Long-term care – also known as custodial care – refers to assistance with activities of daily living such as dressing, bathing, transferring from bed to chair, etc. Long-term care can be provided at home, in the community or in a nursing home.
There is a big gap between the risk of needing such care, and what Americans are actually doing to prepare for it. First, most people greatly underestimate the risk. About 80% of older adults will need such care, with 40% requiring it for more than a year, according to a 2025 study from Boston College’s Center for Retirement Research.
Second, many Americans mistakenly believe that Medicare covers the cost of long-term care. It does not! And regardless of where it is provided, long-term care is astonishingly expensive. According to the most recent Genworth Financial Cost of Care Survey, the annual median cost in Florida for a private room in a long-term nursing home is $138,700; for a home health aide, $68,640. That is an unsustainable expense for most middle class families.
Prepare For The Risk, Protect Assets With Long-Term Care Insurance
One way to prepare for the risk of needing long-term care and to protect your nest egg is to purchase long-term care insurance. This is best done when you are sufficiently young enough and healthy enough to be insurable. Policies can be pricey, however. Even those who are insurable can sometimes be priced out.
There is a bright spot, though: The IRS classifies premiums for qualified policies as a medical expense. If your policy is a qualified one (we’ll explain that point in a moment) and your medical expenses exceed 7.5% of your gross income, you can deduct a portion of the premium from your taxes.
Tax Deductions Increase in 2026
The IRS has released its 2026 deduction levels for long-term care premiums. They are:
- Age 40 and under: $500 (up from $480 last year)
- Over age 40 through age 50: $930 (up from $900 last year)
- Over age 50 and through age 60: $1860 (up from $1,800 last year)
- Over age 60 and through age 70: $4,960 (up from $4,810 last year)
- Over age 70: $6,200 (up from $6,020 last year)
What is a Qualified Policy?
As noted above, these tax benefits are available only if your policy is qualified. To be considered qualified, your policy must:
- Offer inflation protection.
- Have nonforfeiture protection. This allows a portion of benefits or a partial refund to be paid should the policy lapse because of non-payment of premium.
- Be guaranteed renewable. This means that as long as you are paying premiums, the carrier may not cancel your policy if you experience any changes in your health status. Benefits must commence when the insured person requires help with 2 of 6 activities of daily living, or when there is severe cognitive impairment.
A policy purchased prior to 1997 is considered qualified so long as it is approved by the insurance commissioner of the state in which the policy was sold.
How To Evaluate Long-Term Care Policies
If you are thinking about purchasing a long-term care policy, talk to your financial advisor. Long-term care insurance is a serious investment. Buying a policy requires careful evaluation of many issues. (If you do not have a financial advisor, our attorneys can offer recommendations.)
Among the issues to be considered when evaluating a policy:
- Limitations on where long-term care may be received. Does the policy exclude home care or care in a nursing home?
- Elimination period. This is the waiting period before the policy starts to pay out. Shorter waiting periods tend to be associated with higher premiums.
- What medical and other documentation will be needed to apply for benefits?
- What kinds of cognitive impairments does the policy cover? The Boston College study mentioned above notes that people with various dementias are likely to need long-term care services for many years.
- Is there a cap on the dollar amount of payments?
- Can the carrier raise the premium? Is there a cap on increases?
- What is the financial stability of the carrier? There are several resources where you can check up on this, including Moodys and Standard and Poor’s.
Medicaid and Veterans Benefits: Crisis Management
The Karp Law Firm assists clients in crisis whose loved ones need nursing home long-term care and are not insured. We have extensive knowledge about Medicaid benefits and Veterans benefits and may be able to help you preserve a good portion of your assets before you lose it all to long-term care costs. However, that is crisis management, and planning in advance is always preferable. If you can qualify for long-term care insurance and can afford the premiums, we urge you to look into purchasing a policy.
