Long-Term Care Insurance Calculator

Long-term care insurance is unusual among insurance products in that the gap between buying it and claiming on it is measured in decades. A policy bought at sixty is typically claimed in the mid-eighties. Nothing else about the contract matters as much as what happens to the benefit over those twenty-five years, because the thing it is insuring against is growing the whole time.

That growth is not hypothetical. Long-term care costs have risen faster than general inflation for as long as the surveys have run, for a straightforward reason: care is labour, it cannot be offshored or automated much, and the workforce providing it is shrinking relative to the population needing it. Assuming care inflation equal to CPI is the most common way these projections go wrong.

Against that, a level benefit is a wasting asset. Two hundred dollars a day at sixty is two hundred dollars a day at eighty-five, by which time the bill has roughly tripled. The policy has not failed — it pays exactly what it promised — but it covers a fraction of what the buyer assumed. Compound inflation protection typically raises the premium substantially and is still, on almost any assumption about care inflation, the better purchase. Simple inflation protection sits in between and is often mistaken for the compound version: it adds a percentage of the original benefit each year rather than of the current one, and the gap between the two widens for as long as the policy is held.

The second thing people misread is the benefit period. A three-year policy does not buy three years of care. It buys a pool of money equal to the daily benefit multiplied by roughly a thousand days, and that pool drains at whatever rate the care actually costs.

If the benefit covers the whole daily bill the two coincide. If care costs more than the daily benefit — the usual case once inflation has done its work — a reimbursement policy pays its daily maximum and the pool still lasts the stated period, with you funding the difference every day. If care costs less, the pool stretches further. The elimination period sits in front of all of it: ninety days is standard, and it is ninety days of care you pay for at the inflated price, not at today’s price.

This is why the coverage share this page reports is a more useful number than the daily benefit. It answers the question people actually have, which is not "how much does my policy pay" but "how much of this will I still be paying".

Two provisions apply and they are frequently conflated. Section 213(d)(10) sets a ceiling on how much of a qualified LTC premium can count as a medical expense, stepped by attained age — $500 at forty or under, rising to $6,200 above seventy in 2026. It is often described as a deduction. It is not: it is a limit on eligibility, and the eligible amount then has to clear the 7.5% of AGI floor and be worth more than the standard deduction before a single dollar of tax is saved. For most households buying these policies, the real benefit is zero. The exception worth knowing is the self-employed health insurance deduction, which allows eligible premiums above the line within the same age caps.

The second is the per diem limit under section 7702B(d)(4), $430 a day in 2026, and it is routinely reported as a cap on tax-free long-term care benefits. That is a misreading. Section 7702B(d)(1) excludes payments up to the greater of that figure or the actual cost of the qualified care received. A reimbursement policy therefore cannot produce taxable income at all, because it never pays more than the bill it is reimbursing. Only an indemnity policy — one that pays its full daily benefit regardless of what care costs — can create a taxable amount, and only on days when it pays more than both the per diem limit and the real expense. In practice that arises when someone with a rich, well-inflated benefit receives inexpensive care at home.

There is a trap in the present-value figure above, and it is worth naming rather than hiding. Every number on this page is conditional on actually needing the care you entered. Run the default case and the policy comes out ahead on present value — but only because the calculation assumed a three-year claim with certainty. Most people never claim at all, and an insurance policy that pays well when it pays says nothing about whether it was worth buying.

The unconditional test needs no outside statistic. Divide the present value of the premiums by the present value of the benefits and you get the probability of claiming at which the policy exactly breaks even. Below that chance you would have done better keeping the money; above it, the policy wins. That single number is the honest verdict, it is reported alongside the rest, and it lets you weigh the decision against your own family history rather than someone else’s brochure.

The argument for the policy lives in the tail. A minority of claims run eight or ten years, and those are the ones that consume a house, a portfolio, and a surviving spouse’s security along with them. Note what the stress case on this page shows: even a well-inflated policy leaves an enormous unfunded balance when care runs that long, because the benefit pool is finite. The question is not whether the policy beats an index fund on average — but whether it converts an unsurvivable outcome into a survivable one.

Two practical cautions belong with that. Premiums on traditional LTC policies are not guaranteed, and carriers have repeatedly raised rates on in-force blocks by large multiples after underestimating how many policyholders would keep them; a policy is only worth what you can still afford at eighty. And for households whose assets are modest, Medicaid is how long-term care in the United States is actually funded, with its five-year look-back and estate recovery — which makes insurance most valuable in the middle, where there is enough to lose but not enough to self-fund comfortably.