Long-term care insurance vs. health insurance: What's the difference?

Getting care in the U.S. has been getting increasingly expensive. Hospital stays, prescription drugs and assisted living costs are just a few of the many areas of healthcare and long-term care that have experienced rising prices. And approximately half of U.S. adults think it's difficult to afford health care costs, according to KFF.

One way to manage these types of costs is through insurance. While insurance premiums can still be expensive and have gaps in coverage, they can reduce the risk of facing astronomical costs that force tough decisions.

However, it's important to realize that health insurance differs from long-term care insurance. And if you want financial protection for both ordinary medical costs and expenses associated with ongoing care, like living in a nursing home, you may need both types of insurance.

Start exploring your long-term care insurance options here to learn more.

Long-term care insurance vs. health insurance: What's the difference?

To understand the difference between long-term care insurance and health insurance, it helps to first clarify what long-term care means.

"Long-term care involves a variety of services designed to meet a person's health or personal care needs when they can no longer perform everyday activities on their own," explains the National Institute on Aging.

Thus, long-term care insurance typically helps cover related costs for those who need help with things like bathing and eating, known as activities of daily living (ADL). Health insurance, on the other hand, covers things like doctors' visits and prescription drugs associated with treating illnesses or injuries.

Long-term care insurance can also cover "things like meal preparation, housekeeping, and transportation," says Dr. Char Hu, Ph.D., co-founder and CEO of The Helper Bees, an InsurTech company.

Health insurance generally doesn't cover these types of things, particularly on a long-term basis.

"While some of these services are covered by Medicare for specific situations and short durations and Medicaid for those who qualify, traditional health insurance plans do not offer this type of non-medical coverage. When, how, and the amount of coverage also varies between health insurance and long-term care insurance," he adds.

Explore your long-term care insurance options here to see how it could help you or a loved one.

Why would you need long-term care insurance?

Because health insurance often doesn't cover support for ADLs and related needs, long-term care insurance is often needed to protect against what can be substantial costs. A home health aide costs around $5,000 per month and a semi-private room in a nursing home facility costs nearly $8,000 per month, according to the insurer Genworth.

And while you might think the risk of needing long-term care coverage is low, most people end up needing some form of long-term care. In fact, a 65-year-old has nearly a 70% chance of needing long-term care at some point in their life, according to the Administration for Community Living, part of the U.S. Department of Health & Human Services.

"What long-term care insurance provides is asset protection as you begin to lose" abilities, says Allen Haney, co-founder and president of The Haney Company, an insurance agency and financial services company.

What might start out as a manageable cost can snowball as diseases like Alzheimer's or injuries progress.

"Long-term care is something where the cost continues to go up. Because as an individual loses the ability to first not drive, and then not dress themselves, and then not feed themselves, the price goes up every time they lose additional abilities," says Haney.

How do you buy long-term care insurance?

You can buy long-term care insurance through a few different routes. One option is to go through an insurance agent at a long-term care insurance provider. You also might go through an independent insurance agency that can connect you with policies from different insurers. Financial advisors and related professionals also might be able to connect you with long-term care insurance providers.

You also might get long-term care insurance in combination with a life insurance policy.

"Right now, very few insurance carriers offer a standalone long-term care insurance product. It is more commonly paired with life insurance, which is referred to as a hybrid policy. If you currently have a retirement or a life insurance policy, ask your agent if you qualify for or if there is a long-term care rider available to help pay for your long-term care expenses," says Dr. Hu.

However you go about buying long-term care insurance, be sure to closely look at policy details and consider the balance between costs and coverage. "It can be very confusing," says Haney. "Consider what would be the best for you, making sure that you can both afford it and that it works for you when you need it." 

Start exploring your long-term care insurance options online here.

How much does long-term care insurance cost?

Long-term care insurance costs can vary significantly based on the type of policy you choose and factors such as your age.

For example, a policy that starts at $165,000 in level benefits has an average annual premium of $900 for a single 55-year-old male in the "Select" health rate class (which costs more than "Preferred"), based on 2023 data from the American Association for Long-Term Care Insurance (AALTCI). 

A 65-year-old male has an average annual premium starting at $1,700 for $165,000 in level benefits, while a policy with benefits that grow at 5% annually would cost $4,200 per year.

Women face even higher costs. A 65-year-old female pays an average of $2,700 for $165,000 in level benefits, while a policy with benefits that grow at 5% annually would cost $7,225 per year.

Because long-term care insurance costs keep going up with age, Haney recommends starting to look for a policy around age 40, rather than waiting until you're about to retire. 

The bottom line

Health insurance is an important part of affording common medical needs, but it typically doesn't cover long-term care. And considering the majority of seniors will need long-term care at some point, long-term care insurance can be a useful way to protect against this risk. 

However, policies can be expensive and vary significantly, so it's important to compare policies. Consider consulting with a trusted professional who can walk you through your options, such as traditional long-term care insurance vs. hybrid long-term care insurance.