Over the last several years, long-term care insurance has slowly grown in popularity. As life expectancy has increased, the number of people needing more intensive medical care late in life has also increased. And as the demand for assisted living housing has increased, so has its cost. Genworth Financial conducts an annual Cost of Care Survey to gauge the price of long term care in the U.S., and the 2010 report found that:

  • The median annual cost of a private room in a nursing home is $75,190 ($206 per day) – $14,965 more than it was in 2005.
  • A one-bedroom unit in an assisted living facility has a median cost of $3,185 a month – 12% higher than in 2009.
  • The median wage for a non-Medicare certified, state-licensed home health aide in 2010 is $19 per hour, up 2.7% from 2009.1

The most recent estimate of LTC costs from the U.S. Department of Health and Human Services was even higher than the Genworth survey – $219 per day for a private room in a nursing home ($79,935 per year).2 Assuming 5% annual inflation, a private room would cost $130,206 by 2019 and $212,091 by 2029. Finally, AARP notes that approximately 60% of people over age 65 will require some kind of long term care during their lifetimes.3

Why procrastinate? As with any insurance coverage tied to your health, getting coverage earlier in life will decrease your annual cost. This is why some people purchase it before they retire, while those in poor health or over the age of 80 are frequently ineligible for coverage.

What it pays for. While some think LTC coverage just pays for nursing home care, it can pay for a wide variety of nursing, social, and rehabilitative services at home and away from home. It can also provide coverage for those with a chronic illness, or even people who just need assistance bathing, eating or dressing.4

Choosing a Daily Benefit Amount. This is the maximum amount that your LTC plan will pay for care in a nursing home facility (typically between a few dozen dollars to several hundred dollars). You choose a Daily Benefit Amount when you pay for your LTC coverage, and you can also choose the length of time that you want to receive the full DBA. Some plans also offer inflation protection at enrollment; every few years, you will have the chance to buy additional coverage to increase the potential benefit you would receive.

The Medicare Misconception. Although many people think that Medicare will cover the cost of long term care, long term care insurance is not provided. Medicare will only pay for the first 100 days of nursing home care if the following conditions are met:

  1. You are receiving skilled care, and
  2. You enter a nursing home immediately after a hospital stay of at least 3 days.

Medicare also covers limited home visits for skilled care, and some hospice services for the terminally ill.3 Granted, Medicaid can pay for long term care, but you would have to exhaust almost all of your savings before qualifying.

Long-term care insurance doesn’t make sense for everyone, but it’s something that is worth looking into in most cases. Whether it’s something you have been considering or if it’s just something you would like to learn more about, we would be happy to sit down with you to answer your questions.  Please call our office today at 925.462.6007 or simply e-mail us at info@wealth-mgt.net.


This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If assistance or further information is needed, the reader is advised to engage the services of a competent professional.




1 genworth.com/content/etc/medialib/genworth_v2/pdf/ltc_cost_of_care.Par.85518.File.dat/Executive%20Summary_gnw.pdf [4/10]

1 genworth.com/content/etc/medialib/genworth_v2/pdf/ltc_cost_of_care.Par.85518.File.dat/Executive%20Summary_gnw.pdf [4/10]

2 – longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_Of_Care/Costs_Of_Care.aspx [5/12/10]

3 – aarp.org/families/caregiving/caring_help/what_does_long_term_care_cost.html [11/11/08]

4 – pbs.org/nbr/site/features/special/article/long-term-care-insurance_SP/ [11/11/08]

5 – longtermcare.gov/LTC/Main_Site/Paying_LTC/Private_Programs/LTC_Insurance/index.aspx [6/25/09]