How Long-Term Care Insurance Costs Vary by Age

By Arturo Conde | AUG 30, 2023

Long-term care is needed by many people later in life, but long-term care insurance costs can get a little pricey. You can expect to spend thousands per year for modest coverage over the course of your life. That said, costs may vary significantly depending on a number of factors. This is especially true of your age at the time you take out a policy, but also your overall health conditions. The insurance provider you work with can also be a big determinant when it comes to how much you’ll pay, as providers have different policies that can affect your rates. While long-term care is expensive, it can be an important part of planning for your financial future. A financial advisor can help you create a long-term financial plan for your retirement and health care needs.

What Is Long-Term Care Insurance?

Long-term care insurance provides financial benefits to those who are typically older who need access to nursing homes and other long-term care or end of life services. Long-term care insurance may also apply to individuals who have chronic conditions or disabilities that require constant care. Policies typically cover things like nursing home expenses, in-home caretakers, adult day care centers and other types of care that focus on chronic conditions.

Medicaid covers many of the same things that a long-term care insurance policy covers. However, long-term care insurance tends to be more flexible and provides a greater range of options when it comes to making a claim. In exchange, though, it’s significantly more expensive. Living in a nursing home can often cost upwards of $100,000 per year, and so long-term care insurers typically have large bills to cover.

How Long-Term Care Insurance Costs Vary by Age

Being that long-term care can become more and more necessary as someone ages, policy costs will rise as you age. So just like any other insurance policy, the longer you pay in, the less your premium will be. On the flip side, waiting until late in life to get coverage will result in higher costs.

The American Association for Long-Term Care Insurance (AALTCI) released data from its 2023 study that reveals how much, on average, older Americans can expect to spend on long-term care insurance policies. Here’s the AALTCI’s annual premium breakdown for those aged 55, 60 and 65 with benefits that grow 3% annually to keep up with inflation:

• Age 55
  • Male: $2,100
  • Female: $3,600
  • Couple: $5,025
• Age 60
  • Male: $2,585
  • Female: $4,450
  • Couple: $5,670
• Age 65
  • Male: $3,135
  • Female: $5,265
  • Couple: $7,150

At the end of the day, the cost of your long-term care insurance policy will vary based on a number of factors beyond just your age. Someone in poor health will pay more, and certain insurers or policies will charge different amounts to different people. Make sure you remember to shop around and consider all your options before deciding on a policy.

Luckily, premiums are tax-deductible if you make payments toward a tax-qualified insurance policy. You’ll also need to meet required income thresholds to deduct your payments. There are also maximum amounts you can deduct from your taxes, and these increase as you get older.

Understanding Long-Term Care Insurance Costs

Keep in mind that the numbers that came out of the AALTCI study are just averages. It’s typically recommended that you shop for long-term care insurance around the age of 55, but your costs may vary significantly. One way to lower your premiums is to buy long-term care insurance at an earlier age. However, make sure you account for making payments for a longer period of time.

On the other hand, if you wait until you’re too old, you might be stuck with premiums that are unfathomably high. After all, long-term care costs are expensive, and insurers will be on the hook for high bills when you need to make claims.

For some context, a fully private nursing home room can cost over $108,000 annually. Even a semi-private spot at a nursing home can run almost $95,000 or more annually. If you decide to wait too long to take out a long-term care policy, you might not be able to get one at all. In that case, you’d be on the hook for many of the costs associated with getting older.

How to Get Long-Term Care Insurance

Taking out a long-term care insurance policy is relatively simple. In fact, it isn’t too different from taking out any other type of insurance policy. You can shop directly from the insurance companies themselves, or you can work with an agent who can help you shop around. Either way, make sure you’re considering all your options.

Getting long-term care insurance through your employer may also be an option. As is the case with employer-sponsored health insurance plans, you might be able to get better deals on insurance policies through your company.

Bottom Line

Long-term care insurance is something that everyone should consider as they get older. With the high costs associated with assisted living facilities, nursing homes and care for those with chronic conditions, it pays to get long-term care insurance so that you’re covered when you can no longer care for yourself. While premiums are expensive, there are ways to find policies that are cheaper and tailored to your individual needs and financial circumstances. Long-term care insurance costs typically become more expensive as you age, so make sure you have a plan today.

Tips for Retirement Planning

• When it comes to planning for your retirement, there are a lot of things you need to grapple with. A financial advisor can be a great resource to help you make sense of everything. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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Photo credit: iStock.com/tumsasedgars, iStock.com/Vladimir-Vladimirov