Many families eventually face the challenge of helping a loved one who can no longer manage daily tasks on their own. Whether it’s assistance with bathing, dressing, or more specialized supervision for conditions like Alzheimer’s, long-term care often becomes a necessity. While some are fortunate to have relatives step in as caregivers, the reality is that professional care is usually needed at some point—and it’s far from cheap.
The price of long-term care has been rising steadily. A home health aide now costs tens of thousands of dollars per year, and with inflation, that figure is only expected to climb. Traditional health insurance and Medicare generally don’t cover these expenses, leaving many families to pay out of pocket. That’s where long-term care insurance (LTCI) comes in. This type of coverage can provide critical financial support when care is needed, but many people assume it’s out of reach. In truth, premiums are often more affordable than expected, especially compared to the cost of care itself.
Here are five practical ways to make LTCI more budget-friendly:
1. Purchase coverage earlier in life.
The younger and healthier you are when you apply, the lower your premiums will likely be. Waiting even a decade can mean significantly higher annual costs—and fewer years of policy growth before you might need care.
2. Start with a modest policy and rely on inflation protection.
Buying a smaller plan when you’re younger, then letting automatic inflation adjustments increase your benefits over time, can be a smart move. Compound inflation protection can transform a modest daily benefit into a substantial payout decades later.
3. Base premiums on a percentage of income.
Just as people often allocate part of their salary toward retirement savings, you can approach LTCI in the same way. Deciding to set aside a set percentage—say 2% of annual income—for premiums makes planning more predictable and manageable.
4. Use Health Savings Account funds.
If you have an HSA, you can use those pre-tax dollars to pay for your LTCI premiums. This not only stretches your money further but also keeps benefits tax-free when used for actual long-term care costs.
5. Convert life insurance into LTCI coverage.
For those who own permanent life insurance with cash value, it may be possible to exchange that policy for a hybrid plan that combines life insurance with long-term care coverage. This can reduce or eliminate the need to pay additional premiums while providing more relevant protection as priorities shift with age.
Final Thoughts
Long-term care insurance doesn’t have to be overwhelming or unaffordable. By planning ahead and using strategies like buying earlier, choosing inflation protection, or leveraging existing resources, it’s possible to secure valuable coverage without straining your budget. The key is to act before the need arises—because waiting too long can limit your options and increase costs.
