How much does long-term care cost? Options, insurance, and planning tips

Long-term care in the United States costs between roughly $2,000 and $11,000 per month, depending on the type and level of care. A semi-private room in a nursing home, the most commonly cited benchmark, runs a national median of $9,581 per month, or $114,975 per year, according to the 2025 CareScout Cost of Care Survey.

These are costs that most retirees will need to confront in some form. Approximately 70% of Americans turning 65 are expected to need some form of long-term care during their lives, according to the U.S. Department of Health and Human Services. And while long-term care cost growth slowed in 2025 compared to recent years, the baseline remains historically high across all care types.

What are the costs of different long-term care options?

The cost of long-term care depends heavily on the type and intensity of services involved. Here's how the most common options compare, based on the 2025 CareScout Cost of Care Survey:

These terms can be confusing, so let’s break down what they mean. 

In-home care

In-home care allows individuals to receive support in their own home rather than moving to a facility. The 2025 CareScout survey now classifies what were previously separate "homemaker" and "home health aide" services under a single "non-medical caregiver" category, reflecting how these roles have converged in practice.

Non-medical caregivers help with daily activities such as bathing, dressing, meal preparation, light housekeeping, and personal care. For those with more complex medical needs, private duty nursing is also available in the home, with a national median hourly rate of $90 and a median per-visit rate of $160.

Adult day care 

Adult day health care centers provide supervised daytime care and activities for adults who need companionship or support but not round-the-clock assistance. The national median cost declined 5% in 2025 to $95 per day, or approximately $24,700 per year based on five days per week.

Assisted living communities

Assisted living communities offer personal care and health services for those who need help with daily activities but don't require the intensive medical supervision of a nursing home. The national median rose 5% to $6,200 per month, or $74,400 annually.

Nursing home care

Nursing homes provide 24-hour medical supervision, rehabilitation services, and full-time personal care. They are generally for those who require a higher level of care and supervision than assisted living communities can provide.

How much does long-term care cost by state?

The state you live in, or choose to retire in, can significantly influence the cost of long-term care. According to current data, Alaska has the highest nursing home costs in the country, while states like Texas, Louisiana, and Mississippi tend to be among the most affordable.

Most expensive states for long-term memory care:

• Alaska

• Oregon

• Hawaii

• Connecticut

• New York

Least expensive states for long-term care:

• Texas

• Missouri

• Oklahoma

• Arkansas

• Louisiana

While some people look for the best states to retire for tax purposes, the cost of care may also be worth considering. The gap between the most and least expensive states is significant, and if you need long-term nursing care or memory care, it can drain savings faster.

Many people assume that government programs like Medicare and Medicaid will fully cover the costs of long-term care. In reality, however, Medicare's coverage is limited, Medicaid requires meeting strict financial eligibility criteria, and most of the cost falls to individuals and their families.

How someone pays for long-term care depends on their unique financial situation and the type of services they need. Below are the most common funding options and what to expect from each.

Does Medicare or Medicaid cover long-term care?

Medicare is the federal health insurance program for Americans 65 and older. It covers hospital stays, doctor visits, some home health care, and hospice care. However, it does not cover long-term custodial care, which is the type of care most people need if they need assistance with daily activities like bathing, dressing, and eating. 

Medicare will pay for skilled nursing rehabilitation for up to 100 days following a qualifying three-day hospital stay, but with a daily copayment of $217 after day 20 in 2026.

Medicaid is a joint federal and state program that provides health coverage for people with limited income and assets. It is the primary payer for long-term care services in the United States, covering more than 60% of nursing home residents. However, eligibility requires meeting strict income and asset thresholds, and many individuals must spend down their savings before qualifying. The services covered and the options for where you receive care also vary by state.

Can you use personal savings to pay for long-term care?

Many retirees pay for long-term care out of pocket, at least in part. This approach offers flexibility, but it requires careful planning to make sure your savings can absorb what could be years of significant monthly expenses.

Before relying on personal funds, many savers will review their retirement savings to assess whether they can withstand the cost of care on top of other living expenses. Several tax-efficient strategies can help build a dedicated pool of funds for future care:

• Health Savings Accounts (HSAs): An HSA is available to those enrolled in a high-deductible health plan. It offers a triple tax advantage, as contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses (including some long-term care costs and certain long-term care insurance premiums) are also tax-free. Over time, an HSA can serve as a dedicated healthcare reserve.

• Roth IRAs: A Roth IRA allows tax-free qualified withdrawals after age 59½, provided the account has been open for at least five years. Because these withdrawals don't count as taxable income, a Roth can be a flexible source of funds for long-term care without pushing you into a higher tax bracket.

• Dedicated savings: Setting aside funds in a high-yield savings account or a certificate of deposit earmarked for future care costs provides a lower-risk complement to market-based retirement savings. These accounts won't fluctuate with the market, and they keep your care funds accessible and insured.

"The reality of long-term care planning is simple. The sooner you start thinking about it, the better, just like any other aspect of retirement planning," said Alastair Wood, CEO, US, at Raisin. "For those in their 40s and 50s, the best approach isn't necessarily rushing to buy a specific product, but rather stress-testing your retirement strategy against a prolonged healthcare shock.

"Addressing this early treats healthcare as its own piece of the retirement puzzle. It allows you to build flexibility into your plan while your health and earning power are at their peak, giving your strategy plenty of time to compound and adapt long before you ever need to make a formal product decision."

Long-term care insurance is designed to help cover the cost of services that standard health insurance and Medicare don't, including in-home care, assisted living, nursing homes, adult day care, and memory care. 

The three most common types of long-term care insurance are:

• Traditional policies: These offer comprehensive coverage for long-term care services, but premiums can increase over time, and if you never need care, the premiums are not recoverable.

• Hybrid policies: These combine long-term care coverage with life insurance. If you need care, the policy pays for it. If you don't, your beneficiaries receive a death benefit. Hybrid policies tend to have higher upfront costs but offer more certainty about where your money goes.

• Life insurance with a long-term care rider: This allows you to use a portion of the policy's death benefit to pay for care if you need it. The trade-off is that using the rider for care reduces the final payout to your beneficiaries.

Wood notes that the landscape has shifted as savers look for more flexibility.

"Traditional long-term care insurance is a hard sell because it operates on a 'use-it-or-lose-it' model,” he said. “If you stay healthy, your premium dollars are gone. To avoid that risk, clients are shifting to three concrete alternatives: Hybrid life insurance with long-term coverage, which guarantees a payout by converting into a tax-free death benefit for your heirs if you never need care; Health Savings Accounts, which act as a triple-tax-advantaged healthcare nest egg; and self-funded accounts, where you invest a separate fund earmarked strictly for future care."

Understanding the variation in costs and options for long-term care is crucial for those planning their retirement, financial future, or how to care for their loved ones. A few steps worth considering:

• Review your current retirement savings in the context of potential care costs. A single year in a nursing home can exceed $115,000. Even a more modest need for in-home care could run $75,000 or more annually.

• Evaluate your needs. Consider how traditional long-term care insurance, a hybrid policy, or a self-funding approach might align with your overall retirement strategy and risk tolerance.

• Consider your estate plan alongside your care plan. Planning ahead can help protect your assets if you intend to pass wealth on to your family or other loved ones.

• Talk to a retirement financial advisor or long-term care specialist who can help model different scenarios and identify gaps in your current plan.

Long-term care is expensive, and costs continue to climb. But the biggest financial risk is ultimately the uncertainty of not knowing if you'll need care, for how long, or what type. That uncertainty makes early planning all the more valuable.

Whether you choose insurance, self-funding, or a combination of both, the key is to treat long-term care as its own line item in your retirement plan rather than something to address when the need arises. Building a dedicated savings reserve now, even alongside other strategies, gives you flexibility and a financial cushion that can grow over time.

Raisin can help you get started. A single Raisin login lets you access high-yield savings accounts and CDs across multiple federally insured banks and credit unions, making it easy to set aside funds for future care costs while earning a competitive return.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Sources

¹ https://www.hhs.gov/aging/long-term-care/index.html 

² https://www.carescout.com/cost-of-care 

³ https://worldpopulationreview.com/state-rankings/cost-of-long-term-care-by-state

⁴ https://www.medicaid.gov/medicaid/long-term-services-supports