Ask Stacy: Do I Need Long-Term Care Insurance?

About 12 years ago, my friend Diane called me, sobbing. Her mother had been diagnosed with early Alzheimer’s at 78, and the family was looking at memory care facilities that ran $9,000 a month. They’d assumed Medicare would cover it. It doesn’t. They were quickly realizing her mother’s savings — about $180,000 — would be depleted in less than two years.

“Stacy, what do we do? She worked her whole life for this. And it’s just going to be gone.”

There was no good answer. By the time Diane’s mother needed care, it was too late to buy long-term care insurance. By the time her mother’s savings ran out, Medicaid would take over — but only after she’d spent it down to almost nothing, in a facility she didn’t choose and a room she shared.

I’ve watched a lot of families go through this. It’s the silent destroyer of retirements. And it’s coming for more of us than we want to admit.

According to JRC Insurance Group’s compilation of industry data, nearly 70% of people over age 65 will need some form of long-term care during their lifetime. Medicare doesn’t cover it. Medicaid only kicks in after you’ve spent down nearly everything.

Here are the five things every person in their 50s and 60s should weigh when it comes to long-term care insurance.

1. Understand what long-term care costs

Most people dramatically underestimate this. The 2025 national median annual cost figures, drawn from industry surveys reported in JRC Insurance Group’s data, run roughly:

Home health aide (full-time): around $80,000 a year
Assisted living: around $74,400 a year
Semiprivate nursing home room: well over $100,000 a year, in some areas exceeding $122,000

These costs go up roughly 3% to 5% a year. Inflation in long-term care has historically outpaced general inflation. In 20 years, the numbers will be much worse.

For perspective: The median retirement savings for Americans aged 65 to 74 is about $200,000, per Federal Reserve data. A single year in a nursing home wipes out half of that.

2. Know who needs LTC insurance

The conventional wisdom is that LTC insurance makes sense for people in the financial middle.

If you have less than around $200,000 in retirement savings outside of your home, traditional LTC insurance probably doesn’t make sense — premiums would be a hardship, and Medicaid will eventually pick up the cost when you spend down what you have.

If you have more than $2 million to $3 million in liquid retirement assets, you can probably self-insure. Setting aside $500,000 to $700,000 for potential care costs and investing the rest is a viable strategy.

That leaves the broad middle — people with maybe $300,000 to $1.5 million saved — as the group most likely to benefit. You have enough that you’d be wiped out by a long-term care episode, but not so much that paying out of pocket is comfortable.

3. Buy in your 50s, not your 70s

Premiums roughly double every five years. According to 2025 data from the American Association for Long-Term Care Insurance, the average annual premium for a $165,000-benefit policy at age 55 was about $950 for a single male and $1,500 for a single female.

By 65, those numbers nearly double. By 75, premiums become nearly unaffordable, and many people get denied coverage outright.

The denial rate alone tells the story. The denial rate climbs to roughly 38% for ages 65 to 69, 47% for ages 70 to 74, and over 50% for those 75 and older.

If you’re in your mid-50s and reasonably healthy, that’s the sweet spot. Wait too long, and the door closes.

If you want to check prices, Money.com has put together a list of the best long-term care insurance companies.

Quick aside — most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for more than 40 years. Want rock-solid advice? Sign up for the free Money Talks Newsletter. Takes 10 seconds. No fluff. No spam.

4. Consider hybrid policies if traditional doesn’t fit

Traditional stand-alone LTC insurance has a problem: If you never need care, you’ve paid years of premiums for nothing. Many people hate that idea.

Hybrid policies — life insurance with a long-term care rider — solve this. If you need care, the policy pays for it. If you die without using the LTC benefit, your heirs receive a death benefit. You can also frequently get a return of premium if you cancel.

The trade-offs: Hybrid policies tend to have higher upfront costs, and the LTC benefit may be smaller than what a traditional policy would pay. Inflation protection is sometimes weaker.

For people who hate the “use it or lose it” nature of traditional LTC insurance, hybrids are often a reasonable compromise. Learn more in “11 Ways to Pay for Long-Term Care Without Buying Expensive Insurance.”

5. Understand what Medicare does and doesn’t cover

This is the single biggest misconception in retirement planning.

Medicare pays for short-term skilled nursing care — typically up to 100 days following a qualifying hospital stay, with significant copays after day 20. That’s it.

Long-term custodial care, the kind of care many aging adults eventually need — such as help with bathing, dressing, and eating — is not covered by Medicare. Period.

Medicaid does cover long-term care, but only after a person has exhausted their assets. The spend-down rules vary by state, but in general, a single person typically must have less than $2,000 in countable assets to qualify, with primary residence and a vehicle excluded in some cases. Couples have somewhat better protections.

That’s the corner Diane’s mother was in: too much money to qualify for Medicaid, not enough to fund years of care.

The hard truth about long-term care: Hoping you won’t need it isn’t a plan. The Nationwide Retirement Institute’s analysis found that 41% of people doubt they’ll live long enough to need it. The actual data says 70% of people over 65 will.

If you’re between 50 and 65, healthy, and in the financial middle, get quotes now. Look at traditional and hybrid policies. Compare a few carriers. Sit with a fiduciary advisor for an hour. Even if you decide not to buy, at least you’ve made an informed decision instead of an avoidance one.

Diane’s mom passed away three years after the diagnosis. By then, the family had spent everything she had — and considerable amounts of their own money — and she still ended up in a lower-cost facility. Diane’s takeaway, which she shared with me a few years later: “I wish someone had made us think about this 20 years earlier.”

Consider yourself nudged, but if you find all the options too expensive, don’t freak out. Both my parents died without ever needing nursing home care. Hopefully we’ll all be so lucky, both for ourselves and our loved ones.