FAQ and Advice on Long Term Care Insurance
Answers to the most common questions about long term care insurance — from daily benefit amounts to tax deductibility, ADLs, and choosing the right carrier.
The questions below are the ones we hear most often from families shopping for long term care insurance. Answers by Darrick Wilkins, founder of LTC Tree.
Why should I buy long term care insurance?
Most people eventually reach a point where they can't fully care for themselves — whether due to an illness like Alzheimer's or an accident. Modern medicine is extending lifespans, which also means more years where long term care may be needed. Americans over the age of 65 face roughly a 45% risk of spending time in a nursing home. Today, nursing home costs exceed $80,000 per year and can run well over $200,000 in parts of the Northeast and coastal California.
What is the average daily benefit that most people choose?
Daily benefit amounts vary by region, but most clients choose somewhere between $100 and $250 per day. Your local cost of care should drive that decision more than any rule of thumb.
A word of warning: some insurance agents inflate care-cost projections to sell bigger policies. Modest coverage — right-sized to your real costs and existing assets — is often all you need.
What is the best long term care insurance company?
No single company is "best" for every buyer. The right choice depends on three things:
- Financial stability — the carrier needs to be around in 20–30 years to pay your claim
- Competitive pricing — appropriate for your age, health, and situation
- Claims-paying history — an established track record of actually paying benefits
Carriers we regularly recommend include Nationwide, Thrivent, New York Life, National Guardian Life, Mutual of Omaha, and a handful of others. Availability varies by state.
Is long term care insurance tax deductible?
It can be. Under current tax law, itemizers may deduct qualifying medical expenses — including long term care insurance premiums — to the extent they exceed 7.5% of adjusted gross income. For individuals, the deductible portion of the premium is determined by your age, with higher allowances as you get older.
This is not tax advice — please check with your CPA or tax software for your specific situation.
Is long term care insurance a good investment?
Long term care insurance isn't an investment — it's a risk-management tool, and a piece of a broader financial plan. Many investment-focused planners undervalue it because it isn't in their area of expertise.
Here's the math in a real case: a 47-year-old client purchased a policy for under $2,000 a year. Six years later she went on claim. Over her lifetime to age 80 she paid less than $12,000 in premiums but received more than $2.19 million in covered expenses.
What is the average annual assisted living cost?
Assisted living typically costs less than nursing home care, but costs are rising faster than general inflation as baby boomers retire and demand increases. This is one of the reasons we push clients to take inflation protection seriously when designing a policy.
What are Activities of Daily Living (ADLs)?
ADLs are the basic tasks most people take for granted — until they need help with them. Tax-qualified long term care policies require that you need help with 2 of the 6 ADLs before benefits begin:
- Eating
- Bathing
- Dressing
- Toileting
- Transferring (moving from bed to chair, etc.)
- Maintaining continence
Cognitive impairment (such as Alzheimer's) is also a trigger for benefits under qualified policies.
How does the IRS treat benefits paid by the policy?
For individuals, benefits paid by a tax-qualified long term care insurance policy are generally not taxable as income.
Why choose long term care insurance over Medicaid?
Medicaid only kicks in after you've spent down nearly all of your assets. Long term care insurance is designed to prevent that — to keep your home, your savings, and your legacy intact.
Many states also run Partnership programs, which allow qualified policyholders to access Medicaid after their policy benefits are exhausted without having to spend down every dollar they own. Partnership policies preserve assets equal to the amount of benefits the policy paid.
Still have questions?
Call us at 1-800-800-6139 or request a free quote below. We'll compare 5–6 top carriers side by side and walk you through the differences.