Long-Term Care Insurance in the USA 2025: Is It Worth It?

The Question That Keeps Retirees Awake at Night

I sat across from a 58-year-old marketing executive last year who had just watched her mother burn through $340,000 in savings during a four-year battle with Alzheimer's. "I had no idea it would cost that much," she told me, visibly shaken. "Mom thought Medicare would cover everything."

She's far from alone in that assumption. A 2024 study from the Center for Retirement Research found that 45% of Americans over 65 mistakenly believe Medicare pays for long-term care. It doesn't. Not even close.

So here's the uncomfortable truth that financial planners rarely say out loud: deciding whether to buy long-term care insurance in 2025 isn't a simple yes-or-no calculation. It's a deeply personal risk assessment that depends on your health history, family dynamics, existing assets, and—frankly—your tolerance for uncertainty.

Let's cut through the noise and examine what you're actually dealing with.

The Brutal Math of Long-Term Care Costs

Before we discuss insurance, you need to understand what you're insuring against. The numbers have gotten significantly worse over the past decade.

According to the Genworth 2025 Cost of Care Survey, here's what you're looking at nationally:

And those are median figures. In Alaska, a semi-private nursing home room runs $32,220 per month—nearly $387,000 annually. Even in Texas, one of the least expensive states, you're still looking at $5,808 monthly.

The trajectory isn't slowing down either. Nursing home costs have increased approximately 4.5% annually, which means a private room that costs $135,000 today will likely cost around $180,000 by 2033. If you're currently 55, you could be looking at costs that have nearly doubled by the time you need care.

The 70% Statistic Everyone Gets Wrong

You've probably heard some variation of this: "70% of people over 65 will need long-term care." It's technically accurate, according to the U.S. Department of Health and Human Services. But context matters enormously.

Here's what that statistic actually breaks down to, according to 2024 data from the American Association for Long-Term Care Insurance:

For women over 65: 51% will need paid long-term care. Women average 3.7 years of care needs because they typically live longer and are more likely to develop conditions requiring assistance.

For men over 65: 39% will need paid long-term care. Men average 2.2 years of care needs.

For married couples: 43% will need paid care, compared to 51% for unmarried individuals. Having a spouse as an informal caregiver significantly reduces the need for professional services.

The HHS research also reveals that only 4.4% of people over 65 will need paid care lasting longer than five years—the catastrophic scenario that long-term care insurance is primarily designed to address. About 20% will need less than two years of paid care.

This doesn't mean you shouldn't plan for long-term care. It means you should plan with accurate expectations rather than worst-case-scenario fear.

What Long-Term Care Insurance Actually Costs in 2025

Let's talk real premiums. According to the 2024 AALTCI Price Index Survey, here's what a policy with $165,000 in benefits and 3% annual inflation protection actually costs:

Notice the steep gender disparity. Women pay 40-60% more than men for identical coverage because actuarial data shows they're more likely to file claims and require care for longer periods.

Here's the critical math most people miss: that $165,000 benefit pool with 3% compound inflation grows substantially over time. By age 85, those benefits would be worth approximately $345,500. By age 90, around $400,000. That's the leverage you're buying.

But premiums aren't locked in stone. Traditional long-term care insurance companies have historically raised rates on existing policyholders—sometimes by 40-90% over the life of a policy. This has been one of the primary complaints driving consumers toward alternative products.

Traditional vs. Hybrid Policies: The Real Trade-Offs

The long-term care insurance market has fundamentally shifted in the past decade. Sales of "hybrid" policies—which combine life insurance or annuities with long-term care benefits—have eclipsed traditional standalone coverage since 2014.

In 2025 alone, over 653,000 hybrid policies were sold, more than double the 2024 figure. Here's why:

Traditional Long-Term Care Insurance

How it works: You pay annual premiums for coverage that kicks in when you can't perform two or more activities of daily living (bathing, dressing, eating, toileting, transferring, continence) or have severe cognitive impairment. Benefits typically last 2-5 years, though some policies offer lifetime coverage.

Advantages:

• Generally provides the most coverage per premium dollar
• Premiums may be partially tax-deductible
• More robust inflation protection options
• State partnership programs protect assets from Medicaid spend-down

Disadvantages:

• Use-it-or-lose-it—if you never need care, premiums are gone
• Insurers can (and have) raised rates significantly
• Stricter underwriting means health issues may disqualify you
• Fewer companies still offer standalone policies

Hybrid Life/Long-Term Care Insurance

How it works: You purchase a permanent life insurance policy that allows you to accelerate the death benefit to pay for long-term care. If you never need care, your heirs receive the death benefit. If you use part of it for care, they receive the remainder.

Advantages:

• Guaranteed benefit—either as LTC coverage or death benefit
• Premiums typically locked in (no future increases)
• Less stringent underwriting than traditional LTC
• Some policies offer return of premium if you change your mind

Disadvantages:

• Costs 2-4x more than traditional LTC for equivalent care benefits
• Often requires large lump-sum payment ($50,000-$150,000) or 5-10 year payment schedule
• Many hybrid policies lack robust inflation protection
• You're paying for life insurance you may not need

One financial planner I respect puts it bluntly: "Hybrid policies are insurance company marketing genius. They solve the emotional objection ('I might never use it') at the expense of actual coverage efficiency."

The Medicare Myth and Medicaid Reality

Let me be absolutely clear: Medicare does not pay for long-term care. It covers skilled nursing care for up to 100 days following a qualifying hospital stay—and only if your health is improving. Days 1-20 are fully covered; days 21-100 require a $209.50 daily copay (2025 rates). After day 100, you're on your own.

Medicare also doesn't cover assisted living, custodial care, or the vast majority of home health aide services.

Medicaid does cover long-term care—but with severe restrictions. To qualify in most states in 2025, you need:

• Individual assets below $2,000 (excluding primary home, vehicle, and certain personal items)
• Monthly income below $2,982 in most states
• Home equity interest below $730,000-$1,097,000 depending on your state

There's also a 60-month "look-back period." If you transferred assets for less than fair market value within five years of applying for Medicaid, you'll face a penalty period during which Medicaid won't pay for care.

Planning to "spend down" to Medicaid eligibility is technically possible, but it comes with consequences: limited choice of facilities (not all nursing homes accept Medicaid), potential impact on a healthy spouse's financial security, and loss of any legacy you hoped to leave.

Who Should Seriously Consider LTC Insurance

After reviewing thousands of financial plans, I've found that long-term care insurance makes the most sense for a specific demographic:

The "middle affluent"—households with $300,000 to $2 million in investable assets (excluding primary residence). Here's the logic:

If you have less than $300,000 in assets, the premiums may strain your budget, and you might eventually qualify for Medicaid anyway if care needs arise. Self-insuring (saving aggressively) or relying on family care may be more practical.

If you have more than $2 million in liquid assets, you can likely self-insure against even a catastrophic long-term care event without depleting your estate. A four-year nursing home stay at $135,000 annually is devastating for a $500,000 portfolio but manageable for a $3 million one.

In that middle range, a long-term care event could genuinely threaten your financial security and your spouse's lifestyle—exactly the scenario insurance is designed to address.

Other factors that tilt toward purchasing coverage:

• Family history of Alzheimer's, dementia, or Parkinson's—conditions that often require extended care
• Single individuals without children—no family caregivers to rely on
• Desire to protect specific assets or legacy
• Strong preference for quality-of-choice in care facilities

Who Might Skip It (And What to Do Instead)

Long-term care insurance isn't for everyone. You might reasonably decline coverage if:

You have limited assets and would qualify for Medicaid. Paying $2,000-$4,000 annually in premiums when you'd receive government-funded care anyway doesn't make mathematical sense.

You have substantial wealth and can self-insure. If depleting $400,000-$500,000 for care wouldn't materially impact your lifestyle or leave a surviving spouse struggling, the risk transfer may not be worth the premiums.

You have significant health issues that make coverage unaffordable or unavailable. Underwriting has become stricter since the COVID-19 pandemic. Cancer history, heart disease, diabetes, cognitive concerns, or mobility issues can result in denial or prohibitively expensive premiums.

You have a robust support network and prefer home care. Family caregivers provide the majority of long-term care in America. If you have adult children willing and able to assist—and you're comfortable with that arrangement—professional care costs may be limited.

Alternatives to Traditional LTC Insurance

Self-insurance through dedicated savings: Earmark specific assets (a brokerage account, CDs, or a portion of retirement funds) specifically for potential care needs. Invest them appropriately for your timeline. The Fidelity approach suggests calculating your potential care costs, adjusting for inflation, and building a "care reserve" separate from other retirement assets.

Health Savings Accounts (HSAs): If you're still working with a high-deductible health plan, maximize HSA contributions ($4,300 for individuals, $8,550 for families in 2025, plus $1,000 catch-up if 55+). HSA funds grow tax-free and can be used for qualified medical expenses—including long-term care premiums and certain care costs—without penalty.

Life insurance with chronic illness riders: Less expensive than hybrid LTC policies, these riders allow you to accelerate part of your death benefit if you're diagnosed with a chronic illness requiring long-term care. Coverage is typically less comprehensive but costs significantly less.

Annuities with LTC riders: Some fixed annuities offer riders that increase monthly payments if you need long-term care, sometimes doubling the standard payout for a limited period.

Home equity: Your home may be your largest asset. Reverse mortgages (HECMs) or home equity lines of credit can fund care costs while allowing you to age in place. Downsizing and investing the proceeds is another option.

The Optimal Purchase Window

If you decide long-term care insurance makes sense, timing matters significantly.

The AALTCI recommends purchasing in your mid-50s as the sweet spot. Here's the calculus:

Too early (40s): You'll pay premiums for potentially 30-40 years before needing benefits. While premiums are lower, the cumulative cost may exceed what you'd pay purchasing later.

Too late (late 60s+): Premiums increase 3-5% for every year you delay. A 65-year-old pays roughly 80% more than a 55-year-old for identical coverage. More importantly, health conditions that develop can make you uninsurable or require expensive riders.

The 50-60 window: You're likely still healthy enough to qualify for preferred rates, premiums are reasonable, and you won't be paying for decades before potentially needing coverage.

One critical caveat: don't wait for a "perfect" time. If you're healthy at 57 and debating whether to wait until 60, remember that a single diagnosis—diabetes, early-stage cancer, a minor stroke—can take coverage off the table entirely.

What to Look for in a Policy (If You Buy)

Not all long-term care policies are created equal. Whether traditional or hybrid, prioritize these features:

Inflation protection: This is non-negotiable if you're under 70. A policy purchased at 55 might not pay benefits for 25-30 years. Without inflation protection, that $165,000 benefit pool won't cover three months of nursing home care by 2050. Look for 3% compound annual growth at minimum.

Benefit trigger clarity: Standard triggers are inability to perform 2 of 6 activities of daily living (ADLs) or severe cognitive impairment. Make sure the policy specifies how certification works and doesn't require hospitalization first.

Elimination period: This is your deductible—the waiting period before benefits kick in. Common options are 30, 60, or 90 days. Longer elimination periods mean lower premiums but more out-of-pocket costs when you need care. A 90-day elimination period is often the best balance.

Benefit period: How long will the policy pay? Options typically range from 2 years to lifetime. The AALTCI reports that 49% of claims last one year or less, and only about 15% exceed five years. A 3-5 year benefit period covers the vast majority of scenarios without paying for unlikely lifetime coverage.

Care settings covered: Ensure the policy covers home care, assisted living, and nursing home care—not just institutional settings. Most people prefer to receive care at home as long as possible.

Cash indemnity vs. reimbursement: Reimbursement policies pay for actual care expenses you incur and document. Cash indemnity policies pay a set amount regardless of actual costs, giving you flexibility to pay family caregivers or cover non-traditional expenses. Cash indemnity is generally preferable but costs more.

Shared care provisions (for couples): Some policies allow spouses to share a combined benefit pool. If one spouse uses less than their portion, the remainder transfers to the other. This can provide more coverage at lower cost than two individual policies.

The Companies Still in the Game

The long-term care insurance market has consolidated dramatically. Many major insurers exited after underpricing policies in the 1990s and 2000s, leading to massive losses.

For traditional standalone coverage in 2025, your primary options include:

• Mutual of Omaha (MutualCare Custom Solution and Secure Solution)
• Thrivent Financial
• National Guardian Life (NGL)
• Northwestern Mutual

For hybrid life/LTC policies:

• Lincoln Financial (MoneyGuard)
• Nationwide
• Pacific Life
• Securian Financial
• OneAmerica

Work with an independent insurance agent who isn't captive to a single company. Quotes for equivalent coverage can vary by 20-40% between insurers, and policy features differ substantially.

A Decision Framework That Actually Works

Here's how I'd approach this decision if I were sitting across from you:

Step 1: Calculate your realistic care probability. Consider your family health history, current health status, gender, and marital status. Are you in the 40% likely to need significant paid care, or the 60% who won't?

Step 2: Estimate your potential care costs. Look up costs in your area (or where you plan to retire) using tools like Genworth's Cost of Care Survey or the LTC News Cost of Care Calculator. Project 20-30 years into the future at 4% annual inflation.

Step 3: Assess your current and projected assets. Can you self-insure against a 3-5 year care event without devastating your financial security or a surviving spouse's lifestyle?

Step 4: Get real quotes. Contact an independent agent and get proposals for both traditional and hybrid options. Compare the coverage you'd receive to the premiums you'd pay over your expected lifetime.

Step 5: Consider hybrid alternatives. If traditional LTC insurance doesn't fit, explore life insurance with chronic illness riders, annuities with LTC benefits, or dedicated self-insurance strategies.

Step 6: Make a decision—and document it. The worst approach is indefinite delay. Whether you buy coverage, self-insure, or rely on Medicaid as a backstop, make a deliberate choice and communicate it to family members who might be affected.

The Honest Bottom Line

Is long-term care insurance worth it in 2025? For roughly 20-30% of Americans—those in the middle-affluent range with assets to protect and health that qualifies them for reasonable rates—yes, it probably is. The risk transfer makes mathematical and emotional sense.

For everyone else, the answer is more nuanced. If you're wealthy enough to self-insure, do so deliberately. If you have limited assets, understand your Medicaid pathway. If you're somewhere in between, explore hybrid products and alternative strategies that might provide partial protection without the full cost of traditional coverage.

What's never worth it is doing nothing. The marketing executive I mentioned at the beginning didn't just lose $340,000. She lost months of her own career to caregiving, strained her marriage, and carries guilt about decisions made under pressure that she'll never fully shake.

That's what proper planning prevents—not just financial devastation, but the human cost of crisis-mode decision-making when you're already exhausted and overwhelmed.

Start the conversation now, while you still have options.