What is Long-term Care Insurance & How Much is It?

As you get older, long-term care insurance can help protect both your health and your finances.

What is long-term care insurance?

As we enter our senior years, many of us will need help with daily activities like preparing meals, bathing, dressing, and getting ourselves to doctor appointments. Someone who is 65 years old today has a 70 percent chance of needing some type of long-term care services in the future, according to the US Department of Health & Human Services.
 
Here’s the good news: when someone needs extra help, long-term care insurance helps pay for the professional services they need so they can focus on their health, rather than worrying about medical bills piling up.
 
Long-term care isn’t always long-term. If someone breaks a hip, for example, they may simply need a helping hand until they recover. A physical therapist might visit their home to provide physical therapy, for example, or an aide might swing by once a week to do the laundry. Long-term insurance can help pay for those services until the person has healed.
 
If someone needs to move into a nursing home indefinitely, long-term care insurance can defray those costs too.

Types of long-term care insurance

Californians can choose from three types of long-term care insurance policies:
 

Home care only

 
If someone needs help bathing or doing their grocery shopping, this coverage helps pay for a personal aide to visit their home. Nurses and other licensed caregivers are also available for in-home visits, to provide injectable medications, therapy or other medical services, including hospice care.
 
Home care coverage also helps pay for visits to an adult day care center, where older adults can meet friends their age and get practical support. Some adult day care centers offer health screenings, medication management and therapeutic services. Others are mainly social, offering meals together and other activities (although they may offer health services too).
 
Who it’s for: People who want to live independently at home but need some support.
 
What it costs: Home care aides cost about $20 an hour, or $20.50 an hour for licensed medical caregivers, according to the US Department of Health & Human Services. (Medicare Part A or Part B covers this cost in certain situations.) Adult day care centers charge $68 per day, on average (as of 2025).
 

Nursing facility and residential care facility only

 
When living at home alone is no longer safe, this insurance helps cover the cost of living in an assisted living residence.
 
This might be a community where residents can live independently in their own apartment (or room) while getting meals, help with daily tasks, and other support. Assisted living residences have common areas where people can gather or enjoy planned social activities.
 
If someone needs more intensive ongoing medical care, this type of policy also helps pay for a nursing home. Nursing facilities provide supervision, nursing care, meals, and help with daily living tasks.
 
Who it’s for: Older adults who can no longer safely live at home and need support, including ongoing medical care.
 
What it costs: A one-bedroom apartment in an assisted living residence costs, on average, around $3,600 per month, according to HHS.
 
The average cost for a semi-private room in a nursing home is about $6,800 per month, according to HHS, while a private room averages $7,700 per month. Memory care centers, which provide specialized care to people with Alzheimer’s and dementia, cost about $8,400 a month, according to the National Investment Center for Seniors Housing & Care.
 

Comprehensive long-term care

 
A comprehensive policy covers all of the above – home care, adult day care, hospice care and stays in an assisted living residence or nursing home.

Will Medicare or Medicaid pay for long-term care?

Some people assume that Medicare will pay for long-term care, but it only covers costs in specific circumstances. If you’ve just been hospitalized, for example, Medicare may pay for certain services for a short time.
 
Medicaid does pay for long-term care for low-income adults who qualify, although it only pays for stays in Medicaid-certified nursing homes. Medicaid is administered by the state, and each state has its own eligibility criteria and benefit limitations, which are based on income and assets, as well as medical need. In California, Medicaid is currently available to people over 65 living alone who have an income of $17,609 or less, people over 65 in two-person households with a combined household income of $23,792 or less, and people in three-income households with a combined income of $29,974 or less. (Medicaid is also available to some people under age 65, such as blind and disabled residents.)
 
Veterans may get long-term care benefits through the US Department of Veterans Affairs.

Can’t afford long-term care? You’re not alone.

About 90 percent of people say that it would be difficult or impossible for them to afford nursing care or one year’s worth of help from a paid nurse, according to a survey conducted by the Kaiser Family Foundation.

How does long-term care insurance work?

Long-term care insurance can cover a range of services, from in-home aide to nursing home care, depending on the policy. And if friends or family have been pitching in to help and need a break, some policies will pay for respite care. In other words, a “relief” caregiver will visit for a while to handle any tasks that your family members have been doing.
 
Long-term care insurance works a lot like your auto insurance or homeowners insurance. You pay a monthly premium for your long-term insurance policy. Then if you end up getting sick or injured and need long-term care, you file a claim to receive benefits.
 
Here’s how long-term care works:

1. You file a claim with your insurance company.
2. You meet with a health care provider, possibly a nurse or social worker, who evaluates your health. (Your insurer will arrange this.) The health care provider tests whether you can perform certain activities of daily living around your home like dressing or moving from one room to another. They might also test your cognitive health.
3. Your insurer determines whether you qualify for long-term care benefits. If the health care provider found that you experienced certain “trigger events,” your claim will likely be approved.
4. A care plan is created for you by a care manager from your insurance company.
5. You pay for long-term care during an initial “deductible period” (also called the “waiting period” or “elimination period.”) This generally lasts from one month to a few months.
6. Once the deducible period has ended, your insurer starts paying for your care. Most policies pay for care up to a daily limit. Your coverage pays for your care until you reach your policy’s lifetime limit.

How much does long-term care insurance cost?

A 50-year-old pays $888 per year, on average, for long-term care insurance, reports the California Department of Insurance, while a 65-year-old pays $1,850 per year and a 75-year-old pays $5,880 annually.
 
But keep in mind that the cost of long-term care insurance varies based on:

• the type of policy you buy. The more comprehensive the coverage, the more you’ll pay.
• your age. The younger and healthier you are, the lower your premiums will be.
• your gender. Women, who tend to live longer than men, pay more for coverage.
• your marital status. Insurance rates vary regionally.
• your location. Insurance rates vary regionally.
• your policy’s deductible period. You’ll pay more for a policy with benefits that kick in as soon as you begin receiving care. You can lower your premiums if you buy a policy with a longer deductible period.

Things to consider when buying long-term care insurance

Here are some questions to ponder when shopping for long-term care insurance.
 

Do you need long-term care insurance?

 
If you need to move to a nursing home, consider whether you’ll have enough income and savings to pay for it. If you can afford to pay for it yourself, are you sure you want to? Or would you rather buy a long-term care policy and leave more money to your heirs?
 
If you qualify for public assistance (Medicaid), you don’t need to buy a policy. Medicaid will pay for your long-term care.
 

Which insurance provider is best?

 
Start by contacting your state’s Department of Insurance to get a list of long-term care insurance companies in your area. If you need long-term care, you’ll want to know that the company you choose will be able to pay claims. So check their ratings with independent rating agencies like Fitch Ratings, AM Best and Moody’s. These companies also shine a light on each insurer’s rate increase history.
 

What type of coverage do you need?

 
If your goal is to live in your home for as long as possible, for example, you’ll want to buy a policy that covers home care. Think carefully about which benefits you want before buying a policy.
 

How much can you afford to pay for a policy?

 
Shop around and compare each policy’s benefits and features, including premiums, benefit amounts and benefit periods.
 
Are you concerned about the cost of long-term care getting more expensive over time? If so, there are policies with built-in inflation protection. That way, your benefits will increase at specific percentages, for specific periods of time. Some policy’s daily and lifetime maximums rise by 5 percent per year, for example.
 

What are the policy’s terms?

 
Every insurance policy has conditions and exclusions. To avoid unpleasant surprises later on, make sure to read the policy thoroughly and make sure you’re comfortable with the terms.
 
When considering different policies, don’t be shy about asking for help. A financial advisor can help you evaluate options and guide you toward a policy that meets your current budget and future needs.
 

 

 
Sources:
 
US Chamber of Commerce, “Banks vs. Credit Unions: What’s the Difference?” accessed May 29, 2025.
 
MyCreditUnion.gov, “What is a Credit Union?” accessed May 29, 2025.
 
Consumer Financial Protection Bureau, “What is a credit union share draft account? Is it a checking account?” August 30, 2024.
 
SmartAsset, “What Is a Share Savings Account?” April 16, 2025.
 
Experian, “What Is a Credit Union?” accessed May 29, 2025.
 
US Chamber of Commerce, “Nonprofit vs. Not-for-Profit vs. For-Profit: What’s the Difference?” accessed May 30, 2025.
 
Experian, “How to Join a Credit Union,” November 6, 2021.
 
US News & World Report, “10 Things to Know About Credit Unions,” April 8, 2025.
 

 
This article was created in accordance with the Patelco editorial policy.