Long-term care: the numbers, before the sales pitch
It is the largest financial risk in retirement and the least planned for. Here is what care actually costs, who pays for it now, and what insurance does and doesn’t do.
We've said elsewhere that Medicare doesn't cover long-term custodial care. That's the single most consequential gap in American retirement planning, and it deserves more than a sentence.
So this piece is the numbers. Not whether you should buy insurance — that depends on your assets, your health, your family and your state, and anyone who answers it without asking about all four is selling something. Just what things cost, who actually pays, and what the products do.
What care costs
| Assisted living | About $5,511 a month — roughly $66,000 a year. |
|---|---|
| Nursing home, semi-private | About $315 a day — roughly $115,000 a year. |
| Nursing home, private room | About $355 a day — roughly $130,000 a year. |
| Home health aide | Billed hourly. A few hours a day adds up faster than people expect; round-the-clock care can exceed a nursing home. |
| Trend | Costs have been rising roughly 4–5% a year, ahead of general inflation. |
| Regional spread | Enormous. State medians range from around $3,250 a month to well over $6,800 for the same level of assisted living. |
Those are medians, which means half of everything costs more. And the number that matters isn't the annual figure — it's the annual figure multiplied by however long care is needed, which is the part nobody can tell you in advance.
Most people who need long-term care need it for a while and then don't. A minority need it for years. The problem is that the second group is the one that empties an estate, and you don't know which group you're in.
Who actually pays, today
There are only four payers, and it's worth being clear-eyed about each.
- You do, out of savings, investments and home equity. This is how most care starts being paid for.
- Medicaid, once savings are largely gone. It is the largest payer of long-term care in the country — but it's means-tested, with strict income and asset limits, a five-year look-back on gifts and transfers, and far less choice of facility. Planning for it is genuinely specialist legal work.
- Long-term care insurance, if you bought it, and if the policy's conditions are met.
- Your family, in unpaid hours. This is the invisible payer and by far the largest in human terms — usually a daughter or a wife, usually while also working.
Medicare is not on that list, beyond the short skilled-nursing benefit after a qualifying hospital stay. Neither is your Medigap policy.
What the insurance actually does
Traditional long-term care insurance pays a daily or monthly benefit once you can't perform a set number of activities of daily living — typically two of six: bathing, dressing, eating, transferring, toileting, continence — or have a cognitive impairment. Policies have an elimination period (a waiting period before benefits start, often 90 days), a benefit cap, and a benefit period.
Three features decide most of the value:
- Inflation protection. At 4–5% annual cost growth, a benefit fixed today is worth dramatically less in twenty years. Policies without it can look adequate and turn out not to be.
- What counts as care. Most people want to stay home; make sure home care is covered as generously as facility care, not as an afterthought.
- Who decides you qualify. The claims process is where these policies succeed or disappoint.
The industry’s own history is part of the decision
This deserves stating plainly, because it explains a lot about the market.
Insurers badly mispriced traditional policies sold in the 1990s and 2000s — people lived longer, used more care, and let fewer policies lapse than the models assumed. The result was steep premium increases on existing policyholders, sometimes repeatedly, sometimes decades in. Some carriers left the market entirely.
That's not a reason to dismiss the product. It is the reason to ask directly: can this premium be raised, by how much historically, and what happens to my coverage if I can no longer afford it? A policy you drop at 78 after twenty years of payments is the worst outcome available.
It's also why hybrid policies — life insurance or an annuity with a long-term care rider — have largely taken over new sales. They typically pay something to your heirs if care is never needed, which removes the “use it or lose it” objection, and premiums are often guaranteed. You generally pay more for that certainty.
What changes the answer
- How much you have. Very large estates can self-fund; very small ones will reach Medicaid regardless. Insurance is aimed most squarely at the middle.
- Your age now. Premiums rise steeply with age and underwriting gets harder. The 50s and early 60s are when most people can still qualify affordably.
- Your health. These policies are medically underwritten. Waiting until you are worried is often waiting until you are uninsurable.
- Whether you are protecting a spouse. One partner needing years of care can consume assets the other still needs to live on. This is the strongest single argument for coverage.
- Your state. Partnership programmes in many states let you shelter additional assets from Medicaid spend-down if you hold a qualifying policy.
- Who would actually provide care. Assuming a family member will is a plan with a person’s life inside it — worth discussing with them rather than about them.
The reason to think about this in your 50s and 60s rather than your 70s isn't that something is about to happen. It's that every option here — insurance, Medicaid planning, modifying a house, even an honest family conversation — is cheaper and more available before there's a crisis.
The most expensive version of this is the one where nobody planned, and a family makes permanent financial decisions in a hospital corridor in the space of a week.
This is general information, not personal advice. We report the rules, the numbers and the deadlines as clearly as we can. We don't know your income, your state, your health or your family — and all four can change the answer. Treat this as a good place to find the right questions, not a substitute for someone looking at your actual situation.
Where these facts come from
Checked against primary sources on 10 August 2026. Dollar limits and program rules change — if you're reading this well after that date, verify the numbers at the links below.
- CareScout / Genworth — Cost of Care survey — https://www.carescout.com/cost-of-care
- Medicare — Long-term care — https://www.medicare.gov/coverage/long-term-care
- LongTermCare.gov — U.S. Administration for Community Living — https://acl.gov/ltc
- NAIC — Long-term care insurance — https://content.naic.org/insurance-topics/long-term-care-insurance
Edward Silva
Edward spent more than forty years as a computer professional — long enough to pick up one useful occupational habit: when somebody hands you a summary, go and read the actual documentation. He started The Second Half Guide after noticing that most writing aimed at people his age was either talking down to him or quietly selling him something, and that the plain facts — the dates, the thresholds, the dollar figures — were somehow the hardest part to find.
He's married, with two grown sons, both married themselves. He is not a financial adviser, an attorney or an insurance agent, and this site doesn't tell you what to do with your money. It tells you what the rules actually say, and links to where he checked.