Is AARP Long-Term Care Insurance Worth It? (w/Examples) + FAQs

AARP long-term care insurance can be worth it for middle-income Americans with significant assets to protect, but it often costs more than comparable coverage from other insurers. Since 2014, AARP has partnered exclusively with New York Life Insurance Company to offer long-term care policies to its members, and while these policies provide solid coverage, they typically rank among the more expensive options on the market.

The decision to purchase any long-term care insurance depends on your age, health, income, assets, and family medical history. AARP’s offering through New York Life faces the same market challenges as all long-term care insurance: rising premiums, strict underwriting requirements, and the risk of paying for coverage you may never use. However, the cost of not having coverage can be devastating, with nursing home care now averaging $11,294 per month for a private room in 2026.

According to federal estimates, 70% of people turning 65 will need some form of long-term care during their lifetime. Yet only 3% to 4% of Americans over age 50 currently have long-term care insurance protection. This gap creates a financial crisis for families who must either deplete their savings or rely on Medicaid after spending down nearly all assets.

What You’ll Learn in This Guide

📋 How AARP’s partnership with New York Life works and why it may cost more than policies from competing insurers

💰 Real examples showing monthly costs by age and how AARP premiums compare to other top-rated carriers

🏥 The specific triggers that activate benefits including the six Activities of Daily Living and when you qualify for payment

⚖️ Five critical mistakes people make when buying or filing claims that can result in denied coverage or wasted premiums

🔄 Practical alternatives to traditional policies including hybrid life insurance options and self-insurance strategies for different financial situations

Understanding AARP’s Long-Term Care Insurance Partnership

AARP does not sell insurance directly. The organization receives payment from New York Life Insurance Company in exchange for endorsing and marketing New York Life’s long-term care policies to AARP’s 38 million members. This exclusive arrangement means AARP members can only purchase the AARP-branded policy from New York Life agents, who cannot sell competing long-term care products from other insurers.

This partnership structure creates a significant limitation for consumers. When you contact AARP about long-term care insurance, you receive information about only one company’s product at one price point. Independent insurance specialists typically present quotes from multiple top-rated carriers, allowing consumers to compare coverage features and premiums across different insurers.

The AARP-New York Life partnership began in 2014, replacing previous arrangements with Genworth Financial (2007-2013) and MetLife before that. These transitions in insurance partners reflect the broader instability in the long-term care insurance market, where many major carriers have exited the business or dramatically raised premiums on existing policyholders.

How New York Life Policies Differ from Market Standards

New York Life’s AARP-endorsed policies include partnership certification, which provides important Medicaid asset protection benefits. Under the Long-Term Care Partnership Program, policyholders receive dollar-for-dollar asset protection when applying for Medicaid. If your policy pays out $100,000 in benefits before exhausting coverage, you can keep an additional $100,000 in assets beyond Medicaid’s normal $2,000 limit and still qualify for Medicaid long-term care coverage.

However, New York Life policies use a cash deductible structure rather than the standard elimination period used by most carriers. This means you must pay a specific dollar amount out of pocket before benefits begin, rather than waiting a certain number of days. Additionally, New York Life reimburses only 80% of covered care costs, not 100%, which differs from many competing policies.

The 80% reimbursement rate creates a coverage gap. If your assisted living facility costs $5,000 per month, your New York Life policy would cover only $4,000, leaving you responsible for the remaining $1,000 each month. This structure continues throughout your entire benefit period, meaning policyholders must plan for ongoing out-of-pocket expenses even after meeting their deductible.

What Long-Term Care Insurance Actually Covers

Long-term care insurance pays for services you need when you can no longer perform basic self-care tasks independently. These services include help with bathing, dressing, eating, using the toilet, moving from a bed to a chair, and managing incontinence. The insurance covers care received in various settings: your own home, assisted living facilities, memory care units, rehabilitation centers, and nursing homes.

Traditional health insurance and Medicare provide limited or no coverage for long-term care services. Medicare covers only up to 100 days of skilled nursing care following a hospitalization, and only under specific conditions. After those 100 days, or if your care needs are custodial rather than skilled, Medicare stops paying and you become responsible for all costs.

Long-term care policies specify a daily benefit amount and a benefit period. A policy with a $200 daily benefit and a three-year benefit period provides a total pool of money equal to $200 x 1,095 days = $219,000. If your actual care costs less than $200 per day, your benefits last longer than three years. If costs exceed $200 daily, you pay the difference out of pocket, and your benefit pool depletes faster.

The Six Activities of Daily Living That Trigger Benefits

Insurance companies use a standard assessment of Activities of Daily Living (ADLs) to determine when a person qualifies for benefits. The six recognized ADLs are bathing, dressing, toileting, transferring, eating, and continence. Most policies require you to be unable to perform at least two of these activities without hands-on assistance from another person to qualify for benefit payments.

Bathing includes the ability to wash yourself, get in and out of a shower or tub, and maintain personal hygiene. Dressing means putting on and removing clothing, fasteners, braces, or prosthetics. Toileting involves getting to and from the toilet and maintaining personal cleanliness. Transferring refers to moving safely between a bed and chair or wheelchair without falling.

Eating encompasses feeding yourself by getting food from a plate or cup into your body, including use of feeding tubes if necessary. Continence means managing bladder and bowel functions, either maintaining control or properly managing incontinence with devices. Policies can also pay benefits if you have severe cognitive impairment from conditions like Alzheimer’s disease or dementia, even if you can still perform ADLs physically but require supervision for safety.

Your primary care physician must certify in writing that you cannot perform at least two ADLs and that this condition will last at least 90 days. The insurance company typically sends a care coordinator or nurse to assess your situation and verify the doctor’s certification. This assessment process happens before benefits begin, and incomplete or inadequate documentation is one of the most common reasons for claim denials.

Real Cost Comparisons: AARP vs. Other Top Carriers

The price difference between AARP’s New York Life policies and coverage from other highly-rated insurers can be substantial. According to industry data comparing similar coverage options, New York Life consistently prices higher than several competing carriers for equivalent benefit amounts and features.

Consider a policy with a $150 daily benefit, three-year benefit period, and 3% simple inflation protection. For a 60-year-old male, AARP’s New York Life policy costs approximately $255 to $375 per month. An alternate top-rated carrier offers comparable coverage for $180 to $300 monthly—a potential savings of $75 to $900 per year.

The cost gap widens for couples and for policies with more robust inflation protection. A 55-year-old couple seeking coverage with 3% compound inflation protection might pay $450 to $720 monthly through New York Life, while another carrier could provide similar benefits for $300 to $535 per month. Over 10 years of premium payments, this difference amounts to $18,000 to $22,200 in additional costs.

Age at Purchase	Daily Benefit	Benefit Period	AARP/NYL Monthly Premium	Alternate Carrier Monthly	Annual Difference
55	$150	3 years	$215 – $300	$155 – $260	$720 – $480
60	$150	3 years	$255 – $375	$180 – $300	$900 – $900
65	$150	3 years	$310 – $465	$230 – $390	$960 – $900
60	$200	5 years	$450 – $720	$300 – $535	$1,800 – $2,220

These figures represent average market rates as of 2026 and vary based on health status, state of residence, and specific policy features. Women typically pay significantly more than men for the same coverage because women statistically need care for longer periods—an average of 3.7 years compared to 2.2 years for men.

Why AARP Policies Cost More

New York Life maintains some of the highest prices in the long-term care insurance market for several reasons. The company positions itself as a premium provider with very strong financial stability ratings. New York Life is a mutual company owned by policyholders rather than shareholders, which the company argues provides better long-term security for fulfilling claims decades in the future.

The AARP endorsement itself adds cost. AARP receives payment for the marketing arrangement, and this expense gets built into premium prices. Additionally, because New York Life agents can only sell New York Life products to AARP members, there is no competitive pricing pressure within the AARP distribution channel.

New York Life’s underwriting is also described as “very conservative” compared to other carriers. This means the company may deny coverage to applicants with health conditions that other insurers would accept, albeit at higher rates. While conservative underwriting theoretically reduces claims and could lower premiums, this benefit has not translated to competitive pricing for consumers.

Three Common Scenarios: When Policies Pay (and When They Don’t)

Understanding exactly when long-term care insurance activates helps you evaluate whether the coverage justifies the cost. These real-world scenarios illustrate how policies respond to different care situations and what factors determine benefit payments.

Scenario 1: Recovery After Hip Surgery

Situation	Outcome
72-year-old falls and breaks hip, requires surgery	Medicare covers hospital stay and surgery costs
Moves to skilled nursing facility for rehabilitation	Medicare covers up to 100 days of skilled nursing (days 1-20 fully covered, days 21-100 with copay)
Physical therapy needed, expected full recovery in 12 weeks	Long-term care insurance does NOT pay because condition is temporary and Medicare provides coverage
Returns home after 85 days, no ongoing care needs	No long-term care benefits triggered; all costs covered by Medicare

This scenario demonstrates a key limitation. Long-term care insurance only pays when you need help with Activities of Daily Living for at least 90 days. Temporary conditions following surgery or illness, even if they require skilled nursing care, typically do not trigger long-term care benefits because the person is expected to recover and regain independence.

Scenario 2: Progressive Dementia Requiring Ongoing Care

Situation	Outcome
78-year-old diagnosed with Alzheimer’s disease, needs supervision for safety	Doctor certifies cognitive impairment and need for substantial supervision
Family provides care at home for 90 days (elimination period)	Policyholder pays for all care costs during elimination period, approximately $9,000 (90 days × $100/day for home health aide)
After elimination period ends, policy begins paying	Benefits start on day 91; policy pays $150/day for qualified home care services
Family hires licensed home health aide 8 hours daily at $34/hour	Daily cost = $272; policy pays $150, family pays $122 out of pocket
Patient eventually requires memory care facility at $6,500/month	Policy pays $4,500/month (30 days × $150/day), family pays remaining $2,000/month
Care continues for 4.5 years until patient passes away	Policy pays total of $246,375 (1,642 days × $150); family pays approximately $175,000 out of pocket over care period

This scenario shows how policies work for their intended purpose: chronic, long-term conditions requiring ongoing assistance. The dementia diagnosis and inability to perform ADLs or need for supervision due to cognitive impairment both trigger benefit eligibility. However, the 80% reimbursement rate in New York Life policies creates a significant coverage gap that families must fund.

Scenario 3: Claim Denied Due to Documentation Issues

Situation	Outcome
81-year-old needs help with bathing and dressing after stroke	Family submits claim to insurance company
Doctor’s letter states “patient needs assistance with daily activities”	Claim denied—documentation too vague, does not specifically identify which ADLs are impaired
Family resubmits with detailed physician certification listing specific ADLs	Insurance company accepts new documentation, schedules assessment
Care assessment shows patient receives care from daughter (unlicensed)	Claim denied—policy requires care from licensed provider, family member care does not qualify unless daughter obtains required licensing
Family hires licensed home care agency	Claim finally approved after 5-month delay; benefits begin once elimination period is satisfied
Lost $15,000 in benefits due to documentation delays	Family paid all costs out of pocket during multi-month delay, some expenses not reimbursed retroactively

This scenario highlights common documentation mistakes that delay or prevent benefit payments. Vague medical records, failure to specify exact ADL limitations, and use of unlicensed caregivers all create problems during the claims process. Insurance companies require precise documentation because they pay out benefits for years or even decades, and initial determinations set the pattern for all future payments.

The True Cost of Long-Term Care in 2026

Long-term care costs have risen dramatically and continue to increase faster than general inflation. The national median cost for a private room in a nursing home reached $11,294 per month in January 2026, equal to $135,528 annually. Semi-private rooms average $9,842 monthly or $118,104 per year.

These costs vary significantly by location. Alaska has the highest nursing home costs at $32,220 per month for either a private or semi-private room, while Texas has the lowest at $7,519 monthly for a private room and $5,808 for a semi-private room. California, New York, and Massachusetts all exceed $14,000 per month for private room nursing home care.

Assisted living facilities cost less than nursing homes but still require substantial monthly payments. The national median cost for assisted living rose to $5,900 per month ($70,800 annually) in 2024, representing a 10% increase from the previous year. Memory care units designed for dementia patients typically charge $1,000 to $2,000 more per month than standard assisted living.

Home care costs accumulate differently but can exceed facility costs depending on the hours of care needed. Home health aides average $34 per hour nationally, while homemaker services (help with household tasks rather than personal care) cost $33 hourly. Eight hours of daily home care at $34 per hour equals $8,160 per month ($97,920 annually), approaching nursing home costs.

Projected Cost Growth Through 2030

If current trends continue, the monthly cost of a semi-private nursing home room will reach approximately $11,077 by 2030, a 12.5% increase from 2026 levels. Private rooms will cost an estimated $12,712 monthly by 2030. These projections assume annual cost increases of 2.5% to 3%, though actual increases could be higher if labor shortages in the caregiving industry persist.

The rapid growth in care costs explains why inflation protection features in long-term care policies are critical. A policy purchased at age 55 with a $150 daily benefit but no inflation protection will fall far short of covering actual costs 20 or 30 years later when care is needed. At 3% annual inflation, a $150 daily benefit grows to only $255 in 20 years, while actual costs may reach $350 to $450 per day in high-cost areas.

How Activities of Daily Living Assessments Work

When you submit a claim for long-term care benefits, the insurance company conducts a thorough assessment to verify that you meet the policy’s benefit triggers. This process typically begins with your physician completing a detailed form that documents your specific functional limitations and the underlying medical conditions causing those limitations.

The physician must specifically identify which Activities of Daily Living you cannot perform and describe the level of assistance required for each one. A statement like “patient needs help with personal care” is too vague and will likely result in claim denial. The documentation must state clearly: “Patient is unable to bathe independently due to [condition] and requires hands-on physical assistance from another person to enter/exit shower, wash body, and maintain hygiene.”

After receiving medical documentation, most insurance companies send a licensed nurse or care coordinator to conduct an in-person assessment at your home or care facility. This assessor observes your ability to perform ADLs, reviews your medications, interviews family members or caregivers, and verifies the information in your physician’s certification. The assessment typically takes one to two hours and forms the basis for the insurance company’s determination of benefit eligibility.

What “Hands-On Assistance” Actually Means

Insurance policies distinguish between different levels of help. Hands-on assistance means physical help from another person. If you cannot step into the shower safely without someone holding your arm and supporting your weight, that qualifies as hands-on assistance with bathing. Similarly, if you need someone to physically lift you from a wheelchair to a bed because you lack the strength to transfer yourself, that constitutes hands-on assistance with transferring.

Stand-by assistance or cueing often does not qualify as hands-on help under policy definitions. If you can bathe yourself but need someone present in case you slip, or if you need verbal reminders to complete the steps of dressing properly, some policies do not consider this sufficient impairment to trigger benefits. This distinction becomes crucial in cognitive impairment cases where the person may be physically capable of ADLs but needs supervision and reminders due to dementia.

However, policies typically do pay benefits if cognitive impairment requires substantial supervision for the person’s safety, even without physical ADL limitations. A dementia patient who can dress themselves but might walk out of the house unsupervised and become lost would qualify for benefits under the cognitive impairment provisions of most policies.

Partnership Programs and Medicaid Asset Protection

One significant feature of many long-term care policies, including AARP’s offering through New York Life, is participation in state Partnership Programs. These public-private partnerships allow purchasers of qualified long-term care insurance to protect assets beyond Medicaid’s normal limits if they eventually exhaust their insurance benefits and need Medicaid coverage.

Under normal Medicaid rules, individuals must reduce their countable assets to $2,000 or less to qualify for nursing home coverage. This “spend down” requirement forces many middle-class seniors to deplete their life savings before Medicaid will pay for their care. Additionally, after the Medicaid recipient dies, the state attempts to recover the costs it paid through the Medicaid Estate Recovery Program, often forcing the sale of the family home to repay the state.

Partnership policies change these rules. For every dollar your long-term care insurance pays in benefits, you can protect an additional dollar of assets when applying for Medicaid. If your partnership policy pays out $150,000 before exhausting benefits, you can have $152,000 in assets ($2,000 base limit plus $150,000 protected) and still qualify for Medicaid. Furthermore, those protected assets are shielded from estate recovery after your death, allowing you to preserve an inheritance for family members.

How Partnership Asset Protection Works in Practice

Consider this example: Margaret purchased a partnership-certified long-term care policy at age 58 with a total benefit pool of $200,000. At age 82, she requires nursing home care and her policy begins paying benefits. After 30 months, her policy exhausts all $200,000 in benefits, but Margaret still needs care and has minimal income to pay the $11,000 monthly nursing home costs.

Without partnership protection, Margaret would need to spend down all her assets to the $2,000 limit. She owns a home worth $175,000 and has $50,000 in savings, totaling $225,000 in countable assets. She would need to sell her home and deplete her savings to $2,000 before Medicaid would cover her care. After her death, Medicaid would seek reimbursement from her estate, potentially leaving nothing for her children.

With partnership protection, Margaret can keep $202,000 in assets ($2,000 base limit plus $200,000 protected based on what her insurance paid). She can designate her $175,000 home and $25,000 from savings as “protected assets” and immediately qualify for Medicaid without spending down. Her remaining $25,000 in savings exceeds the limit and must be spent on her care first, but her home and the $25,000 in protected savings remain safe. After her death, Medicaid cannot recover costs from her protected assets, allowing her to pass her home to her children as intended.

Tax Benefits of Long-Term Care Insurance Premiums

Long-term care insurance premiums qualify as medical expenses for tax purposes, but only for tax-qualified policies that meet federal standards under Internal Revenue Code Section 7702B. Most modern long-term care policies, including AARP’s New York Life offering, are tax-qualified. However, many hybrid life insurance policies with long-term care riders do not meet the tax-qualified requirements.

The tax benefit works differently depending on your employment status and how you pay for the insurance. For individuals who itemize deductions, long-term care premiums can be included with other medical expenses. However, you can only deduct medical expenses that exceed 7.5% of your adjusted gross income, which makes this benefit unavailable to many taxpayers.

The maximum deductible premium amount is age-based and adjusts annually for inflation. For 2026, the limits are: age 40 or less ($500), age 41-50 ($930), age 51-60 ($1,860), age 61-70 ($4,960), and age 71 or older ($6,200). A married couple both over age 70 could potentially deduct up to $12,400 in combined premiums if they meet the other requirements for deducting medical expenses.

Special Tax Benefits for Business Owners and Self-Employed

Self-employed individuals and business owners gain substantially better tax treatment of long-term care insurance premiums. Self-employed people can take an “above-the-line” deduction on Schedule 1 of Form 1040, up to the age-based limits, without needing to itemize or meet the 7.5% adjusted gross income threshold. This makes the tax benefit much more accessible and valuable.

Business owners purchasing long-term care insurance for themselves, their spouses, or employees get even better treatment. The business can deduct the full premium cost without being limited to the age-based caps, as long as the compensation is reasonable. Additionally, the premium paid by the business is excluded from the employee’s income and is not subject to FICA or other payroll taxes.

A new tax benefit beginning in 2026 allows individuals to withdraw up to $2,600 annually from certain retirement accounts to pay long-term care insurance premiums without incurring the usual 10% early withdrawal penalty for distributions before age 59½. This provision applies to 401(k) plans, 403(b) plans, and governmental 457(b) plans, though your specific plan must adopt this feature to allow such distributions.

Elimination Periods: Your Out-of-Pocket Deductible

The elimination period functions as a time-based deductible that determines how long you must receive and pay for covered care services before your insurance begins paying benefits. Common elimination periods include 0, 30, 60, 90, or 180 days, with 90 days being the most frequently chosen option.

Selecting a longer elimination period significantly reduces your premium. A 90-day elimination period might cost 20% to 30% less than a 30-day period for the same coverage. This trade-off makes sense for many buyers because they need to prepare financially to cover care costs during the elimination period, which could total $10,000 to $30,000 depending on the type of care required.

Two different methods determine how elimination periods are calculated: service days and calendar days. With a service day elimination period, only days when you actually receive covered care services count toward completing the waiting period. If you receive home care services three days per week, a 90-day service day elimination period would take 30 weeks (approximately 7 months) to satisfy. With a calendar day elimination period, you count consecutive days from when care begins, regardless of whether you receive services every single day.

Strategic Coordination with Medicare Coverage

The 90-day elimination period aligns strategically with Medicare’s coverage of skilled nursing facility care. Medicare covers up to 100 days of skilled nursing care following a hospitalization—days 1-20 at no cost, and days 21-100 with a daily coinsurance amount of $204 in 2026. By choosing a 90-day elimination period, your long-term care insurance benefits begin just as Medicare coverage is ending or has ended, minimizing the gap you must fund personally.

However, this strategy only works if your nursing home stay qualifies as skilled care under Medicare rules and follows a three-day inpatient hospital stay. Many long-term care situations involve custodial care—help with Activities of Daily Living rather than skilled nursing services—which Medicare does not cover at all. In custodial care situations, you pay all costs during your elimination period, regardless of Medicare.

Some newer policy designs offer more flexibility. The Nationwide CareMatters II policy effectively provides a 0-day elimination period after you satisfy 90 calendar days of benefit eligibility, by paying benefits retroactively back to day one once the waiting period ends. Other carriers like OneAmerica offer split elimination periods with 30 days for home care and 60 days for facility-based care.

Inflation Protection: Essential but Expensive

Long-term care costs increase faster than general inflation, making inflation protection one of the most important—and most expensive—features of a long-term care policy. Without inflation protection, a policy purchased at age 55 with $150 daily benefits provides inadequate coverage when you need care 25 or 30 years later.

The two main types of automatic inflation protection are simple and compound. Simple inflation protection increases your benefit by the same dollar amount each year based on your original benefit. A $200 daily benefit with 5% simple inflation increases by $10 per day every year—year one: $210, year two: $220, year three: $230, and so on. After 20 years, your benefit doubles to $400 per day.

Compound inflation protection increases your benefit by a percentage of the current value each year, similar to compound interest. With 5% compound inflation, that $200 daily benefit becomes $265 after 10 years, $441 after 20 years, and $732 after 30 years. The difference between simple and compound becomes dramatic over longer time periods—after 25 years, 5% simple would grow to $450, while 5% compound reaches $677.

Choosing the Right Inflation Protection for Your Age

Industry experts generally recommend 5% compound inflation protection for purchasers under age 75, because these buyers face 20 to 40 years before needing care. The higher long-term growth of compound inflation justifies the significantly higher premium. For ages 75 and older, 5% simple inflation provides adequate protection at lower cost because the time until a claim is likely much shorter.

3% compound inflation protection has become the most popular option in recent years as a middle ground between cost and benefit growth. At 3% compound, a $200 daily benefit reaches $362 after 20 years and $486 after 30 years—less than 5% compound but still substantial. The premium savings compared to 5% compound often allows buyers to afford more comprehensive coverage in other policy features.

Partnership-certified policies require automatic compound inflation protection for purchasers under age 76, though some states allow buyers over age 76 to purchase partnership policies without inflation protection or with simple inflation. This requirement ensures partnership policyholders maintain meaningful coverage over time, protecting the public-private partnership program’s objective of reducing Medicaid dependency.

California law requires insurance companies to offer 5% compound inflation protection to all purchasers, though buyers can decline this feature if they sign a specific rejection form. This consumer protection ensures Californians understand the importance of inflation protection before purchasing a policy without it.

Common Mistakes When Buying Long-Term Care Insurance

The complexity of long-term care insurance creates numerous opportunities for expensive mistakes. Understanding these common errors helps you avoid wasting money on inadequate coverage or overpaying for features you don’t need.

Mistake #1: Buying coverage too early or too late. Purchasing long-term care insurance in your 40s results in paying premiums for potentially 30 to 40 years before needing care. While premiums are low at younger ages, the total amount paid over decades can exceed the benefits received. Conversely, waiting until your 70s dramatically increases premiums and the likelihood of being denied coverage due to health issues. The optimal purchase age is typically between 60 and 65, balancing manageable premiums with a reasonable payment period before claims begin.

Mistake #2: Choosing simple inflation instead of compound for ages under 65. Simple inflation protection costs less but leaves significant coverage gaps over 20+ years. A 55-year-old who buys a policy with 5% simple inflation will have benefits that are worth 40% less in inflation-adjusted dollars at age 85 compared to choosing 5% compound inflation. The premium savings rarely justify accepting inadequate coverage when you actually need care decades later.

Mistake #3: Buying coverage you cannot afford long-term. Long-term care insurance premiums can increase after purchase if the insurance company obtains regulatory approval for rate increases across an entire class of policies. Financial advisor Suze Orman recommends only purchasing a policy if you can absorb a 40% premium increase over the years without dropping coverage. If paying premiums would strain your budget even without increases, you risk abandoning the policy after years of payments with nothing to show for it.

Mistake #4: Not reviewing the financial strength and claims history of the insurance company. You may not file a claim for 20 to 30 years after purchasing a policy, making the insurer’s long-term financial stability critical. Companies with ratings below “A” from AM Best or similar agencies pose higher risk of future financial difficulties. Additionally, research whether the company has requested large premium increases on existing policyholders, which signals potential problems with product pricing and reserves.

Mistake #5: Overlooking alternatives to traditional long-term care insurance. Many people assume traditional standalone long-term care insurance is their only option and don’t explore hybrid life insurance policies with long-term care riders, which often cost less and guarantee no premium increases. These hybrid policies return some value to your beneficiaries if you don’t use long-term care benefits, eliminating the “use it or lose it” concern that makes some people hesitant about traditional policies.

Mistake #6: Assuming group coverage through an employer is always the best deal. Group long-term care insurance policies, including arrangements like the former AARP-Genworth partnership, often lack flexibility and have historically experienced larger premium increases than individual policies. Group policies also typically offer less comprehensive inflation protection and may not be portable if you leave the employer, making individual policies a better choice for many buyers despite slightly higher initial premiums.

Mistake #7: Buying coverage that only pays for facility care, excluding home care. Most people prefer to receive long-term care in their own homes rather than moving to an institutional setting. Policies that exclude or severely limit home care benefits force you into a nursing home when home care might be clinically appropriate and less expensive. Comprehensive policies provide equal benefits for all care settings—home, assisted living, or nursing home—giving you maximum flexibility.

Do’s and Don’ts for Long-Term Care Insurance Buyers

Do’s

Do compare multiple carriers before purchasing. AARP’s partnership limits you to New York Life’s products, but independent insurance specialists can show you quotes from five to ten highly-rated carriers. Price differences of 20% to 40% for similar coverage are common, potentially saving $30,000 to $50,000 over the life of the policy.

Do purchase inflation protection appropriate for your age. If you’re under 65, buy at least 3% compound inflation protection, preferably 5% compound if you can afford it. The premium difference is significant, but inadequate inflation protection means your policy becomes nearly worthless when you need care 25 years later.

Do consider a partnership-certified policy. Partnership programs exist in most states and provide valuable Medicaid asset protection at no additional premium cost. Even if you believe you’ll never need Medicaid, unexpected circumstances—catastrophic medical expenses, market crashes affecting your retirement savings—can change your financial situation.

Do purchase coverage when you’re healthy and in your late 50s or early 60s. Approximately 30% of applicants are declined during underwriting due to health conditions. Conditions as common as diabetes with complications, history of stroke, Parkinson’s disease, or even poorly controlled high blood pressure can result in denial. Purchasing coverage while healthy is essential.

Do review and update your policy every few years. Some policies offer options to increase coverage later, and your financial situation may improve allowing you to add benefits. Conversely, if your financial situation deteriorates, you might need to reduce coverage rather than dropping the policy entirely, preserving at least some protection.

Do keep detailed records of your policy and inform family members where to find it. Many families struggle to locate insurance policies when care is needed. Keep your policy in a fireproof safe or give copies to adult children, your attorney, or financial advisor. Include clear information about the insurance company name, policy number, agent contact information, and premium payment method.

Do work with a specialist who represents multiple carriers. Long-term care insurance is complex, and agents who sell only one company’s products cannot provide objective comparisons. Specialists who represent eight to twelve carriers can match your specific situation and health history to the companies most likely to offer favorable underwriting and competitive pricing.

Don’ts

Don’t buy a policy if your only income is Social Security. Industry guidelines suggest spending no more than 5% of your income on long-term care insurance premiums. If Social Security or Supplemental Security Income (SSI) is your sole income source, you likely cannot afford premiums and should plan on qualifying for Medicaid if you need long-term care.

Don’t purchase coverage from just the first agent you talk to. Insurance agents earn substantial commissions on long-term care policies—often 50% to 70% of the first year’s premium—creating an incentive to sell you a policy quickly without thorough needs analysis or price comparison. Speak with at least two or three specialists and compare actual proposals before deciding.

Don’t neglect to understand the elimination period and how it’s calculated. A 90-day service day elimination period (counting only days you receive care) could take six months or longer to satisfy if you receive care just three days per week. This extended waiting period affects how much money you need in savings to bridge the gap before benefits begin.

Don’t assume Medicare or health insurance covers long-term care. This misconception causes many people to delay purchasing long-term care insurance. Medicare provides extremely limited skilled nursing coverage following hospitalization, and standard health insurance does not cover custodial care (help with bathing, dressing, eating, and other ADLs).

Don’t buy a policy with a very short benefit period to save on premiums. One-year or two-year policies cost less, but claims average 2.8 years. A short benefit period forces you to self-fund the most expensive years of care if your condition is chronic. Three-year policies represent a reasonable minimum, with five years providing substantially better protection for progressive conditions like dementia.

Don’t ignore your family medical history when deciding whether to buy. If multiple first-degree relatives (parents, siblings) developed Alzheimer’s disease, dementia, or Parkinson’s disease, your risk of needing extensive long-term care increases significantly. This family history both makes insurance more valuable for you and may complicate underwriting or result in higher premiums or denials.

Don’t wait to file a claim when you start needing care. Many families delay contacting the insurance company, hoping the situation will improve. This delay extends the time until benefits begin and may result in denied reimbursement for early care expenses. Contact your insurance company as soon as you or your physician recognize that you likely need help with ADLs for an extended period.

Pros and Cons of AARP Long-Term Care Insurance

Pros

Financial strength and stability of New York Life. New York Life maintains some of the highest financial strength ratings in the insurance industry and has paid claims for more than 170 years. For a product where claims may occur 30 years after purchase, choosing a financially stable company reduces the risk that the insurer won’t be able to pay benefits when needed.

Partnership certification provides Medicaid asset protection. AARP’s policies through New York Life qualify for most state Partnership Programs, allowing policyholders to protect assets equal to benefits paid when eventually applying for Medicaid. This feature gives middle-class families a way to preserve some inheritance for children rather than spending down all assets to qualify for Medicaid.

Comprehensive care settings covered. The policies cover care received at home, in assisted living facilities, in memory care units, and in nursing homes. This flexibility allows you to choose the care setting most appropriate for your needs and preferences rather than being forced into a nursing home because the policy excludes other options.

Access to care coordination services. New York Life provides care coordination assistance to help families understand their options, locate qualified care providers, and navigate the complex long-term care system. These services can be valuable when families face the overwhelming task of arranging care for the first time.

Compound inflation protection available. AARP’s New York Life policies offer true compound inflation protection at 3% or 5%, ensuring your benefits grow meaningfully over the decades before you need care. Some competing policies only offer inferior inflation options like Consumer Price Index-linked increases or future purchase options that require you to request increases and pay higher premiums.

Cons

Significantly higher premiums than many competitors. New York Life’s AARP-endorsed policies consistently cost 15% to 30% more than comparable coverage from other highly-rated carriers. Over 15 to 20 years of premium payments, this difference totals $20,000 to $40,000 or more in additional costs for equivalent protection.

Limited to one insurance company without price competition. AARP’s exclusive arrangement with New York Life means members cannot receive competitive quotes from other carriers through AARP. This restriction eliminates the price competition that helps keep premiums reasonable in the broader long-term care insurance market.

Only 80% reimbursement rate creates coverage gap. Unlike most policies that reimburse 100% of covered expenses up to the daily benefit maximum, New York Life’s policies pay only 80% of costs. This permanent 20% co-insurance means policyholders must budget for ongoing out-of-pocket expenses throughout their entire claim period.

Cash deductible structure instead of standard elimination period. The cash deductible can be more difficult to understand and plan for compared to the time-based elimination periods used by most other carriers. Families may find it harder to determine when benefits will begin and how much they need to pay first.

Premium increases possible even after purchase. Like all long-term care insurers, New York Life can request and receive approval for rate increases on entire classes of existing policies. While the company has a better track record than some carriers that have imposed 40% to 80% increases, the risk remains that premiums could rise substantially years after you purchase coverage.

Practical Alternatives to Traditional Long-Term Care Insurance

Traditional standalone long-term care insurance isn’t the right choice for everyone. Several alternatives provide different approaches to funding long-term care expenses, each with distinct advantages and disadvantages.

Hybrid Life Insurance with Long-Term Care Riders

Hybrid policies combine permanent life insurance with long-term care benefits, addressing the “use it or lose it” concern that makes many people hesitant about traditional long-term care insurance. If you need long-term care, the policy pays benefits to cover those expenses. If you don’t use the long-term care benefits, your beneficiaries receive the life insurance death benefit.

These hybrid policies typically require a large single premium payment ($50,000 to $150,000) or a series of premium payments for 10 years. The long-term care benefit is usually two to three times the life insurance death benefit. For example, a $100,000 single premium might provide a $50,000 life insurance death benefit and $150,000 in long-term care benefits.

The main advantages of hybrid policies include guaranteed premiums that never increase and the certainty that either you or your beneficiaries receive value from the policy. Disadvantages include the large upfront cost and potentially lower long-term care benefit amounts compared to traditional policies purchased with the same total premium dollars over time.

Self-Insurance with Dedicated Savings

For wealthy individuals with substantial retirement savings, self-insuring may make more financial sense than paying ongoing insurance premiums. Financial experts commonly recommend having at least $500,000 specifically set aside for potential long-term care expenses to self-insure effectively.

Self-insurance works well when you have sufficient assets to cover care costs without depleting savings needed for a surviving spouse or other goals. With $2 million in retirement assets, spending $300,000 on long-term care over four years still leaves $1.7 million for other needs. However, someone with $600,000 in total retirement savings who spends $300,000 on long-term care faces a much more difficult financial situation.

The advantage of self-insurance is avoiding premium costs that might never provide any return. If you don’t need long-term care, you retain all your assets rather than having spent $100,000 or more on insurance premiums. The risk is that extended long-term care—particularly for a married couple where both spouses need care—could deplete assets faster than anticipated, leaving insufficient funds for the surviving spouse’s remaining years.

Health Savings Accounts for Future Care Costs

Health Savings Accounts (HSAs) offer a tax-advantaged way to save for long-term care expenses, though they have contribution limits that make them most useful as a supplement to other strategies. For 2026, individuals can contribute $4,300 to an HSA, and families can contribute $8,550.

HSA contributions are tax-deductible, the account grows tax-free, and withdrawals for qualified medical expenses—including long-term care services—are tax-free. You can also use HSA funds to pay premiums for tax-qualified long-term care insurance, subject to the age-based deduction limits. After age 65, you can withdraw HSA funds for any purpose without penalty, though withdrawals for non-medical expenses are taxed as ordinary income.

The main limitation of using HSAs for long-term care is the relatively small contribution limits. Even if you maximize contributions for 20 years, you would accumulate only $86,000 to $171,000 (assuming no investment growth), which covers just one to two years of nursing home care at current prices.

Annuities with Long-Term Care Benefits

Some insurance companies offer annuities with long-term care riders that increase payouts when you need care. These products come in two main types: immediate annuities that begin payments right away, and deferred annuities that start payments at a future date.

A long-term care annuity might pay $2,000 per month as a standard retirement income stream, but double or triple that amount ($4,000 to $6,000 monthly) when you trigger long-term care benefits. This increased payout helps cover care costs while still providing lifetime income security.

Annuities with long-term care features work best for people who want guaranteed lifetime income regardless of whether they need care. The main disadvantage is that these products tend to have high fees, and the long-term care benefit increase may be smaller than what a dedicated long-term care policy would provide for the same premium.

Short-Term Care Insurance

Short-term care insurance covers care needs for 6 to 12 months and costs substantially less than traditional long-term care insurance. Given that 49% of long-term care claims last one year or less, short-term care insurance can be a practical alternative for people who don’t qualify for traditional long-term care insurance due to health issues or who cannot afford comprehensive coverage.

Short-term care policies typically have more lenient underwriting, accept applicants up to age 84 or 89, and cost 30% to 50% less than full long-term care policies. Women particularly benefit because short-term care premiums are not gender-based like traditional long-term care insurance, eliminating the 60% to 80% premium surcharge women typically face.

The obvious limitation is that short-term care insurance leaves you unprotected if you need care for multiple years. This product works best combined with self-insurance for longer care needs—the short-term policy covers the first year, giving you time to arrange financing or qualify for Medicaid if an extended stay becomes necessary.

Understanding Medicaid’s Role as the Backup Plan

Medicaid serves as the default long-term care insurance for Americans who either cannot afford private coverage or who exhaust their insurance benefits and personal savings. Medicaid paid for approximately 62% of all nursing home resident-days in recent years, making it the largest single payer of long-term care in the United States.

However, qualifying for Medicaid long-term care requires meeting strict financial eligibility rules that vary by state. Most states limit countable assets to $2,000 for individuals and $3,000 for couples applying for nursing home coverage. This asset test excludes your primary residence (in most states, with equity limits), one vehicle, personal belongings, and a few other specific items, but includes bank accounts, investments, retirement accounts, and additional properties.

The 60-month look-back period creates additional complications. Medicaid reviews all financial transactions during the five years before application to identify any asset transfers made for less than fair market value. If you gave money to your children or sold property below market value during this period, Medicaid imposes a penalty period during which you’re ineligible for coverage.

The Spend-Down Process and Its Consequences

“Spending down” means deliberately depleting your assets to the $2,000 limit so you can qualify for Medicaid. This process must follow specific rules—you cannot simply give away assets or transfer property to family members without triggering penalties. Permissible spend-down strategies include paying off debts, making home modifications for accessibility, prepaying funeral expenses with irrevocable trusts, and purchasing medical equipment.

The spend-down requirement forces many middle-class families to use their entire life savings for care before Medicaid provides any assistance. A couple with $200,000 in retirement savings must deplete those assets to $2,000—spending $198,000 on care or approved expenses—before the spouse in the nursing home qualifies for Medicaid. The healthy spouse can keep some assets under spousal impoverishment rules, but the amounts are limited.

After the Medicaid beneficiary dies, the state attempts estate recovery to recoup what it spent on care. The state can file liens against the deceased person’s property, particularly their home, and force a sale to recover Medicaid expenditures. Estate recovery often takes most or all of whatever assets remained, leaving little or no inheritance for children or other family members.

Special Considerations for Veterans and Federal Employees

Veterans may qualify for long-term care benefits through the U.S. Department of Veterans Affairs, which can reduce or eliminate the need for private long-term care insurance. The VA provides nursing home care, assisted living, home health care, and hospice services to eligible veterans, with benefit amounts depending on service-connected disability ratings and income levels.

Veterans with service-connected disabilities rated at 70% or higher, or who require nursing home care for a service-connected condition, receive care at no cost. Other veterans may receive care on a space-available basis with copayments based on income. Veterans with low income and high medical expenses may qualify for VA long-term care assistance that adds $2,358 monthly for long-term care costs on top of regular VA benefits.

The interaction between VA benefits and private long-term care insurance requires careful planning. Some insurance policies reduce benefits paid when other coverage exists, which could include VA benefits. Conversely, VA benefits might consider your insurance payments as income, potentially affecting eligibility for certain VA programs. Consulting with a VA-accredited attorney or benefits specialist before purchasing long-term care insurance helps ensure optimal coordination.

Federal Employee Program Suspension and Uncertainty

The Federal Long-Term Care Insurance Program (FLTCIP), which covered federal employees, retirees, and their families, suspended new enrollments on December 19, 2022, with the suspension now extended through at least December 19, 2026. The program faced serious financial problems including premium increases up to 86% for some participants and mounting losses.

Federal employees and retirees can no longer enroll in the FLTCIP or increase existing coverage during the suspension. Current enrollees continue to receive benefits, but the program’s uncertain future has led many benefits experts to question whether it will reopen or be permanently discontinued. Even if it reopens, the past problems with massive premium increases and lack of partnership certification make it a poor value compared to individual policies available in the private market.

Federal employees who want long-term care coverage should explore private individual or hybrid policies rather than waiting for the FLTCIP to potentially reopen. The private market offers better features, partnership certification, and potentially more stable pricing than the federal program provided.

When Is AARP Long-Term Care Insurance Worth It?

AARP’s long-term care insurance through New York Life makes sense for specific situations despite its higher cost. Consider these policies if you strongly value the financial security of New York Life’s stability and are willing to pay a premium for that reassurance. The company’s financial strength ratings and long history provide confidence that it will exist and pay claims 30 or 40 years in the future.

AARP’s offering also works well if you’ve already received quotes from multiple carriers and discovered that health conditions make you uninsurable or result in rated premiums elsewhere. While New York Life has conservative underwriting, some applicants who are declined by other carriers may find approval from New York Life. In this scenario, having access to coverage at any price becomes more valuable than finding the lowest premium.

The policies make the most sense for AARP members between ages 55 and 65 who have significant assets to protect ($250,000 to $2 million), steady income that can absorb potential premium increases, and no family history of conditions that might lead to coverage denial. These individuals benefit from the partnership program’s asset protection and have sufficient financial resources to maintain coverage even if premiums rise 30% to 40% over time.

When to Look at Other Options

Most people should compare AARP’s New York Life policies against at least three to five other carriers before making a final decision. The 15% to 30% price difference for comparable coverage typically justifies the extra effort of obtaining multiple quotes, potentially saving $30,000 to $60,000 over the life of the policy.

Consider alternatives to AARP’s offering if your primary goal is maximizing coverage for your premium dollars rather than buying from the most well-known brand. Several mutual insurance companies and highly-rated carriers offer excellent products at more competitive prices. Working with an independent specialist who represents multiple carriers ensures you see the best options for your specific age, health, and coverage goals.

Hybrid life insurance policies with long-term care riders deserve serious consideration as an alternative, particularly if you’re uncomfortable with the possibility of paying premiums for decades and receiving no value if you don’t need care. These hybrid products cost more upfront but eliminate premium increase risk and guarantee a benefit to either you or your beneficiaries.

Finally, if your assets exceed $1 million and you have strong family longevity, self-insurance combined with strategic Medicaid planning might provide better outcomes than purchasing insurance. This approach requires working with an elder law attorney to establish appropriate trusts and spending strategies, but it allows you to keep control of your assets while still protecting some inheritance for your children.

Mistakes to Avoid When Filing Long-Term Care Claims

Even after purchasing a policy, numerous pitfalls during the claims process can delay or prevent benefit payments. Understanding these common problems helps you avoid costly mistakes when you or a family member needs care.

Waiting too long to notify the insurance company. Many families delay contacting the insurer, hoping their loved one will recover and not need ongoing care. This delay causes problems because most policies require notification within a specified timeframe after care begins, and late notification might result in denied reimbursement for care already received. Contact your insurer as soon as you reasonably believe care will be needed for 90 days or longer.

Inadequate physician documentation of ADL limitations. The doctor’s certification must specifically identify which Activities of Daily Living the patient cannot perform and describe the hands-on assistance required. Generic statements like “patient needs help with daily activities” or “patient is frail” do not meet policy requirements and result in claim denials. The physician should list each ADL separately—bathing, dressing, toileting, transferring, eating, continence—and explain what help is needed for each one.

Using unlicensed or non-qualified care providers. Most policies require care from licensed home health agencies or certified nursing assistants for home care benefits. Family members providing care typically do not qualify unless they obtain required licensing and certification, and even then, some policies exclude family member caregivers entirely. Before hiring any caregiver or agency, verify with your insurance company that the provider meets policy requirements.

Poor record-keeping of care received and expenses incurred. Insurance companies require detailed documentation of services received each day, who provided care, how many hours they spent, what ADL assistance they provided, and receipts for all expenses. Caregivers should maintain daily logs showing arrival and departure times, specific tasks performed, and any changes in the patient’s condition. Keep copies of all invoices, canceled checks, and credit card statements related to care expenses.

Not understanding how elimination periods are calculated. If your policy uses a service day elimination period rather than calendar days, you might wait months longer than expected before benefits begin. A 90-day service day elimination period with care only three days per week takes 30 weeks (about seven months) to satisfy. During this extended waiting period, you must continue paying for care out of pocket, so understanding the calculation method is essential for financial planning.

Failing to submit the required annual recertification. Most long-term care policies require annual recertification from your physician confirming that you still cannot perform ADLs or still have cognitive impairment requiring supervision. Missing these annual recertification deadlines can result in benefit payments stopping, even though your care needs haven’t changed. Set calendar reminders to submit recertification paperwork 60 days before it’s due.

Not appealing denied claims. Insurance companies sometimes deny legitimate claims due to insufficient documentation or misinterpretation of policy language. If your claim is denied, carefully review the denial letter to understand the specific reason, gather additional documentation addressing the stated concerns, and file a formal appeal within the timeframe specified in your policy. Many initially denied claims are approved upon appeal once complete documentation is provided.

Frequently Asked Questions

Does AARP sell long-term care insurance directly?

No. AARP does not sell insurance. AARP receives payment from New York Life Insurance Company for endorsing and marketing New York Life’s long-term care policies to AARP members.

Can I buy AARP long-term care insurance if I’m not an AARP member?

No. AARP-branded long-term care insurance is available only to AARP members. You must join AARP before applying for coverage through their partnership with New York Life.

Is AARP long-term care insurance cheaper than other options?

No. AARP’s policies through New York Life typically cost 15% to 30% more than comparable coverage from competing insurers. Independent quotes from multiple carriers usually reveal better prices.

Will Medicare pay for my long-term care?

No. Medicare covers only up to 100 days of skilled nursing care following hospitalization under specific conditions. Medicare does not cover custodial care or extended long-term care needs.

Can long-term care insurance premiums increase after I buy a policy?

Yes. Insurance companies can request and receive approval for premium increases on entire classes of policies, though they cannot single out individual policyholders. Increases of 20% to 40% are possible.

Do I get my money back if I never need long-term care?

No. Traditional long-term care insurance does not return premiums. You pay for coverage like auto or home insurance. Hybrid life insurance policies with long-term care riders do provide death benefits.

What age should I buy long-term care insurance?

Ages 60 to 65 typically provide the best balance of affordable premiums and reasonable payment period before claims begin. Buying earlier costs less annually but more total over time.

Can I be denied long-term care insurance due to health conditions?

Yes. Approximately 30% of applicants are denied during underwriting. Conditions like diabetes with complications, previous stroke, Parkinson’s disease, or chronic conditions often result in denial.

Does long-term care insurance cover care at home?

Most policies do. Modern comprehensive policies cover care in all settings—home, assisted living, or nursing home. Older policies may limit home care, so review coverage carefully when comparing.

What is a partnership policy?

Partnership policies provide Medicaid asset protection. For every dollar your insurance pays, you can keep an additional dollar of assets beyond Medicaid’s $2,000 limit when eventually applying.

Can I use retirement account money to pay premiums without penalty?

Yes. Beginning in 2026, you can withdraw up to $2,600 annually from 401(k), 403(b), and governmental 457(b) plans for long-term care premiums without the 10% early withdrawal penalty.

How long do most long-term care insurance claims last?

The average claim lasts 2.8 years, and 49% of claims last one year or less. However, 10% of claims extend beyond five years, often involving dementia.

What is an elimination period?

The elimination period is the waiting time (typically 90 days) after care begins before insurance starts paying. You pay all care costs during this period, like a deductible.

Are long-term care insurance premiums tax-deductible?

Partially. Premiums for tax-qualified policies can be included with medical expenses if you itemize and expenses exceed 7.5% of income. Self-employed individuals get better deductions.

Should I buy inflation protection?

Yes. Without inflation protection, your coverage becomes inadequate over time. Buyers under 65 should choose 3% or 5% compound inflation protection to maintain meaningful coverage for decades.