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Long-term care insurance pays for help with the basic tasks of daily life when age, illness, or cognitive decline makes them hard to do alone. It does not pay for doctor visits or hospital stays. It pays for the kind of care health insurance never covers: someone helping you bathe, get dressed, eat, and get around safely. Here is what policies actually cover, setting by setting, with the 2025 national median costs so you can see what is at stake.
What triggers benefits
Every tax-qualified long-term care policy pays when you cannot perform at least two of the six activities of daily living (ADLs), bathing, dressing, eating, toileting, continence, and transferring (moving from bed to chair, for example), or when you need substantial supervision due to a severe cognitive impairment such as Alzheimer’s disease. A licensed health care practitioner certifies the need, and the insurer approves a plan of care. This trigger is standardized, so it works the same way across carriers.
Nursing homes
Nursing homes provide 24-hour skilled care and are the most expensive setting. According to the 2025 CareScout Cost of Care Survey, the national median daily rate for a semi-private room is $315, or $114,975 a year. A private room runs a median of $355 a day, totaling $129,575 a year. Policies pay up to a daily or monthly maximum you select when you buy; choosing a benefit below the local median means you self-fund the difference, so check costs in your state, not just the national number.
Assisted living
Assisted living communities provide housing, meals, and help with ADLs without round-the-clock medical staffing. The 2025 national median is $6,200 a month, or $74,400 a year. CareScout’s analysis found that $250,000 in savings covers about 3.4 years of assisted living at the median rate, compared with 2.2 years of a semi-private nursing home room. Most policies cover assisted living up to the same daily maximum as nursing home care, but confirm this in the contract: older policies sometimes paid a reduced percentage for assisted living.
Home care
This is where most people prefer to receive care, and where policies have expanded the most. Coverage typically includes home health aides who help with ADLs and homemaker services for cooking, cleaning, and errands. The 2025 national median for in-home care is about $80,080 a year, and $250,000 in savings covers roughly 3.1 years at that rate. Private-duty skilled nursing at home, for medical needs beyond aide-level care, runs a national median of $90 an hour. Good policies also cover home modifications like ramps and grab bars, and some pay for caregiver training for family members.
Adult day care and other settings
Adult day health care provides daytime supervision, meals, and activities, giving family caregivers respite. The 2025 national median is $95 a day, or $24,700 a year assuming five days a week, making it the most affordable formal option. Policies also typically cover hospice care and respite care, short-term relief stays that let a family caregiver rest. Coverage for informal care, paying a family member directly, varies by policy and is worth asking about if a relative expects to provide care.
What it does not cover
Long-term care insurance does not cover medical care itself: doctor bills, hospital stays, prescription drugs, and rehabilitative therapy aimed at recovery rather than maintenance. Those belong to health insurance and Medicare. And Medicare’s own long-term care coverage is minimal. Medicare pays for up to 100 days of skilled nursing after a qualifying hospital stay, and only for skilled care, not the custodial help with ADLs that most long-term care consists of. The widespread belief that Medicare covers nursing home stays is one of the costliest misconceptions in retirement planning. Our piece on what Medicare does not cover lays out the gaps.
Medicaid does pay for long-term care, but only after you have spent down nearly all countable assets, and the facility choices are limited. For households with meaningful savings, a home, or a desire to choose their setting, insurance or self-funding are the realistic options.
How the benefit is structured
When you buy, you choose three numbers: the daily or monthly benefit (what the policy pays per day of care), the benefit period (how many years it pays, commonly 2 to 5 years, or a lifetime pool of money), and the elimination period (the waiting window, often 90 days, before benefits start). Inflation protection, which raises the benefit each year, is the most important add-on for buyers in their 50s, because a $150 daily benefit bought today covers far less care in 30 years without it. Premiums rise with age and health issues, which is why timing matters. See when to buy long-term care insurance and what long-term care insurance costs by age for the numbers.
