Senior Care Insurance 101 – Demystifying Insurance for Seniors

Nearly 70% of people will require long-term care in their lifetime, according to Genworth’s 2020 “Cost of Care Survey.” Considering the rising costs of healthcare in the United States, investing in a quality health insurance policy as soon as possible can give many people and their loved ones peace of mind that their medical needs will be met later in life.

Long-term Care Insurance

When most people talk about senior care insurance, they are referring specifically to long-term care insurance (LTCI).

Who Offers LTCI?

LTCI is private insurance that a handful of companies offer, including:

  1. Bankers Life & Casualty
  2. MassMutual
  3. Mutual of Omaha
  4. New York Life
  5. Northwestern Mutual

What Does LTCI Cover?

These plans help pay for long-term care, which many Medicare and Medicaid plans do not cover. While coverage varies depending on several factors, many policies help pay for costs associated with:

  • Assisted living facilities
  • Alzheimer’s care or other kinds of memory care services
  • In-home care services
  • Extended stays in nursing homes
  • Adult day care

Who is Eligible for LTCI?

The answer to this question will vary depending on the specific insurance company and policy someone chooses. That said, most people are eligible for some sort of LTCI policy.

Having certain health conditions may make applying for a policy more difficult, however. Specifically, some companies will only sell certain policies to people with pre-existing conditions, and there may be a delay period between when the policy is purchased and when it takes effect.

When Should People Enroll?

There is usually no age limit for when someone can first purchase a policy, so when someone enrolls is best left to individual discretion.

Many insurance companies recommend purchasing a policy while someone is in their 40s. Experts note that people can expect to pay less for coverage if they purchase a policy before turning 60.

How Much Does LTCI Cost?

How much LTC plans cost depends on several factors, including when someone purchased a policy and what that specific policy covers. That said, the average annual cost is $2,700, according to LifePlans.

Not sure how much to spend on a policy? According to The National Association of Insurance Commissioners, a good rule of thumb is not to spend more than 7% of your annual income on LTCI premiums.

What are the Benefits of LTCI?

Long-term care insurance benefits include peace of mind that medical expenses will be largely—if not completely—covered later in life if long-term care in a medical facility is necessary. Policyholders will also have to worry less about the expenses they leave behind for their families, especially if they already have a life insurance policy too.

Other Types of Senior Care Insurance

There are several ways to pay for medical care in the United States. Which one works best will vary by the individual, although most people opt for a combination of insurance types and policies. This way, there are few if any gaps in insurance coverage.


Medicare, a federal healthcare program, most often comes to mind when people think of senior care insurance. While most people know of Medicare, they might not know exactly what Medicare covers.

So, what does Medicare cover?

The answer to that question depends on what type of Medicare coverage someone has. There are a variety of Medicare plans, some of which are only available in certain states and localities.

Original Medicare

When most people refer to Medicare, though, they are referring to what is known as Original Medicare, or Medicare Parts A and B.

In most cases, Medicare Part A, or Medicare hospital coverage, covers the following:

  • Inpatient hospital care
  • Skilled nursing facility care
  • Home health care
  • Short-term (less than 100 days) nursing home care
  • Hospice care

In most cases, Medicare Part B, or Medicare medical insurance, covers the following:

  • Services that are medically necessary
  • Preventative services

Medicare Advantage

Medicare Part C is also known as Medicare Advantage. Medicare Advantage plans are bundled, “all in one” plans that include various Medicare parts; it is the traditional alternative to enrolling in Original Medicare.

What each Medicare Advantage plan offers will vary, but most offer prescription drug coverage and other benefits that Original Medicare alone usually doesn’t guarantee.

Medicare Prescription Drug Coverage

Medicare Part D offers prescription drug coverage. People who have documented medical conditions that require medications to manage should plan to invest in Part D.


Despite the name, Medigap is not offered by Centers for Medicare & Medicaid Services, the government agency that runs Medicare. Rather, private insurance companies offer “Medigap” plans, or insurance coverage that can fill in Original Medicare coverage gaps. That is why people will sometimes refer to Medigap as Medicare supplemental insurance.


Medicaid is a federal and state-run healthcare program for low-income people, seniors, and people with disabilities. Because it is a joint state and federal program, what Medicaid offers varies widely by location.

Medicaid may help pay for assisted living communities and other kinds of senior living arrangements, either through a state-specific program or local waivers.


Sometimes, qualified long-term care premiums can be included as part of someone’s medical expenses on their taxes, which means that eligible individuals may be able to put these premiums toward deductions on their annual tax forms.

Life Insurance

Life insurance is a type of insurance where the insurance company pays out a certain sum of money (death benefit) to family members or other beneficiaries that the policyholder designates. The benefit amount varies depending on several factors, including the specific insurance plan the policyholder chose.

These policies will not help pay for senior care, although they provide older people with peace of mind that their family members will be financially secure after their passing.

Final Thoughts

How to pay for senior living might be confusing at first. However, knowing more about senior care insurance options, particularly long-term care insurance, can make it easier to know what options are best suited to covering your healthcare costs later in life.

Disclaimer: This article does not constitute legal, financial, medical, or any other kind of advice.