What Long-Term Care Insurance Policyholders Need to Know
Long-term care insurance can be confusing at times, so here are some insights about premium increases, when you can use your benefits and other issues.


About 7.5 million Americans have some form of long-term care insurance (LTCI), which is a policy that helps cover the daily living costs associated with health diagnoses not covered by standard health insurance. This coverage is crucial to people who experience a health crisis that dramatically affects their way of living, such as Alzheimer’s or mobility issues.
LTCI policyholders have significantly more options when it comes to housing or in-home health care than people who don’t. If you are lucky enough to have LTCI coverage, you may have questions about your policy. As someone who specializes in helping older adults prepare for their next phase of life, I’m often asked questions about LTCI. Based on some of the most common concerns I hear, I hope these insights below provide you with the necessary guidance to plan ahead for your future.
What Should I Do When My LTCI Premium Increases Each Year?
Keep your policy. Too many people drop their LTCI policies because they are upset by a 20% premium increase. After paying LTCI premiums for 20 or even 30 years, it’s hard to swallow increases, but the alternative of self-paying for assisted living or nursing home care can be even more costly. Instead, ask your LTCI company to reduce portions of your benefits rather than increase premiums. You can also ask your insurance company to run proposed tradeoff comparisons. Before dropping your policy, consider one of three options:
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- How much do you need to reduce your daily benefit to keep your premiums steady?
- What happens to the premium if the total coverage pool is reduced from a five-year, $400,000 coverage cap to a three-year, $250,000 cap?
- What happens to the premiums with a reduction in inflation benefits from a 5% compounding feature to a 3.2% compounding rate?
Call the customer support phone number provided in the premium increase notification to discuss what options are available beyond what is initially presented. And make a point to know what the deadlines are for you to make a decision. Most of these premium increase notifications have a default election of the increased premium that goes into effect unless you elect differently.
When Can I Start Using My Long-Term Care Insurance Policy?
You need to meet certain criteria to activate your policy, like cognitive impairment, including Alzheimer's and other forms of dementia. You can also make an LTCI claim if you cannot perform two or more activities of daily living (ADLs) for at least 90 days. ADLs are bathing, dressing, continence/toileting, eating and transferring.
Your contract may have a waiting or elimination period (typically 90 to 100 days) before benefits are paid, so you will be responsible for all costs from when you first claim LTCI and when the elimination period ends.
Note that premium payments stop when you are in a claim period, which means you will not need to make any payments while you are receiving care.
Can I Use My Long-Term Care Insurance Policy If I Need Care at Home?
Each LTCI policy has slightly different terms for where care can take place. Your policy may pay different amounts depending on the location of the services (i.e., your home, assisted living community, nursing home). You need to read your policy to see if it covers home care aides, home health aides, care in assisted living or only care in nursing homes.
Note that if you choose home health aides or home care aides, you still must first meet the criteria for LTCI policies of cognitive impairment or needing assistance with at least two activities of daily living (mentioned above).
Why Do I Need to Worry About Long-Term Care Costs When I Have Long-Term Care Insurance?
"My long-term care costs are fully covered because I have long-term care insurance" is a statement I hear too frequently. Unfortunately, as this image illustrates (Source: Lifecare Affordability Plan), long-term care insurance covers only a portion of long-term care costs and services.
According to Genworth, the national average cost for assisted living is $54,000 annually, home health aides cost $62,000 annually, and nursing homes cost $108,000 annually. In some areas, the nursing home costs start much higher. Therefore, if you have an LTCI daily benefit of $200, it will only pay a portion of a $9,000 monthly fee.
The most frequent advice I give about long-term care insurance policies is: Read your policy. Too often, policyholders do not have a firm grasp of what coverages they have or how the policies work. Sometimes the policies themselves have been lost, and the only connection the policyholders have with the coverage is the annual premium notices.
If you lost your policy, get a new copy and take the time to understand your LTCI policy components. Call your long-term care insurance company and ask questions to be sure you understand what you have been paying for.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Financial adviser Tom West, CLU®, ChFC®, AIF®, founded Lifecare Affordability Plan (LCAP) to address a critical need for actionable planning that integrates finances, healthcare and senior housing. Tom has nearly 30 years of experience guiding families through financial and healthcare decisions. By bridging the gap between finance and healthcare, LCAP’s experienced team works with individuals and financial advisers to provide families with a financial strategy that meets changing healthcare needs while preserving the caregiver’s quality of life.
-
Kickstart Your 2026 Retirement Plan Now
Retirement can feel far-off, or too close for comfort, depending on where you’re at. But one thing’s clear — now is the ideal time to get your retirement plan in order.
-
Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings, From a Financial Planner
Holding too much of one company's stock can put your financial future at risk. Here are four ways you can strategically unwind such positions without triggering a massive tax bill.
-
Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings, From a Financial Planner
Holding too much of one company's stock can put your financial future at risk. Here are four ways you can strategically unwind such positions without triggering a massive tax bill.
-
Beyond Banking: How Credit Unions Serve Their Communities
Credit unions differentiate themselves from traditional banks by operating as member-owned financial cooperatives focused on community support and service rather than shareholder profit.
-
Answers to Every Early Retiree's Questions This Year, From a Wealth Adviser
From how to retire in a crazy market to how much to withdraw and how to spend without feeling guilty, a financial pro shares the advice he's given this year.
-
The Risks of Forced DST-to-UPREIT Conversions, From a Real Estate Expert
Some new Delaware statutory trust offerings are forcing investors into 721 UPREIT conversions at the end of the hold period, raising concerns about loss of control, limited liquidity, opaque valuations and unexpected tax liabilities.
-
I'm a Financial Adviser: You've Built Your Wealth, Now Make Sure Your Family Keeps It
The Great Wealth Transfer is well underway, yet too many families aren't ready. Here's how to bridge the generation gap that could threaten your legacy.
-
Want to Advance on the Job? Showing Some Courtesy and Appreciation Could Help
Two business professors share their insights about the impact of digital communication on the social skills of some in Gen Z and the importance of good manners on the job.
-
From Job Loss to Free Agent: A Financial Professional's Transition Playbook (and Pep Talk)
The American workforce is in transition, and if you're among those affected, take heart. You have the skills, experience and smarts that companies need.
-
A Financial Planner's Top Five Items to Prioritize When Your Spouse Is Ill
During tough times, it's easy to overlook important financial details, but you'll be so much better off if you take care of these things right now.