents will represent just one company. It’s best, especially with Long Term Care insurance, to shop around and get multiple quotes from a range of companies.

Of course, it can be difficult and time-consuming to find options locally since you’ll likely have to physically meet with multiple agents. Comparing the policies and quotes only adds to the time it takes.

However, if you prefer to do business face-to-face, then this is the best option. You may also find an agent that can get you multiple quotes from different companies.


It is probably the easiest to go online and get quotes. You can usually enter your information only one time and get multiple quotes. You can easily compare policies and find the lowest prices online.

Keep in mind that every company will offer you different quotes even if you give them the exact same information due to how each company calculates premiums.

In addition, when shopping around, make sure the terms of the policy are exactly the same before comparing them. Remember, a policy that pays out for a longer amount of time or that has a lower waiting period will always cost less than one with a more limited payout time or longer waiting period. You cannot get proper quotes if you are not comparing like policies.

How Do State Partnership Plans Work With Long term Care Insurance?

As you begin looking into long-term care insurance, you will come across state partnership plans. A state partnership plan is a program the state runs to help you qualify more easily for Medicaid.

Not every state offers a partnership program. States without this option are:

  • Alaska
  • Hawaii
  • Illinois
  • Massachusetts
  • Mississippi
  • Utah
  • Vermont

It doesn’t impact your LTC insurance directly, but it can allow you to keep your LTC insurance and still qualify for Medicaid. To qualify for Medicaid, you have to meet income limits because it is insurance for those with a low income only.

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Medicaid will consider your earnings and assets when determining your qualifying income. Typically, to get the insurance, older individuals will need to get rid of assets they own. Most states set a limit of $2,000 for an individual. If you have assets over that limit, you must sell them.

With the state partnership program, you get an increase in the assets you may own. The state will increase your asset limit by the amount of benefits your LTC insurance will pay. For example, if your policy pays $100,000, then your new Medicaid asset limit will be $102,000.

Medical Underwriting Requirements

When it comes to buying an Long Term Care insurance policy, you will have to go through the underwriting process. Part of the process will focus on basics, such as verifying you are who you say you are and looking over your credit history. The other part is medical underwriting.

This is a process that helps the company to determine how much of a risk you represent. An insurance company wants to pay out as little as possible. So, you will be at a higher risk if the company determines your health is such that you will likely need LTC services because then you will make a claim, and the company will have to pay out. 

If, during underwriting, the company determines your health is currently too bad, it won’t offer you a policy. Every company is different. Some will have specific medical conditions for which it is an automatic denial. Companies will also usually have conditions they allow. You should do your research to figure out what is allowable and what is not for the company from which you want to buy a policy.

There are usually multiple parts to the medical underwriting process. It will start with a review of your medical records, including prescription drugs that you take. If you pass this stage, you will then move onto an interview.

It might be over the phone or in person. An in-person interview will usually involve a physical exam, usually with a nurse. He or she will take your temperature, blood pressure, and other vitals. You may have to complete some tasks and answer questions.

Once the company completes its investigation, it will either offer you a quote or let you know it cannot provide you with coverage. 

Summary of Long Term Care Insurance

Long-term care insurance is specific to older adults, and it pays for medical needs when you are unable to take care of yourself as you age. Most people will not secure this type of insurance until they are at least in their 50s, although it is available for anyone to buy. 

With a policy, you will get specific coverage up to your policy limits. There is usually a set time in which the policy will pay out. Therefore, there is a limit on how long you can get benefits. 

You can buy a policy through your employer, an agent, or online. Your options include a traditional policy or a hybrid policy that combines LTC insurance with life insurance.

The bottom line about LTC insurance is to choose a policy based on your personal needs. While you can certainly listen to advice, the variability of policies means it has to be a personal decision based on your needs.