Below are the questions Mr. McDonnell hears most often from clients planning for long-term care. Each answer is based on over 20 years of experience placing coverage with the nation's leading insurance companies. For a personalized comparison request a free quote.
The right option depends on your age, health, and financial goals. Here is a general guide:
The need for long-term care can happen at any time and any age. The sooner you plan, the more options you have and the lower the cost.
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These are the two main categories of long-term care coverage, and they work very differently:
| Feature | Traditional LTC Insurance | Hybrid Life / LTC Insurance |
|---|---|---|
| How benefits are paid | Monthly or daily benefit paid directly for qualifying care | Death benefit is accelerated to pay for care |
| If you never need care | No money returned — similar to auto or home insurance | Unused benefit paid as a death benefit to heirs, tax-free |
| Premium stability | Premiums can be increased by the insurance company over time. New policies have a <10% chance of increase (AALTCI) | Premiums are typically guaranteed level or paid-up |
| Partnership eligibility | Yes — qualifies for Medicaid asset protection both spend-down and estate-recovery | No — does not qualify for Partnership protection |
| Inflation protection | Required for Partnership under age 76; compound option available | Some products offer inflation options; varies by insurance company and policy. |
| Funding options | After-tax dollars only; monthly, quarterly, semi-annual or annual premiums | Cash, single premium, 10-pay, or qualified money (IRA/401k) |
| Death benefit | None | Yes — any unused LTC benefit passes to heirs tax-free |
| Best for | Younger, healthier applicants seeking maximum coverage and asset protection | Those who want a guaranteed return of premium or have existing cash/assets to reposition |
Both types cover the same qualifying care: nursing home, assisted living, memory care, adult day care, and in-home care. The right choice depends on your priorities — maximum coverage vs. guaranteed value.
The Partnership for Long-Term Care is a cooperative program between private insurance companies and state Medicaid programs. It allows policyholders who exhaust their insurance benefits to qualify for Medicaid while retaining assets equal to what the policy paid out — rather than spending down to the $2,000–$3,000 Medicaid poverty threshold.
Example: If your Partnership policy pays $300,000 in benefits and you still need care, you may qualify for Medicaid while keeping $300,000 in personal savings. Without Partnership, you would have to spend nearly everything you own before Medicaid would help.
Partnership policies also provide estate recovery protection — the state cannot recover Medicaid costs from your estate after death, up to the amount the policy paid.
Learn more about Partnership Plans »
Yes, under certain conditions. If you are over age 59½, certain hybrid long-term care products — specifically linked-benefit life insurance or annuities with long-term care riders — can be funded with qualified retirement money (IRA, 401k, etc.). This allows you to reposition retirement assets that may be subject to required minimum distributions into a plan that provides both long-term care coverage and a potential death benefit for your heirs.
This option is not available for traditional standalone long-term care insurance policies, which must be funded with after-tax dollars.
It depends on the type of policy:
For people who are concerned about paying premiums they may never use, a hybrid policy eliminates that uncertainty entirely.
Most U.S. states offer Partnership-certified policies. The following states currently do not have Partnership policies available for new purchase:
If you already have a policy and are not sure whether it qualifies for Partnership, contact your insurance company directly with your policy number or Social Security number.
Care costs vary significantly by type of service and geographic location. General national benchmarks:
| Type of Care | Average Monthly Cost (U.S.) |
|---|---|
| Nursing Home (semi-private room) | $8,000 – $10,000+ |
| Nursing Home (private room) | $9,500 – $15,000+ |
| Assisted Living Facility | $4,000 – $9,000 |
| Memory Care / Dementia Unit | $5,500 – $8,500 |
| In-Home Care (Home Health Aide) | $25 – $40 per hour |
Costs in California, New York, and other high-cost states are at the upper end of these ranges. Because care costs will differ by type of care and your location, it is important to design a policy with a benefit amount that reflects costs in your area. A $10,000 per month long-term care expense can seriously impact the lifestyle of the person who needs care and their family. How would you pay?
When Medicaid pays for long-term care, the state has the right to recover those costs from the beneficiary's estate after death. In most states there is a 60-month (5-year) look-back period — meaning asset transfers made in the five years before applying for Medicaid can be reversed or penalized.
A Partnership-certified long-term care insurance policy provides two layers of protection:
Without a Partnership policy, you would generally need to spend your assets down to $2,000–$3,000 before Medicaid would begin paying, and the state could then recover its costs from your estate after death.
More about Partnership asset protection »
| Feature | Hybrid Life / LTC | Hybrid Annuity / LTC |
|---|---|---|
| Base product | Permanent life insurance (universal or whole life) | Fixed annuity |
| How LTC benefits work | Death benefit is accelerated to pay for care | Annuity value multiplied (often 2–3x) for LTC use |
| Death benefit | Yes — any unused portion paid to heirs tax-free | Annuity value passes to beneficiary |
| Growth | Cash value grows; interest rate varies by product | Fixed interest growth on annuity base |
| Best candidate | Those paying with new cash or repositioning a life policy. Those who cannot health-qualify for traditional LTC insurance | Those with an existing non-qualified annuity to exchange or cannot health-qualify for traditonal or Life/LTC policies. |
| 1035 exchange eligible | Yes (from existing life policy). No capital gains on exchange. You can exchange life for life or life for annuity. | Yes (from existing annuity) — no capital gains on exchange. |
The Pension Protection Act allows you to exchange an existing annuity or life insurance policy for a linked-benefit product that includes long-term care coverage — without triggering income tax on accumulated gains. This makes the annuity/LTC hybrid particularly attractive for people who already have a non-qualified annuity.
Women take care of men. But who takes care of the women? Know that 72% of women over 65 will need long term care and that women make up the majority of residents in long term care facilities. Wouldn't you rather plan where you would receive quality care, your family is not burdened, and your savings and assets are protected? This is what a long term care insurance policy will provide.
Long-term care costs have historically risen faster than general inflation. A benefit that covers your care costs today may fall significantly short in 10–20 years when you actually need it. Inflation protection options include:
Partnership inflation requirements: Under age 61 — compound inflation protection is required. Ages 61–75 — some form of inflation protection must be purchased. Age 76 and older — inflation protection must be offered but is not required for Partnership qualification.