Long-Term Care Insurance vs Self-Insure Calculator

Long-Term Care Cost Reality 2026

Average annual nursing home cost: $108,400 (private room) per Genworth Cost of Care Survey 2024. Assisted living: $64,200. Home health aide: $75,500. 70% of people age 65+ will need long-term care at some point. Average duration of need: 2-3 years women, 1-2 years men. Total expected lifetime cost: $200K-$400K average; some need $500K-$1M+. Medicare does NOT cover long-term custodial care.

LTC Insurance Cost and Coverage

Traditional LTC policy at age 55: $2,000-$5,000/year premium for $200-$300/day benefit, 3-5 year benefit period, 3% inflation rider. At age 65: premiums jump 50-100%. Hybrid policies (LTC + life insurance): single premium $50K-$150K. Premiums NOT guaranteed level — many traditional LTC insurers raised premiums 50-100% in recent years (Genworth, John Hancock notable). Buying younger locks in better rate but commits more years of premium.

The Self-Insure Math

$3,000/year LTC premium invested at 6% from age 55 to 85 = ~$237,000 saved. Average LTC need: 2 years × $108K = $216K. Self-insurance roughly breaks even on average. BUT: insurance covers tail risk — what if you need 7 years of care? Self-insure fails catastrophically; insurance pays. The decision is risk-tolerance + asset-protection: people with $500K+ liquid net worth can often self-insure; those with $100K-$500K should consider insurance.

Strategy Considerations

Couples: at least one likely needs care. Insurance with shared benefit pool covers either spouse. Estate planning: LTC drains heirs' inheritance — insurance protects the estate. Tax: LTC premiums deductible up to age-based limits if itemizing. Hybrid policies popular for those uncomfortable with 'use it or lose it' traditional LTC. State Partnership Programs offer additional Medicaid asset protection beyond policy benefits. Long-term care planning is best done at age 50-55.

Sources: Genworth Cost of Care Survey 2024, AALTCI 2024 Price Index, IRS Pub 502. Last updated: May 2026.