Is Long-Term Care Insurance Still Worth It in 2026? An Honest Look at the Numbers

Long-term care insurance used to be a straightforward recommendation. Buy a policy in your 50s, pay the premiums, and rest easy knowing that nursing home costs would not wipe out your savings.

That was the old story. The new story is more complicated.

Premiums have climbed sharply over the past decade. Some policyholders have seen their rates double or even triple. Meanwhile, several major insurers have left the market entirely.

So where does that leave you in 2026? Is long-term care insurance still worth buying? Let us look at the numbers honestly.

Why Long-Term Care Matters

First, the hard truth. The odds of needing long-term care are higher than most people think.

About 70% of people turning 65 today will need some form of long-term care during their lifetime. That might mean:

Help at home with daily tasks like bathing, dressing, and cooking
An assisted living facility
A nursing home
Memory care for dementia or Alzheimer’s

The average length of care needed is about 3 years. But some people need care for much longer, especially those with dementia.

The Cost of Care in 2026

Long-term care is expensive, and the costs keep rising. Here are the current national averages:

Home health aide: $6,500 to $7,000 per month
Assisted living facility: $5,500 to $6,000 per month
Nursing home (semi-private room): $8,500 to $9,500 per month
Nursing home (private room): $10,000 to $11,000 per month
Memory care: $7,000 to $9,000 per month

These are averages. Costs in major cities and coastal states are much higher. In parts of New York, Connecticut, or California, a private nursing home room can top $15,000 a month.

A three-year stay in a nursing home at the national average costs roughly $300,000. A five-year stay pushes past $500,000.

These numbers can drain a lifetime of savings in a hurry.

What Long-Term Care Insurance Covers

A traditional long-term care insurance policy pays a daily or monthly benefit when you cannot perform a certain number of “activities of daily living” (ADLs). These include bathing, dressing, eating, toileting, transferring (moving from bed to chair), and continence.

Most policies pay out when you cannot perform 2 or more ADLs, or when you have a cognitive impairment like dementia.

A typical policy might pay $150 to $300 per day for up to 3 years. That works out to $4,500 to $9,000 per month. You choose your benefit amount, benefit period, and other features when you buy the policy.

The Premium Problem

Here is where things get difficult. Long-term care insurance premiums have risen dramatically.

A healthy 55-year-old couple can expect to pay $3,000 to $6,000 per year for a decent policy. By age 65, that jumps to $5,000 to $10,000 or more per year.

And those are starting premiums. Unlike term life insurance, long-term care premiums are not locked in. Insurers can (and do) raise rates on existing policyholders. Many people who bought policies 10 or 15 years ago have seen their premiums increase by 50% to 100%.

When premiums jump, you face an unpleasant choice:

Pay the higher premium
Reduce your benefits to keep the premium affordable
Drop the policy entirely and lose everything you paid in

Roughly 30% of people who buy long-term care insurance eventually let their policies lapse. That means they paid years of premiums and got nothing in return.

The Math: When It Makes Sense

Long-term care insurance works best for people in a specific financial range. Think of it as a “Goldilocks zone.”

Too wealthy: If you have $2 million or more in liquid assets, you can likely self-insure. You can pay for care out of your savings without devastating your financial plan. The premiums would be money better invested.

Too limited in resources: If you have very modest savings and income, Medicaid will eventually cover your long-term care costs. You would spend down your assets first, but the insurance premiums might not change that outcome much. (Medicaid rules are complicated, and coverage varies by state. Talk to an elder law attorney if this applies to you.)

The sweet spot: If you have $200,000 to $1.5 million in retirement savings, long-term care costs could seriously damage your financial security. This is where insurance can provide the most value, protecting a nest egg that is large enough to matter but not large enough to absorb $300,000 or more in care costs.

Alternatives to Traditional Policies

If traditional long-term care insurance does not feel right, you have other options.

Hybrid Life/Long-Term Care Policies

These combine life insurance with long-term care benefits. If you need care, the policy pays for it. If you never need care, your beneficiaries receive a death benefit.

The big advantage: your money does not disappear if you never file a claim. The downside: hybrid policies usually require a large lump-sum payment or high annual premiums. Expect to pay $50,000 to $150,000 upfront, or $5,000 to $15,000 per year.

Hybrid policies have become very popular in recent years because they solve the “use it or lose it” problem of traditional policies.

Short-Term Care Insurance

These policies cover care for up to 12 months. They are much cheaper than traditional long-term care policies and easier to qualify for.

The downside is obvious: if you need care for longer than a year, you are on your own. But for many people, a year of coverage provides a meaningful safety net at a manageable cost.

Self-Insurance With Dedicated Savings

Some financial advisors suggest setting aside a specific pool of money just for potential care costs. You invest it conservatively and only touch it if you need care.

The advantage: you keep control of the money. If you never need care, it stays in your estate.

The risk: if you need care that costs more than what you saved, you are short. And it requires discipline to keep that money separate and not spend it on other things.

Health Savings Accounts (HSAs)

If you are still working and have a high-deductible health plan, you can contribute to an HSA. After age 65, you can use HSA funds for long-term care insurance premiums (up to certain limits) or for care costs directly, all tax-free.

The limits for using HSA funds on long-term care premiums in 2026 are:

Age 51-60: $1,900
Age 61-70: $5,070
Age 71+: $6,350

HSAs will not cover the full cost of care, but they can be a useful piece of the puzzle.

Questions to Ask Before You Buy

If you are considering a long-term care policy, ask these questions:

What is the insurer’s history of rate increases? Some companies have been more aggressive than others. Check the track record.
What is the company’s financial strength rating? You need this insurer to be around in 20 or 30 years. Look for A.M. Best ratings of A or better.
What exactly triggers benefits? Make sure you understand the policy’s definition of benefit eligibility.
Is there inflation protection? A policy that pays $150 per day today will not go far in 20 years without inflation adjustments. Compound inflation protection is better than simple inflation protection.
What is the elimination period? This is the waiting period before benefits start, usually 30 to 90 days. You pay out of pocket during this time.
Can you afford the premium if it increases by 50%? If the answer is no, you may end up dropping the policy when you need it most.

What About Medicaid?

Medicaid covers long-term care for people with very limited income and assets. The exact rules vary by state, but generally you must have less than $2,000 in countable assets (some states set higher limits).

Many people assume they can simply give away their assets and then qualify for Medicaid. It does not work that way. Medicaid has a “look-back period” of 5 years. Any gifts or transfers during that time can result in a penalty period when Medicaid will not pay for your care.

Medicaid planning is a real strategy, but it requires working with an experienced elder law attorney well in advance. Last-minute moves rarely work and can backfire.

Also, Medicaid typically covers nursing home care, not assisted living or in-home care (though some states offer waivers for these). And you have less choice about where you receive care.

The Bottom Line

Long-term care insurance is not a simple yes or no decision. The right answer depends on your health, your savings, your family situation, and your comfort with risk.

Here is a simple framework:

Strong buy: You are in the financial “sweet spot” ($200K to $1.5M in assets), you are healthy, you are in your mid-50s to early 60s, and you can afford premiums even if they increase.
Consider a hybrid policy: You have a lump sum available and want guaranteed value whether or not you need care.
Consider self-insuring: You have significant assets ($2M+) or you have a strong family support system and other safety nets.
Focus on Medicaid planning: Your assets are modest and you want to protect what you have for a spouse or children.

Whatever you decide, do not ignore the issue. Hoping you will never need care is not a plan. The best time to think about this is before you need it.

Reported by Ellen Murphy with additional research from the SeniorDaily editorial team. For corrections or updates, please contact us.

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