Long-Term Care Insurance Pays for Care That Health Insurance Doesn’t Cover

You’ve probably seen the insurance commercials with Deion Sanders, Nick Saban, and a white duck promising coverage for “expenses health insurance doesn’t cover.” They’re not talking about long‑term care insurance — but that tagline is exactly what long‑term care insurance is designed to do: long-term care insurance pays for care that health insurance doesn’t cover. It pays for personal, ongoing care that traditional health insurance and Medicare don’t cover.

For many families — including those in the commercial real estate industry, where wealth is often tied up in illiquid assets — these costs can create real financial strain if not planned for in advance.

Here are the key things you’ll learn in this article.

What Does Health Insurance Cover?

Many people assume their health insurance will pay for any care they need. In reality, health insurance only covers medical care — the diagnosis and treatment of illness or injury. That includes:

• Doctor’s visits
• Hospital stays and surgeries
• Medical tests and screenings
• Prescription drugs
• Some medical equipment

Every policy has its own rules, but one thing is consistent: health insurance does not cover ongoing personal care or help with daily activities.

That’s where long-term care insurance comes in.

What Does Long-Term Care Insurance Cover?

Qualified long‑term care insurance policies cover the cost of non‑medical personal care when you can no longer perform at least two of six Activities of Daily Living (ADLs) for 90 days or longer, or when you have a substantial cognitive impairment.

These are the six ADLs:

• Bathing
• Eating
• Dressing
• Toileting
• Transferring (i.e., getting into and out of bed)
• Continence

You may need help with these because of a medical condition, but health insurance only covers the treatment — not the hands‑on assistance. Long‑term care insurance fills that gap.

Levels of Care Covered by Long-Term Care Insurance

Long-term care insurance policies usually cover varying levels of care. They pay benefits at each level, but the higher level of care you need, the faster you will eat through your benefits (see below about benefit structures).

From the lowest level/least expensive to the highest level/most expensive care these plans cover:

• Home health aide. Non‑medical support in your home, provided by a non‑licensed caregiver. This can be part‑time, full‑time, or even provided by a family member.
• In-home nursing care. Licensed medical care delivered at home by an RN or LPN. This is more advanced than a home health aide but still allows you to remain at home.
• Assisted living. A residential setting for people who can live independently in many ways but need help with ADLs, medication management, or mobility.
• Nursing home care. A residential facility providing 24‑hour skilled nursing care — the highest level of long‑term care.

How Much Does Long-Term Care Cost?

The cost of long‑term care insurance varies based on age, health, location, and policy design. But the cost of care itself is substantial.

According to the Federal Long Term Care Insurance Program (FLTCIP) 2024 Cost of Care Survey, national average costs are:

Do I Need Long-Term Care Insurance?

According to the U.S. Administration for Community Living, on average:

• Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years
• Women need care longer (3.7 years) than men (2.2 years)
• One-third of today’s 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years

Going without long-term care insurance can be a significant risk, primarily falling on the surviving spouse of person who dies after a period of long-term care. As shown by the data above, long-term care costs for an individual can be multiple hundreds of thousands of dollars. If you don’t have long-term care insurance coverage, you may have to pay out of pocket for this care. That can be a serious drain on your retirement savings, leaving your spouse in a completely different financial situation than you planned for.

Remember: Long-term care insurance pays for care that health insurance doesn’t cover. Your health insurance may pay for your doctors and medicines, but it won’t pay for personal care.

How Are Long-Term Care Benefits Structured?

There are five key components of a long-term care insurance policy:

• The benefit period is the length of time that you will receive benefits under the policy once you become eligible. This can be for a specified period like two years or five years, or for your lifetime. The shorter the benefit period, the lower the policy premium.
• The elimination period is the waiting period before benefits become payable. For example, you may become unable to perform two ADLs, but you have a waiting period before the benefits kick in (this helps to prove that you are truly disabled). Elimination periods range from zero to 365 days. The longer the elimination period, the lower the policy premium.
• The daily benefit is the maximum amount that a policy will reimburse per day or month. The lower the daily benefit, the lower the policy premium.
• Some policies include a “pool of money” that combines the concepts of the benefit period and the daily benefit. For example, a policy may include a pool of money based on a daily benefit amount of $200 and a benefit period of 730 days (2 years). $200 x 730 = $146,000. With a pool of money, you may be able to extend your benefit period beyond two years if your daily cost is below $200. This is one reason why it can be beneficial to use a home health aide (relatively inexpensive) for as long as reasonably possible.
• Riders allow you to add features to a policy. Key features to consider are inflation protection and waiver of premium (i.e., you do not have to pay premiums when you are receiving benefits).

Medicare Does Not Cover Long-Term Care

People often assume that they don’t need long-term care insurance once they are covered by Medicare. But Medicare does not cover long-term care. Medicare will pay for skilled nursing care for up to 100 days following a hospitalization. It covers the first 20 days fully, and then you pay a portion for the next 80 days. After that, you are on the hook completely—Medicare doesn’t cover after 100 days.

Our Approach

At Dominion Financial Advisors, we do not sell long-term care insurance. Instead, we help you evaluate whether coverage makes sense within your broader financial plan. Long‑term care decisions must be made in the context of your assets, income, family situation, and long‑term goals. As fiduciary financial advisors, we don’t receive commissions, referral fees, or kickbacks for long-term insurance. Our only goal is to help you protect you — and the people you love — from the financial risks that long‑term care can create.