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[quote=Anonymous]Most households would benefit from having some long-term care (LTC) insurance other than those that are sufficiently rich or sufficiently poor. Rich households can self-insure and pay for long-term care out of pocket. A reasonable rule of thumb is that the household has $500K-$1M per retiree that they can earmark specifically for LTC. If so, they don’t need LTC insurance. Poor households can generally rely on Medicaid if their income is less than $2742 per month (which will increase with inflation over time). Anyone with income (including social security benefits) above this threshold will likely not qualify for Medicaid.

When purchasing long-term care insurance, there are a few important considerations:
1. Buy a policy with inflation protection as LTC costs are likely to increase over time.
2. Buy from a reputable insurer with good credit & consumer ratings plus a history of premia stability. Two solid insurance companies for long-term care are Northwestern Mutual and NY Life. I have no affiliation to either company.
3. Buy a policy with reimbursement payment (to cover care expenses) not indemnity or cash benefits, as premia are cheaper this way. 
4. Avoid LTC insurance bundled with life insurance. It is generally cheaper to buy standalone long-term care insurance separate from death & withdrawal benefits. 
5. The ideal ages for buying LTC insurance are in one’s 50s and 60s, as LTC insurers can reject applications for health reasons.

LTC insurance (e.g., from the aforementioned companies) is expensive, but so too is long-term care. One way to make it more affordable is by adding an elimination period (like a deductible for health insurance) which is the period during which you’d pay LTC out-of-pocket before benefits kick in. Another way to make it more affordable is by buying a policy with “inflation offers”. In this case, your premium isn’t fixed but increases with the rate of inflation as do your benefits.

FYI the current premium is around $9K per year ($750 per month) for a 50-year old male with a $12K monthly benefit, total max benefit of $1M, benefits increasing at 3% compound inflation per year, and a one-year elimination period. The premium goes down to about $4K per year ($300 per month) with a CPI-based inflation offers policy and all other features the same.

FYI I am not affiliated with any insurance company, nor do I make any money from insurance sales. I work for a company that does financial planning for retirement with a focus on long-term care. I’ve got LTC insurance to protect my spouse and children from the burden of my care in the future even though I, too, would like to avoid those years if at all possible.
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