Why seniors should buy long-term care insurance and Medicare supplemental insurance, according to experts

As seniors age out of the workforce, they'll have to decide which priorities are most important, as their income will typically be more limited than it was before retirement.  According to the Pension Rights Center and the Pension Policy Center, the median annual income in 2022 for people 65 and older was $29,740. 

In turn, seniors might need help choosing between different types of insurance coverage, as not all will be worth the extra money. While there are plenty to choose from, long-term care insurance and Medicare supplemental insurance are both important. Here's what the experts say about why you need both.

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Why seniors should buy long-term care insurance and Medicare supplemental insurance now, experts say

While related, long-term care insurance and Medicare supplemental insurance cover different needs. Long-term care insurance covers the cost of care for assistance with normal living activities, like dressing, bathing and daily care. Medicare supplemental insurance covers medical-related needs, like doctor visits, hospital stays, lab work and more.

Larry Nisenson, chief growth officer at Assured Allies, says both insurances serve different purposes. 

"Long-term care insurance is focused specifically on the activities of daily living and cognitive decline," Nisenson says. "Medicare supplemental coverage is built around the same health care services as Medicare."

Planning for the future means considering when you might need both types of coverage. Ethan Pickner, founder of AZ Health Insurance Brokers, says that while some people choose to only have one, that coverage might not be enough.

"[Seniors] would need both when they can no longer perform daily living activities or need to be placed in a nursing home," Pickner says. "Look into long-term care insurance because [you might need] it later in life."

And, having health insurance through Medicare and Medicare supplemental insurance may cover a lot of expenses, but it won't cover all of them. 

"Medicare and Medigap do not usually cover senior living that offers assisted-living services," says Joy Loverde, author of The Complete Eldercare Planner. "This is when a [long-term care] insurance policy comes in handy."

Long-term care insurance and Medicare supplemental insurance serve different purposes, and for some people, it might be important to have both.

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Why seniors may just want to buy one

Depending on your income and other factors, you might want to buy one over the other in some instances, experts say.

"Wealthy seniors may choose to forgo paying for LTC insurance and instead pay for nursing home care, personal care at home, a stay in assisted living facilities and adult day care out-of-pocket," Loverde says. 

If you have the funds to pay for certain services, you may not need to buy an extra insurance plan.

"The only time someone would not need Medicare supplemental coverage is if they had credible coverage elsewhere such as VA, Tricare or a retiree program," Pickner says. "Some people choose just to have original Medicare and no additional coverage."

Long-term care insurance doesn't have the same age requirements as Medicare or Medicare supplemental insurance. So, if you need help before age 65, some experts say you may need to buy a long-term care plan.

"Medicare eligibility is generally limited to those 65 or older while long-term care insurance can typically be purchased without an age restriction," Nisenson says. "Many purchasers of LTC coverage are not old enough for Medicare or Medicare supplemental coverage."

Healthy older people may not believe they need help now. However, Nisenson says long-term care insurance might be more important than you think.

"About 70% of those over 65 will have a [long-term care] event," Nisenson says. "Not all of them will need LTC insurance, but certainly many will and therefore should plan on how to cover the associated expenses."

Why seniors may not want to buy either

For some, your health insurance might have a big impact on the other types of insurance you need.

"Medicaid clients receive [long-term care] coverage in their program so a private plan is not required," Nisenson says. 

Right now, there are about 7.2 million seniors who have both Medicare and Medicaid. These seniors may not need either long-term care insurance or Medicare supplemental insurance.

The bottom line

Long-term care insurance and Medicare supplemental insurance serve different but important purposes for seniors. While long-term care insurance covers assistance with daily living activities, Medicare supplemental insurance fills gaps in medical coverage. Experts generally recommend having both types of insurance to ensure comprehensive protection in retirement.

However, individual circumstances may influence the decision. Wealthy seniors might opt to self-fund long-term care, while those with certain types of existing coverage may not need Medicare supplements. Additionally, some seniors may be covered by Medicaid, which can provide long-term care benefits. Ultimately, the choice depends on factors such as age, health status, financial situation and existing coverage. Seniors should carefully evaluate their needs and resources to determine the most appropriate insurance strategy for their retirement years.