Use It or Lose It Is Dead: How Long-Term Care Planning Quietly Reinvented Itself
Use It or Lose It Is Dead: How Long-Term Care Planning Quietly Reinvented Itself
The product almost nobody buys anymore, the one that replaced it, and why the cost of actual care does not behave like the inflation number on the news. A plain-English guide to what changed and the vocabulary worth knowing.
Updated for: 2026 · Read time: about 11 minutes · Category: Long-Term Care · Last updated on August 24, 2026 by Chris Franchina.
If you bought long-term care insurance in 1998, you bought a product that barely exists today. If you have been putting off the decision because you remember your parents complaining about premium increases on theirs, you are reacting to a version of this market that has largely been retired. And if you have a number in your head for what care costs, there is a good chance it is a decade old.
Long-term care is the planning question people postpone the longest, and it is the one where the ground has shifted the most. This article walks through three things: what care actually costs right now according to the largest annual survey of it, why those costs behave differently from the inflation figure you hear on the news, and how the entire approach to funding care quietly reorganized itself over about twenty-five years.
What Care Actually Costs Right Now
The most widely cited source on this is the Cost of Care Survey, run annually since 2004 and now published by CareScout, a Genworth company. The 2025 edition, released March 2, 2026, collected more than 25,000 provider rates nationwide between July and November 2025.
Here are the national medians for the two most recent survey years.
| Care setting | 2024 national median | 2025 national median | Change |
|---|---|---|---|
| Nursing home, private room | $127,750 / year | $129,575 / year ($355 / day) | Up 1% |
| Nursing home, semi-private room | $111,325 / year | $114,975 / year ($315 / day) | Up 2% |
| Assisted living community | $70,800 / year | $74,400 / year ($6,200 / month) | Up 5% |
| Adult day health care | $26,000 / year | $24,700 / year ($95 / day) | Down 5% |
| In-home non-medical caregiver | Reported separately as home health aide ($77,792) and homemaker ($75,504) | $80,080 / year ($35 / hour) | Categories merged for 2025; see note below |
Where these numbers come from, and one honest caveat. All figures are national medians published by CareScout and Genworth: the 2024 values from the survey released March 4, 2025, and the 2025 values from the survey released March 2, 2026. Annual figures for in-home care assume 44 hours per week; adult day figures assume five days per week. The in-home row deliberately does not show a percentage change, because CareScout merged two previously separate categories — home health aide and homemaker — into a single “non-medical caregiver” line for 2025, after finding that two-thirds of agencies had begun charging the same rate for both. Comparing a merged category to a split one would produce a number that looks precise and is not. The 2025 hourly rate itself rose 3% year over year.
One more figure worth holding onto: CareScout added a new line in 2025 for skilled nursing delivered in the home, sometimes called private duty nursing. The national median is $90 per hour, or $160 per visit.
🦉 Tip from Alfred:
Notice that the cheapest line on that table and the most expensive line differ by more than $100,000 a year. Long-term care is not one product with one price. It is a spectrum that runs from a few hours of help with groceries to round-the-clock skilled nursing, and most people move along that spectrum rather than starting at the end of it.
Why Care Costs Do Not Behave Like Regular Inflation
Here is the part that surprises people, and it is more interesting than the usual scare statistic.
When you buy a television, you are buying a manufactured good. Manufacturing gets more efficient over time, which is part of why consumer inflation stays in a relatively narrow band. When you buy long-term care, you are buying a person’s time. There is no productivity gain available in helping someone bathe. One caregiver, one hour, one person cared for.
That makes care cost inflation a wage story, not a goods story. CareScout’s own survey participants said as much: for home care services, labor costs were the top factor driving increases. For facilities, general inflation was the top factor. And the LIMRA and EY joint research on this market, published in January 2026, states it plainly — rising long-term care costs, especially for labor, are outpacing inflation.
But the two-year table above shows something the headline version misses. Care inflation is lumpy, not steady. Assisted living rose 10% in 2024 and 5% in 2025. Adult day health care rose 5% in 2024 and then fell 5% in 2025. Nursing home private rooms rose 9% in 2024 and 1% in 2025. In 2025, consumer inflation averaged 2.7% and wage growth about 2.5%, and several care categories landed near or below that.
So the accurate statement is not “care costs rise 5% every year forever.” It is this: care costs are driven by local labor markets and local facility supply, they can move in double digits in a single year, they occasionally move backward, and none of that variance shows up in a national inflation figure. That unpredictability is itself the planning problem. A budget can absorb a known increase. It struggles with a number that swings from positive ten to negative five depending on the year and the zip code.
Illustrative arithmetic, clearly labeled
If the 2025 assisted living median of $74,400 were to grow at a steady 5% per year, it would reach roughly $121,000 in ten years. At 4% per year, the nursing home semi-private median of $114,975 would reach roughly $170,000 in ten years.
These are illustrative calculations using assumed rates, not forecasts. Nobody knows what care will cost in ten years, and as the table above shows, actual annual changes have ranged from negative 5% to positive 10% in just the last two survey years. The point of the arithmetic is to show how compounding works on a large base, not to predict a number.
The Three Eras of Long-Term Care Planning
It helps to see this as three distinct periods, because the product someone bought tells you roughly when they bought it.
Era one: the standalone policy, roughly the 1980s through the mid-2000s
The original model was straightforward and looked a lot like homeowners insurance. You paid an annual premium, and if you needed qualifying care, the policy reimbursed you up to a daily or monthly limit for a defined benefit period. If you never needed care, you got nothing back. Dozens of carriers competed, premiums were modest, and underwriting was comparatively relaxed.
It was priced on assumptions that turned out to be wrong in three directions at once. People lived longer than projected. Fewer of them let their policies lapse than projected, which mattered enormously because the pricing assumed a certain amount of premium collected on policies that would never pay a claim. And the interest rates carriers were counting on to grow reserves fell and stayed low for years.
Era two: the reckoning, roughly the mid-2000s through the 2010s
Carriers responded the only two ways available to them. Many requested and received large premium increases on policies already in force. And many stopped selling new coverage altogether. Industry accounts of this period consistently describe the majority of standalone carriers exiting the market, with the remaining players tightening underwriting substantially.
For policyholders, this was the era that shaped public perception. A retiree who had budgeted a fixed premium for twenty years received a letter proposing a significant increase, with the choices being pay more, reduce benefits, or drop the policy. That experience is why the phrase “long-term care insurance” still carries baggage in a lot of households, and it is a reasonable reaction to what actually happened.
Era three: combination products, roughly 2015 to now
LIMRA has reported that sales of combination policies — life insurance or annuity contracts with long-term care benefits attached — have outpaced standalone long-term care sales since 2015. The LIMRA and EY research describes hybrid offerings as now the leading private long-term care insurance solution. Industry figures for 2024 put combination product sales at roughly $4.2 billion in new premium across about 450,000 new policies.
The structural change that drove this is simple to state. Combination products removed the use-it-or-lose-it problem. If you never need care, the money does something else — it pays a death benefit, or it remains available as a cash value or annuity balance. And because these products are typically priced with guaranteed or limited-adjustment premium structures, the repricing risk that defined era two is handled differently.
⚠ This is not a verdict on the product you already own. If you hold a traditional standalone policy issued fifteen or twenty years ago, it may well provide richer benefits, a more generous inflation rider, and better economics than anything available for purchase today — precisely because it was priced on those optimistic assumptions. Older is not worse here. Nothing in this article suggests replacing existing coverage, and a policy in force is a decision that deserves its own careful look rather than a general rule.
Why Traditional Coverage Fell Out of Favor
Four reasons, in roughly the order consumers cite them:
- Use it or lose it. Paying premiums for thirty years and potentially receiving nothing is a hard proposition, particularly for people who have watched a parent do exactly that.
- Rate increase history. The in-force increases of era two are public knowledge, and they made future premiums feel like an estimate rather than a commitment.
- Carrier availability. A market with a handful of active standalone carriers offers less competition, less pricing pressure, and fewer options for someone with an imperfect health history.
- Underwriting. Standalone long-term care underwriting is among the most rigorous in the insurance business, and it now commonly includes cognitive screening. The LIMRA and EY survey found that more than 60% of carriers in this market use six or more data inputs, including pharmacy checks and cognitive assessments.
The Modern Toolbox, Side by Side
There is no longer a single default answer, which is genuinely better even though it makes the conversation longer. Here is the landscape, described neutrally.
| Approach | How the money works | What people tend to like | What to look at closely |
|---|---|---|---|
| Traditional standalone LTC insurance | Annual premium; reimburses qualifying care up to a daily or monthly maximum | Typically the most benefit dollars per premium dollar; strong inflation rider options | Use it or lose it; premiums are subject to future adjustment with regulatory approval; rigorous underwriting; fewer carriers |
| Life insurance with an LTC rider (often a 7702B rider) | Life policy pays a death benefit; the rider accelerates that benefit to pay for qualifying care | Money is used either way; premium structures are often guaranteed or limited | Care benefits generally reduce the death benefit; benefit amounts are tied to the life policy size |
| Life insurance with a chronic illness rider (often a 101(g) rider) | Accelerates the death benefit on certification of a chronic condition | Frequently available at low or no additional premium on policies people already want | Not the same as an LTC rider — triggers, benefit calculation and discounting can differ meaningfully; read the rider, not the brochure |
| Linked-benefit or hybrid policies | A single premium or short pay period funds a dedicated pool of care benefits plus a death benefit | Large care pool relative to premium; return-of-premium provisions on many designs | Requires a substantial lump sum or committed pay period; the money is committed to this purpose |
| Annuity with a long-term care or confinement benefit | Annuity contract that increases or accelerates payout on qualifying care need | Underwriting is often simplified, which matters for people declined elsewhere | Benefit multiples and trigger definitions vary widely between contracts |
| Self-funding from assets | Pay from savings, investments, home equity or income | Complete flexibility; no premium and no underwriting | Concentrates the risk on one household; the tail scenario is a multi-year skilled nursing stay, not an average one |
| Medicaid | State and federal program covering care for those who meet strict income and asset limits | Serves as the ultimate backstop and pays for a large share of US nursing home care | Eligibility rules, lookback periods and facility choice are all significant; this is legal and financial territory, not an insurance decision |
A note on the tax code references. The distinction between a 7702B long-term care rider and a 101(g) chronic illness rider is one of the most consequential and least understood details in this entire subject. They are different sections of the Internal Revenue Code with different requirements, different benefit triggers, and in some designs materially different payouts. Two policies that both advertise “living benefits” can behave very differently at claim time.
The Gap People Do Not Expect
⚠ Medicare is not a long-term care benefit. Medicare covers medically necessary skilled care on a short-term basis, generally following a qualifying hospital stay, with day limits and cost sharing. It does not pay for custodial or personal care — help with bathing, dressing, eating, transferring and the other activities of daily living — which is what the overwhelming majority of long-term care actually consists of. This is the single most common misunderstanding in the subject, and it is worth verifying directly at Medicare.gov or by calling 1-800-MEDICARE rather than taking anyone’s word for it, including ours.
Research cited by LIMRA and EY, drawing on AARP, indicates more than half of people turning 65 will need some form of long-term services and supports in their lifetime. Their survey also found 63% of individuals express a need for long-term-care-focused insurance. The gap between that stated need and actual coverage in force is the reason this topic keeps getting written about.
🦉 Tip from Alfred:
The first long-term care plan in most families is not a policy. It is a daughter. Unpaid family caregiving absorbs an enormous share of this need, and it has real costs that never appear on a statement — reduced hours, foregone promotions, interrupted retirement savings, and the strain on the caregiver’s own health. A conversation about funding care is also a conversation about who you are asking to provide it.
The Vocabulary That Actually Matters
Activities of daily living
Bathing, dressing, eating, transferring, toileting and continence. Most policies pay benefits when a licensed professional certifies that a person cannot perform a specified number of these, commonly two of six, or has a severe cognitive impairment.
Benefit trigger
The specific contractual condition that starts benefits. This is where policies differ most and where a claim is most often delayed or denied.
Elimination period
A waiting period, often 0, 30, 60 or 90 days of qualifying need, before benefits begin. Functionally it is a deductible measured in days rather than dollars.
Reimbursement versus indemnity
A reimbursement policy pays actual documented expenses up to a limit. An indemnity policy pays the full benefit amount regardless of what was spent. Indemnity is simpler at claim time and typically costs more.
Inflation protection
An optional feature that grows the benefit amount over time, commonly at a fixed 3% or 5% compound rate or tied to a price index. Given everything above about care cost inflation, this is the single most important design choice in most policies, and it is also the most commonly declined because it raises the premium.
Partnership programs
Some states, including California, operate long-term care partnership programs that coordinate qualifying private policies with Medicaid asset protection. Rules are state specific.
Where Are You in the Timeline?
Forties and early fifties
Underwriting is at its easiest and premiums at their lowest, and this is also when household cash flow is usually most contested. The LIMRA and EY research notes that this market focuses on people aged 45 to 64 with household incomes above $100,000 — not because others do not need it, but because that is where the products have been aimed. Combination approaches that also serve a life insurance need tend to get looked at first in this window.
Late fifties to mid sixties
The most common window for a serious look, often triggered by a parent’s care event. Underwriting is still generally attainable, health history is starting to matter more, and there is enough visibility into retirement assets to know what self-funding would actually require.
Late sixties and seventies
Traditional underwriting becomes harder and cognitive screening becomes routine. This is where simplified-underwriting approaches and asset-based or annuity-based structures often enter the conversation, and where the discussion shifts from insuring the whole risk to earmarking a specific portion of assets for it.
Already receiving care, or a family member is
Insurance is generally no longer available at this stage, and the work becomes different: understanding what existing policies actually cover, coordinating Medicare’s limited skilled benefit correctly, understanding veterans benefits if applicable, and getting accurate information about Medicaid eligibility from a qualified elder law attorney.
Questions Worth Bringing to a Professional
- What does care actually cost in my county, not nationally? Median figures hide enormous geographic variation.
- If I self-funded, which specific assets would I use, in what order, and what would that do to the surviving spouse?
- Do I already have a chronic illness or long-term care rider on a life policy I own? Many people do and do not know it.
- If a rider exists, is it a 7702B long-term care rider or a 101(g) chronic illness rider, and what are the actual triggers?
- What would inflation protection cost, and what does the benefit look like in twenty years with and without it?
- Given my health history and medications, what would I realistically qualify for today?
- Who in my family are we implicitly assuming will provide care, and have we asked them?
Frequently Asked Questions
Is traditional long-term care insurance still available?
Yes, from a smaller number of carriers than in the past. It is no longer the default choice, but it remains available and for some people it delivers the most benefit per premium dollar.
What does long-term care cost per year right now?
Per the 2025 CareScout Cost of Care Survey, national medians were $129,575 for a private nursing home room, $114,975 for semi-private, $74,400 for assisted living, $80,080 for in-home non-medical care at 44 hours a week, and $24,700 for adult day health care at five days a week. Local costs vary substantially from national medians.
Do care costs really rise faster than inflation?
Over longer periods, and particularly for labor-intensive home care, the research consistently points that way — LIMRA and EY state that rising costs, especially labor, are outpacing inflation. Year to year, though, it is uneven. In 2025, several categories rose between 1% and 5% while consumer inflation averaged 2.7%, and adult day care declined 5%.
Why did premiums go up on older policies?
Original pricing assumed shorter lifespans, higher policy lapse rates and higher interest earnings than actually occurred. Carriers requested premium increases from state regulators to address the shortfall.
What is the difference between an LTC rider and a chronic illness rider?
They are built under different sections of the tax code, most commonly section 7702B for long-term care and section 101(g) for chronic illness. Requirements, benefit triggers and how the payout is calculated can differ meaningfully. The rider language is the authority, not the marketing material.
Does Medicare pay for long-term care?
Medicare covers short-term skilled care under specific conditions with day limits and cost sharing. It does not cover ongoing custodial or personal care. Verify specifics at Medicare.gov or 1-800-MEDICARE.
Is it too late if I am in my seventies?
It depends entirely on health history, and the set of available approaches narrows rather than disappearing. Some structures use simplified underwriting. This is a question that requires looking at an actual application, not a rule of thumb.
Should I keep the policy I already have?
That is a question about your specific contract, not a question this article can answer. Older policies frequently contain benefits and inflation riders that are not available today. Any look at existing coverage should start by reading what it actually promises.
