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Aging & care
Long-term care: what it costs, who pays, and how to plan
About 7 in 10 people turning 65 will need help with daily living. Medicare pays little of it. Here is how families protect their savings.
Short answer: about 70% of people turning 65 will need some long-term care, for about three years on average. A year in a nursing home now costs a national median of $129,575, and Medicare does not pay for ongoing custodial care. Families plan with life insurance living benefits, annuities with care features, dedicated long-term care coverage and savings, ideally starting in their 40s or 50s while they are healthy.
What long-term care is
Long-term care is help with everyday life when you can't manage on your own because of aging, a chronic illness, an injury or memory loss. It is usually not medical treatment, which is why health insurance doesn't pay for it.
Insurers measure the need with six activities of daily living:
Needing help with two of the six for 90 days or more, or having a severe cognitive impairment such as Alzheimer's, is the usual trigger for benefits.
Types of long-term care
| Type of care | What it includes | Where | U.S. median, 2025 |
|---|---|---|---|
| In-home care | A caregiver helps with bathing, dressing, meals, medications and light housework | Your home | $35/hour |
| Adult day health care | Supervision, meals, activities and some health services during the day | A community center | $95/day |
| Assisted living | Private apartment with meals, personal care and 24-hour staff | A residential community | $6,200/month |
| Memory care | Secure assisted living for Alzheimer's and other dementia, with trained staff | A specialized unit or community | Usually more than assisted living |
| Nursing home | 24-hour skilled nursing and personal care | A licensed facility | $355/day private room |
| Hospice and respite | Comfort care at end of life; short breaks for family caregivers | Home or facility | Varies; hospice is usually covered by Medicare |
Agent tip: Most people want to stay home as long as possible. Home care is often the first and longest stage, so plan for it, not just for a nursing home.
How likely you are to need it
According to the U.S. Administration for Community Living, about 70% of people turning 65 will likely need some long-term care. Women need care longer on average (3.7 years) than men (2.2 years). About 1 in 5 will need care for more than five years.
Agent tip: Most care is first given by a spouse or adult child. Planning isn't only about money. It's about not putting your family in an impossible spot.
What care costs in 2025
Source: CareScout 2025 Cost of Care Survey. Your state may cost more or less.
Costs rose again in 2025. Assisted living was up 5% and in-home care up 3%. In higher-cost states the numbers are much larger. In New Jersey, for example, a private nursing home room has a median cost of $173,375 a year.
Care costs in your state
Source: CareScout 2025 Cost of Care Survey, ranked state tables.
| State | Nursing home (private) | Assisted living | In-home care (44 hrs/wk) | 3 years in a nursing home |
|---|---|---|---|---|
| Arizona | $137,240 | $75,000 | $86,944 | $411,720 |
| California | $182,135 | $84,000 | $91,520 | $546,405 |
| Georgia | $113,150 | $63,600 | $73,216 | $339,450 |
| New Jersey | $173,375 | $104,520 | $86,944 | $520,125 |
| North Carolina | $129,575 | $77,955 | $68,640 | $388,725 |
| Pennsylvania | $164,250 | $77,760 | $77,792 | $492,750 |
| South Carolina | $115,340 | $64,200 | $71,786 | $346,020 |
| Texas | $91,250 | $67,992 | $68,640 | $273,750 |
| Virginia | $140,160 | $83,340 | $80,080 | $420,480 |
| U.S. median | $129,575 | $74,400 | $80,080 | $388,725 |
Texas has the lowest nursing home costs of the states we serve, and California the highest, almost twice as much. Costs also vary a lot between cities within a state, and they rise almost every year.
What a care event can cost your family
That money usually comes out of the same savings meant to support a surviving spouse. One long care event can undo decades of retirement saving.
Who pays for long-term care
Up to 100 days in a skilled nursing facility after a 3-day hospital stay, with daily coinsurance after day 20. No ongoing custodial care.
Pays for medical treatment, not help with bathing, dressing or supervision.
Pays for care once most assets are spent. Most states look back 5 years at gifts and transfers.
Savings, life insurance with living benefits, annuities and long-term care coverage you put in place now.
Medicare covers short rehabilitation, not ongoing help with daily living. Medicaid covers care only after you have spent down most of your assets, and its rules vary by state. That leaves the plan you put in place yourself.
The hidden cost: family caregivers
When there's no plan, care usually falls to a spouse or an adult daughter or son. AARP estimates that about 38 million family caregivers in the U.S. provide unpaid care worth roughly $600 billion a year. Many cut work hours, pass up promotions or leave jobs, and their own retirement savings and health suffer.
- Lost wages and lower future Social Security for the caregiver
- Stress, burnout and health problems
- Strained marriages and sibling conflicts over who does what
- Spending down the savings meant for the surviving spouse
Agent tip: A plan that pays for help at home lets your family be family, not full-time unpaid caregivers.
Your options compared
| Option | How it pays | Pros | Watch for | Through TrueFin |
|---|---|---|---|---|
| Chronic illness rider on life insurance | Advances part of the death benefit when you qualify | Low or no added cost; unused benefit goes to family | Smaller benefit than dedicated LTC; reduces death benefit | Yes |
| IUL with living benefits | Death benefit advance plus cash value you can borrow | Covers death, care and retirement in one policy | Needs funding discipline; loans reduce benefits | Yes |
| Annuity with care features | Nursing home surrender waivers; some contracts raise income if you need care | Protected growth; access to money when care starts | Features vary by carrier and state | Yes |
| Hybrid life + LTC policy | Dedicated long-term care benefit pool plus a death benefit | Premiums usually guaranteed; benefit either way | Higher upfront cost | We refer to an LTC-licensed specialist |
| Traditional LTC insurance | Daily or monthly benefit for care | Most care per premium dollar | Premiums can rise; nothing back if never used | We refer to an LTC-licensed specialist |
| Self-funding | You pay as you go | Full control | Can drain a retirement plan quickly | We help you plan the income |
| Medicaid | Pays after spend-down | Covers care when money runs out | Limited choice; 5-year look-back | Talk to an elder law attorney |
TrueFin Services is licensed for life insurance and annuities. We do not sell standalone or hybrid long-term care insurance; when that is the best fit, we refer you to an LTC-licensed specialist.
How a chronic illness rider works
Many term and IUL policies include or offer a chronic illness, critical illness and terminal illness rider. These living benefits let you use part of your death benefit while you're alive if you qualify. Payouts depend on the carrier, the rider and your age at claim, so we compare them side by side.
Agent tip: If you're buying life insurance anyway, choosing a policy with strong living benefits is one of the lowest-cost ways to add care protection.
How annuities can help with care costs
- Nursing home waivers: many fixed and fixed indexed annuities let you withdraw money without surrender charges if you are confined to a nursing home or diagnosed with a terminal illness.
- Income enhancement: some income riders increase your lifetime income payments for a period if you can't perform daily activities.
- A guaranteed paycheck: lifetime annuity income keeps paying the bills while savings cover the cost of care.
- Tax-deferred growth on money set aside for later-life needs.
See how annuities work and how they fit a diversified retirement income plan.
How a care claim works
Tax rules for 2026
Premiums for tax-qualified long-term care insurance, including the long-term care portion of many hybrid policies, count as medical expenses up to an age-based limit:
| Your age by year-end | 2026 maximum deductible LTC premium |
|---|---|
| 40 or under | $500 |
| 41–50 | $930 |
| 51–60 | $1,860 |
| 61–70 | $4,960 |
| 71 and older | $6,200 |
- You can deduct medical expenses only if you itemize and they exceed 7.5% of your adjusted gross income.
- Self-employed people can often deduct qualified LTC premiums, up to these limits, without itemizing.
- Health savings account (HSA) money can pay qualified LTC premiums up to these limits, tax-free.
- Chronic illness benefits from a life insurance rider are generally received income-tax-free within IRS limits.
Limits from IRS inflation adjustments for 2026. Ask your tax professional how they apply to you.
Myths vs. facts
Medicare covers short rehab stays only. It does not pay for ongoing custodial care.
Family usually provides the first care, often at the cost of their own jobs, health and savings.
Accidents, strokes and illnesses cause care needs at any age, and coverage is cheapest when you're young and healthy.
Medicaid requires spending down most assets, limits your choice of facility and reviews 5 years of transfers.
Life insurance with living benefits pays your family either way, whether you use it for care or not.
Plan by age
Questions to ask before you buy any care coverage
- How much does it pay per month, and for how long, or as a total pool?
- What triggers benefits, and is there a waiting (elimination) period?
- Does it pay for home care, assisted living and nursing homes, or only some of them?
- Is there inflation protection?
- Can the premium go up? Is it guaranteed?
- What happens if I never need care? Does my family get anything?
- If it's a life insurance rider, how much of the death benefit can I access, and what does the carrier charge at claim time?
- How strong is the insurer's financial rating?
Five steps to start this month
- Talk with your spouse and children about where you would want care: at home, near family or in a community.
- Sign a durable power of attorney, a health care directive and a HIPAA release.
- Check your current life insurance and annuities for living benefits and nursing home waivers. Many people already have more than they think.
- Decide how much of a care event you want covered by insurance and how much you'll pay from savings.
- Get a free review while you are healthy. Call 585-305-2330.
Long-Term Care: common questions
How much does a nursing home cost in Virginia, Texas or California?
CareScout's 2025 medians for a private nursing home room are $140,160 a year in Virginia, $91,250 in Texas and $182,135 in California. See the state table on this page for Arizona, Georgia, New Jersey, North Carolina, Pennsylvania and South Carolina.
Are long-term care insurance premiums tax-deductible in 2026?
Premiums for tax-qualified LTC insurance count as medical expenses up to an age-based limit: $500 at 40 or under, $930 at 41–50, $1,860 at 51–60, $4,960 at 61–70 and $6,200 at 71 or older. You must itemize and exceed 7.5% of AGI, unless you are self-employed.
What is an elimination period?
It is the waiting period between when you qualify for care benefits and when payments begin, often 90 days. You pay for care yourself during that time, so a cash reserve or annuity income helps.
Does Medicare pay for long-term care?
No. Medicare covers up to 100 days in a skilled nursing facility after a qualifying 3-day hospital stay, with daily coinsurance after day 20. It does not pay for ongoing custodial care at home, in assisted living or in a nursing home.
How much does long-term care cost in 2025?
National medians from the CareScout 2025 Cost of Care Survey: $129,575 a year for a private nursing home room, $114,975 semi-private, $80,080 for a full-time in-home caregiver, $74,400 for assisted living and $24,700 for adult day health care.
Can life insurance pay for long-term care?
Yes, if the policy has a chronic illness or long-term care rider. You can use part of the death benefit while you are alive if you can't perform two of six daily activities or have a severe cognitive impairment. Whatever you don't use goes to your beneficiaries.
What is the difference between a chronic illness rider and long-term care insurance?
A chronic illness rider advances part of a life insurance death benefit, usually at low or no added cost. Long-term care insurance or a hybrid life and LTC policy provides a dedicated pool of money for care and usually pays more, but costs more.
When should I start planning for long-term care?
Your 40s and 50s are the best window. You are more likely to qualify, prices are lower, and riders added to a life policy you need anyway cost very little. After 65, options narrow and costs rise.
What is the Medicaid look-back period?
Most states review gifts and asset transfers made in the 5 years before you apply for Medicaid long-term care. Transfers made during that window can delay eligibility. Talk with an elder law attorney in your state.
Can an annuity help pay for a nursing home?
Many annuities waive surrender charges if you are confined to a nursing home, and some income riders increase payments if you need care. An annuity also provides guaranteed income so other savings can be used for care.
Do you sell long-term care insurance?
No. We are licensed for life insurance and annuities, including policies with living benefits and annuities with care features. If standalone or hybrid long-term care insurance fits you best, we refer you to an LTC-licensed specialist.
Sources
- CareScout 2025 Cost of Care Survey (released March 2026)
- U.S. Administration for Community Living: How much care will you need?
- Medicare.gov: Skilled nursing facility care
- CareScout 2025 ranked state cost tables
- 2026 LTC premium deduction limits
- AARP caregiving resources
- NAIC: consumer guides to long-term care
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