Long-Term Care Insurance Calculator

Long-term care insurance covers the cost of services that help with daily activities when a person can no longer perform them independently due to aging, chronic illness, or disability. Covered services typically include nursing home care, assisted living, memory care, and home health aide services. Benefits are triggered when you are unable to perform a specified number of Activities of Daily Living (ADLs) such as bathing, dressing, eating, and transferring, or when you have a severe cognitive impairment.

The cost of long-term care insurance varies widely based on your age at purchase, health status, daily benefit amount, benefit period, and inflation protection choice. A healthy 55-year-old might pay $1,500–$3,500 per year for a $150/day benefit with a 3-year benefit period. Waiting until age 65 can more than double premiums. The American Association for Long-Term Care Insurance reports that a couple both aged 55 with a $162,000 benefit pool pays an average of $3,050/year combined.

Most financial planners recommend purchasing LTC insurance in your mid-50s, typically between ages 52 and 64. At this age, premiums are still relatively affordable, you are likely healthy enough to qualify for preferred rates, and you have decades before you may need to use the benefits. Buying before age 50 means paying premiums for many years without needing benefits. Waiting until your 70s often means much higher premiums or difficulty qualifying due to health conditions.

The elimination period is the number of days you must pay for care out-of-pocket before your LTC policy begins paying benefits — similar to a deductible in days rather than dollars. Common elimination periods are 30, 60, 90, and 180 days. A 90-day elimination period is the most popular choice. Choosing a longer elimination period (such as 180 days) lowers your premium significantly but requires more upfront savings to cover the waiting period. If you have adequate emergency savings, a longer elimination period can be a smart way to reduce premiums.

For most people purchasing LTC insurance before age 65, compound inflation protection is the better long-term choice. Compound protection multiplies your daily benefit by a percentage (typically 3–5%) each year, so benefits grow exponentially. Simple inflation protection adds a flat dollar amount annually. Over 25 years, a $200/day benefit with 3% compound inflation grows to approximately $418/day, while 3% simple inflation only grows it to $350/day. The compounding difference becomes more significant the longer you hold the policy. Simple inflation protection is a reasonable compromise if you want inflation protection at a lower cost.

Qualified long-term care insurance premiums may be tax-deductible as a medical expense, subject to age-based limits set by the IRS. For 2024, the deductible limits range from $470 (age 40 or under) to $5,880 (age 71 and over). Self-employed individuals can deduct 100% of qualified LTC premiums up to the age-based limit. For employees, LTC premiums may be deductible if total medical expenses exceed 7.5% of adjusted gross income. Benefits received from a qualified LTC policy are generally tax-free. Consult a tax professional for guidance specific to your situation.