Formal Long-Term Care

Private long-term care insurance is a type of insurance people can purchase to cover some of the costs of formal long-term care services including nursing home care, assisted living facility care, and formal home care. If they meet the underwriting criteria, people can buy a policy that pays for a specified dollar amount of long-term care, provided that they pay the premiums and a deductible (typically three months of nursing home care). Premiums for these policies increase with age, so purchasing insurance at an earlier age locks in lower premiums but extends the duration of payments.

Chart 10. Percentage of people aged 55–64 with long-term care insurance, by educational attainment and sex, 2004

Source: Health and Retirement Study.

• People with higher levels of education are more likely to purchase long-term care insurance than people with lower levels. In 2004, 15 percent of men and 19 percent of women aged 55–64 with a college degree purchased long-term care insurance compared to only 1 percent of men and 3 percent of women who did not have a high school degree.
• Overall, the percentage of people aged 55–64 who purchase long-term care insurance is relatively low, 7 percent of men and 9 percent of women.