Long-term care insurance made sense when over 100 carriers competed for business in the 1990s. Now fewer than 15 remain, and the industry hemorrhages $25 million daily in payouts while premiums keep climbing. Only 3% to 4% of people over 50 actually own policies, and 40% of adults flat-out refuse to buy coverage. The math is brutal: 70% of 65-year-olds will need care costing up to $127,000 annually, yet the companies selling protection are collapsing. The full breakdown of costs, claims data, and alternatives reveals why this decision paralyzes so many Americans.

Design Highlights

• 70% of adults turning 65 will need long-term care, with annual costs ranging from $77,000 to $127,000.
• Average claims pay out $72,000, but premiums cost $1,750-$3,280 annually for individuals and $5,850 for couples.
• The industry is collapsing with fewer than 15 carriers remaining, creating uncertainty about future coverage availability.
• Only 3-4% of people over 50 have coverage, partly due to high costs and misconceptions about Medicare.
• Worth depends on personal finances, health status, and risk tolerance; hybrid life insurance products offer alternatives.

Long-Term Care Insurance

The market for long-term care insurance is collapsing. Fewer than 15 carriers remain in 2025, down from over 100 in the 1990s. The industry is basically on life support, which is darkly ironic considering what it insures. Those remaining companies are paying out serious money though—over $25 million daily across the industry, with the biggest providers alone dropping $18 million every business day.

Here’s the brutal math. Roughly 70% of adults turning 65 will need some form of long-term care during their lifetime. Nearly half will actually pay for those services out of pocket. About 20% will need care for longer than five years. The costs are staggering. Home health aides run over $77,000 annually. Nursing homes? Between $111,000 and $127,000 per year.

Yet only 3% to 4% of people over 50 have long-term care insurance. One in ten Americans report owning a policy. And 40% of adults age 29 and up flat-out don’t plan to purchase coverage, up from 32% the previous year. Many people think Medicare covers long-term care. It doesn’t. That misconception is expensive.

The policies themselves have changed. The average buyer is now 57, up from 53 in previous years. People are waiting longer, which costs more. For a 65-year-old male, annual premiums range from $1,750 to $3,280 depending on benefit growth. Women pay considerably more due to longer life expectancy and increased claim risk. At 55, premiums are $2,100 for males and $3,600 for females for traditional policies with 3% annual growth. For couples age 55, choosing the wrong insurer can mean paying over 26% more in annual costs.

The average benefit window purchased is 4.2 years. Average daily benefit is $225. Married couples pay around $5,850 annually for coverage. Over 460,000 claims were analyzed between 2010 and 2019, with an average payout of approximately $72,000 per claim. Through 2022, the industry has paid over $12.5 billion in benefits across more than 295,000 claims. Claims break into two distinct patterns: 43% last one year or less, while those exceeding a year average 3.9 years in duration. Most policies include an elimination period of 30 to 90 days during which you pay out of pocket before coverage kicks in.

Hybrid products combining life insurance with long-term care coverage are gaining traction as standalone policies fade. Makes sense. Get something even if you never need care.

The industry projects paid claims will peak around 2041 at $42 billion. Utilization rates are 95% for skilled nursing and assisted living, 67% for home healthcare policies. The money gets used.

Whether it’s worth buying depends on personal financial situations, health status, and risk tolerance. The numbers don’t lie. The need is real. The coverage is expensive. The decision is complicated.

Frequently Asked Questions

Can I Use Health Savings Account Funds to Pay for Long-Term Care Insurance?

Yes, HSA funds can pay for qualified long-term care insurance premiums tax-free.

But there’s a catch—there are annual limits based on age. In 2025, someone who’s 70 can use up to $4,770 from their HSA for premiums.

The policy has to meet IRS requirements: guaranteed renewable, no cash value, and specifically designated as qualified LTC insurance.

The premiums can’t be double-dipped as a medical tax deduction.

Pretty straightforward rules, actually.

What Happens to My Premiums if I Never Need Long-Term Care?

Most traditional long-term care insurance premiums? Gone forever if benefits go unused. Insurers keep the money—no refund to the policyholder or heirs.

That’s just how it works. Some policies offer Return of Premium riders that refund premiums if care is never needed, but they jack up costs considerably.

Hybrid policies might pay death benefits to heirs instead. Cancel after the free-look period? Still no refund.

It’s basically use it or lose it.

Does Long-Term Care Insurance Cover Care Provided by Family Members?

Some policies do, most don’t. It’s frustrating, honestly.

Cash indemnity policies typically allow families to get paid for caregiving. Reimbursement-based policies? They usually restrict payment to professional caregivers only.

Even when family coverage exists, there’s a catch—relatives often need training or certification first.

Less than 3% of Americans have LTCI anyway, and most have no clue what their policy actually covers. The fine print matters. A lot.

Read it carefully before assuming anything.

At What Age Should I Consider Purchasing Long-Term Care Insurance?

Most experts point to age 50-60 as the sweet spot for buying long-term care insurance. The average buyer today is around 57-60 years old.

Here’s the deal: premiums jump markedly each year after 50—sometimes 8-10% annually. Plus, rejection rates climb fast.

Apply in your 50s? About 10% rejection risk. Wait until your 70s? That shoots up to 40%.

Health declines with age, making approval harder and more expensive.

Are Long-Term Care Insurance Premiums Tax Deductible?

Yes, long-term care insurance premiums are tax deductible, but there’s a catch—actually, several.

The deduction is age-based, maxing out at $6,020 for those 71 and older in 2025.

Here’s the kicker: medical expenses must exceed 7.5% of adjusted gross income, and itemizing is required.

Self-employed individuals get better treatment—they can deduct 100% of premiums above the AGI threshold.

Most people won’t qualify. The tax code isn’t generous here.