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Winter 2022  Volume 15, Number 4        

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How to Afford Long-Term Care as Prices Rise

Long-term care costs are a significant financial burden for many families, and inflation has made it even more challenging to afford. With rising skilled nursing and senior housing costs, it is essential to know how to afford long-term care. There are options available to help offset the cost.

How Much Does Long-Term Care Cost

According to LTCG, the average cost of long-term care is $50,000 per year at home and $100,000 in a nursing home. However, these figures vary by state. For example, in Connecticut, it can cost as much as $165,000 per year, whereas, in Texas, it’s $70,000.

The problem, according to data from the Arctos Foundation and HCG Secure, is that approximately 10% of adults aged 44 - 64 with a mid-level income do not have any form of insurance to cover their long-term care costs. In addition, many don’t realize that Medicare does not cover most long-term care services.

Even if long-term care insurance is purchased, affordability can be an issue. According to the American Association for Long-Term Care Insurance, the cost of a new policy with $165,000 in benefits has increased significantly over the past few years. A 55-year-old healthy applicant could, over a 30-year period, pay as much as $45,000 in premiums.

These costs are a major burden for families of relatives who require long-term care. For example, the U.S. Department of Health and Human Services says that a typical 65-year-old stands a 70% chance of requiring long-term care.

How to Afford Long-Term Care

With a little forethought, however, options are available to help cover long-term care costs.

Long-Term Care Insurance

Obviously, the younger a person is, the cheaper the premiums for long term care insurance will be. If someone purchases a LTC policy in their 40s, for example, the likelihood of making a claim will be minimal at first, allowing premiums to accumulate in a way that easily funds policy reserves and keeps monthly premiums low later in the life of the policy.

An LTC policy will pay for a certain amount of long-term care services, depending on the coverage. However, remember that long-term care insurance is not health insurance and will not cover the cost of medical care.

Hybrid Insurance

Hybrid insurance policies combine life insurance and long-term care coverage. The benefit of a hybrid long term care and life policy is that it will pay for long-term care services, as well as provide a death benefit to the policyholder’s beneficiaries. In addition, many hybrid policies have an inflation rider that will increase the benefit amount by a certain percentage each year. This is important to consider as the cost of long-term care will likely keep growing.

Some policies also have a cash value component, meaning that the policyholder can access the policy’s cash value for long-term care expenses. The cash value can also be used for other purposes, such as retirement income.


Another way to offset the cost of long-term care is through Medicaid. To qualify for Medicaid, you must have a low income and meet specific asset requirements. Medicaid will cover the cost of some long-term care services, but it is important to note that there is a 5-year lookback period. When determining your eligibility, Medicaid will consider any assets you have acquired in the past 5 years.

Self-Funded Care

Many people choose to self-fund their long-term care. They use savings, investments, or retirement income to pay for long-term care services. While this option may work for some people, it is crucial to consider the future cost of long-term care and whether or not you will be able to afford it.

Communicate With Your Family

Communicating with your loved ones about your long-term care needs and wishes is one of the most important things you can do. This will help to ensure that your family is on the same page and that everyone is aware of your wishes.

It is also essential to have an honest conversation about the cost of long-term care and how you plan to pay for it. This will help to avoid any surprises down the road.

Having these types of conversations can be difficult but starting them as early as possible is essential. You never know when you may need long-term care, and it is vital to be prepared. Keep in mind too, the younger you are the more affordable LTC insurance will be and now may be the best time to start planning for this contingency, when the monthly cost is low. .

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In this issue:

This Just In...“Cash” Pharmacies Don’t Take Insurance but Save Patients Money

Rising Demand for Life Insurance in a Post-Pandemic World

How to Afford Long-Term Care as Prices Rise

How to Protect Yourself from Medicare Scams

Majority of Hospitals Ignore Hospital Price Transparency Law




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