Do I Need Long-Term Care Insurance?

Whether you need long-term care insurance depends mainly on the size of your portfolio relative to the cost of care. The need for care itself is widespread: roughly 70% of people turning 65 will require some form of long-term care in their lifetime, according to federal estimates. The financial question is how you will pay for it. Most people fall into three groups: those with modest assets, who may rely on Medicaid after spending down; those in the broad middle, for whom insurance most often makes sense because a multi-year care event could exhaust their savings; and the wealthy, who can frequently self-fund care from their portfolio and choose insurance only when they prefer to transfer the risk or protect a specific legacy. For affluent families, long-term care is less an insurance question than a liquidity and planning question, but it is one that should be answered deliberately, not ignored.

What does long-term care actually cost?

The case for planning rests on the numbers, which are substantial and rising. According to the CareScout 2025 Cost of Care Survey, released in March 2026, the national median annual cost of a private room in a nursing home was about $129,575, a semi-private room about $114,975, and assisted living about $74,400 per year. In-home non-medical care ran around $35 per hour, which for full-time support can rival facility costs.

Two features make these figures dangerous to ignore. First, they are medians, so high-cost metropolitan areas run well above them. Second, a serious care event can last years, not months. A multi-year stay in memory care can easily exceed half a million dollars, and that cost is not covered by Medicare, which pays only for limited, short-term skilled care, not for extended custodial care.

Who needs long-term care insurance, and who does not?

The right answer depends on where your wealth sits relative to those costs.

Families with limited assets often cannot afford meaningful private coverage and may ultimately rely on Medicaid, which pays for long-term care only after assets are spent down to low limits. The broad middle, households with enough to lose but not enough to absorb a prolonged care event, are the classic candidates for insurance, because a single long stay could consume the savings meant to last a lifetime or to pass to a spouse. Wealthy families can usually self-fund: if your portfolio can absorb several hundred thousand dollars of care without endangering your lifestyle or your survivor's security, you may not need to transfer the risk to an insurer at all.

Even when self-funding is feasible, some affluent families still choose coverage, for reasons beyond pure affordability: to protect a specific legacy or business interest from being drawn down, to relieve a spouse or children of caregiving and funding decisions, or simply to convert an uncertain, open-ended liability into a known cost. The decision is as much about preferences and family dynamics as about arithmetic. We place it alongside the rest of the coverage picture in the high-net-worth insurance review.

What types of long-term care coverage exist?

The market has changed substantially, and the old product is no longer the only option.

Traditional standalone long-term care insurance pays benefits if you need care, but if you never need care, the premiums are not returned, and insurers have raised premiums on older policies. Hybrid policies, which combine life insurance or an annuity with a long-term care benefit, have become the more common choice precisely because they address the "use it or lose it" objection: if you need care, the policy pays for it; if you do not, a death benefit passes to your heirs. Hybrids typically require a larger upfront commitment, sometimes a single premium, which suits families with assets to reposition. A third option is simply to earmark a portion of the portfolio as a self-funding reserve, effectively self-insuring with your own capital.

Are long-term care premiums tax-deductible?

Sometimes, within limits. Premiums for a tax-qualified long-term care policy can count as deductible medical expenses, but only up to an age-based cap and only to the extent your total unreimbursed medical expenses exceed 7.5% of adjusted gross income if you itemize. For 2026, the IRS age-based eligible-premium limits are $500 for those age 40 or under, $930 for ages 41 to 50, $1,860 for ages 51 to 60, $4,960 for ages 61 to 70, and $6,200 for age 71 and older (IRS, 2026). Business owners may achieve better treatment through their entity. For most high earners the deduction is modest because of the 7.5% threshold, so taxes should inform the decision but rarely drive it.

A worked example: insure or self-fund?

The following is a hypothetical illustration. Consider two 60-year-old couples.

The first has $1,500,000 saved, most of it earmarked for a 30-year retirement. A single spouse needing four years of memory care at today's costs could consume $500,000 or more, jeopardizing the survivor's security. For them, insurance, traditional or hybrid, transfers a risk they cannot comfortably absorb, and the premium buys protection for the healthy spouse as much as the sick one.

The second couple has $20,000,000. The same $500,000 care event is real but absorbable; it does not threaten their lifestyle or their heirs. They can rationally self-fund, holding a portion of the portfolio as a mental reserve, and skip insurance, though they might still buy a hybrid policy if they prefer to ring-fence the cost or simplify decisions for their children. The arithmetic favors self-funding; the choice still depends on preferences. Both examples are hypothetical.

Frequently asked questions

What are the odds I will need long-term care?About 70% of people turning 65 will need some long-term care during their lives, per federal estimates, though the duration and intensity vary widely. Many needs are short, but a meaningful minority last years and become very expensive.

Does Medicare pay for long-term care?No, not for extended custodial care. Medicare covers limited short-term skilled care and rehabilitation. Ongoing help with daily activities, the bulk of long-term care, is paid out of pocket, by insurance, or by Medicaid after a spend-down.

At what level of wealth can I self-fund long-term care?There is no fixed threshold, but if your portfolio can absorb several hundred thousand dollars of care, potentially for both spouses, without endangering your lifestyle or your survivor, self-funding is often reasonable. Many families above roughly $5,000,000 self-fund, though preferences vary.

Are hybrid long-term care policies better than traditional ones?They solve the main objection to traditional policies, that premiums are lost if care is never needed, by adding a death benefit, and their premiums are generally more stable. They require a larger upfront commitment. Which is better depends on your cash flow, health, and goals.

When should I buy long-term care insurance if I want it?Generally in your mid-50s to mid-60s. Buy too early and you pay premiums for many years; wait too long and coverage becomes expensive or unavailable due to health. Underwriting tightens with age and medical history.