Long-Term-Care Insurance and Living on Social Security

By Jonathan Peterson

Copyright © 2018 by AARP. All rights reserved.

The cost of long-term care can wipe you out financially. A private room in a nursing home may cost almost $100,000 per year — or even more, depending on where you live. A home-care aide may cost $23 per hour or considerably more in some areas. Neither Medicare nor typical health-insurance policies cover long-term care, beyond brief rehabilitation.

By some measures, two-thirds or more of individuals over 65 will need some long-term care before they die. If you require extended institutional care, you’ll have to use up most of your assets before you qualify for assistance through Medicaid, the government’s healthcare program for the poor.

So, should you buy a long-term-care insurance policy? The answer depends on a range of factors, including what brings you peace of mind, whether you can afford to pay for long-term care out of your own pocket if you need to, and whether you believe you have family support to count on.

A good, transparent long-term-care policy from an established insurer can help protect you — but understand the limits. Policies cost less if you start when you’re younger, though future rate hikes can be jolting. Policies vary in daily benefits, waiting periods required before you can make a claim, and how long they’ll pay for. Automatic, compounded inflation protection is an important feature to look for. Without it, coverage erodes over time.

You can find out more about consumer issues in purchasing long-term-care insurance at Naic.org.