The Long-Term Care Risk Most Families Leave Uninsured

Most Americans carry insurance against events that will probably never happen to them. They insure automobiles against collisions that, for the typical driver, resolve in days and cost thousands. They insure homes against fires that, in the overwhelming majority of cases, never occur. They buy travel policies, umbrella liability, and identity theft protection — coverage for events whose annual probability sits well below one percent.

Then they leave uninsured the one event that is more likely to happen than all of those combined: the need for extended care.

This is not ignorance of the risk. It is a persistent underestimate of it — a mix of optimism, avoidance, and the widely held assumption that Medicare, personal savings, or family members will absorb the cost when the time comes. None of those assumptions survives contact with the published research, and the research on this subject is better than most people realize.

The Comparison That Reframes the Decision

Set long-term care beside the risks a household already insures without hesitation. The comparison is not rhetorical — the frequency data are published by the insurance industry’s own statistical organizations.

Property and auto frequencies: Insurance Information Institute / ISO and HLDI claim-frequency data. Care figures: ASPE/Urban Institute (2022, revised) and CareScout 2025 California medians.

A one-in-430 annual chance of fire compounds to roughly a seven percent chance across thirty years of homeownership. Nearly every one of those homeowners is insured. The care event, at better than even odds, is the one most of them face bare.

What the Independent Research Actually Shows

The conclusions on this page are not mine alone. They track what the federal agencies, the actuarial literature, and the congressional research offices have published — and where those sources disagree with each other, I would rather show you the disagreement than pick the number that sells best.

The probability: two federal figures, honestly stated

You will see 70 percent quoted almost everywhere in this industry, including on pages I have written. It comes from an HHS analysis (Johnson, 2019) finding that 70 percent of adults who survive to 65 develop severe care needs before they die — counting care delivered by unpaid family members as well as paid providers.

The more recent HHS/Urban Institute projection (Johnson & Dey, 2022, revised) puts the figure at 56 percent for people turning 65 between 2021 and 2025 — measured at the stricter threshold that actually triggers benefits under a tax-qualified policy: help with at least two activities of daily living expected to last 90 days, or substantial supervision due to severe cognitive impairment.

Both are HHS figures. They measure different things. The 56 percent number is the conservative one and the one that matters for insurance planning, because it is drawn at the benefit trigger. I use it here. The argument does not need the larger number.

The duration and cost, from the same source

ASPE Research Brief, Long-Term Services and Supports for Older Americans: Risks and Financing, 2022 (revised August 2022), Tables 1, 3, 5 and 6. Costs in 2020 dollars, national, and include only paid care.

Two cautions about that cost column, both of which the source states plainly. It is a national average across everyone, including the 44 percent who never develop a significant need — among those who do use paid care, the projected average is $245,400. And it is in 2020 dollars at national prices. California prices are materially higher, as the next section shows.

The same brief values the unpaid care that families provide at $204,000 per person among those receiving it — more than the value of all paid care. That is the part of the bill that does not arrive as an invoice. It arrives as a daughter reducing her hours.

Who Actually Pays for Long-Term Care

This is the question the whole subject turns on, and it has a published answer. The Congressional Research Service tracks the national payer mix each year.

Congressional Research Service, Who Pays for Long-Term Services and Supports? (2025), using 2023 National Health Expenditure data. Figures exclude unpaid family care, which researchers estimate would roughly double total spending if valued at market wages.

Read that table twice. The largest payer is a means-tested welfare program. The second largest is the family checkbook. Private insurance — and that 8.7 percent includes ordinary health insurance, not just long-term care policies — is a distant third. In the HHS projection, private insurance covers about five percent of an individual’s lifetime care costs, and only 3.6 percent of older adults have any care cost paid by insurance at all.

That is the second half of this page’s title, quantified. Fewer than eight percent of Americans over 60 owned a stand-alone long-term care policy as of 2022, on HHS’s own count. The risk is close to universal. The coverage is not.

The Perception Gap, Measured

It would be reasonable to assume that a risk this well documented is widely understood. It is not. The University of Michigan National Poll on Healthy Aging surveyed adults aged 50 and older and found the gap between the actuarial picture and the public one to be very wide.

Nearly half said planning felt too far off to act on, and roughly the same share said they did not know how to plan even if they wanted to. In a separate HHS-commissioned survey, only a quarter of Americans aged 40 to 70 could correctly identify Medicaid as the program that pays the most for long-term care in this country.

That last finding is the one I encounter most often in practice. People are not refusing to plan. They are planning against a picture of the system that is simply inaccurate — and by the time the picture corrects itself, the underwriting window has usually closed.

What Care Costs in California

National medians understate this state considerably. These are CareScout’s 2025 California statewide medians, published March 2026, with the three-year change alongside.

CareScout Cost of Care Survey 2025 (published March 2026), California statewide medians. Memory care is not separately surveyed; where clients need a planning figure I use roughly $8,800 per month, which is an estimate rather than survey data. Bay Area costs commonly run above these statewide medians — that is my observation from practice, not a published survey result.

On the inflation question I want to be more careful than this industry usually is. Care costs have clearly outpaced general inflation over the past several years — more than 20 percent on a California private room since 2022. But CareScout’s 2025 survey recorded the first real slowdown since the pandemic, with most settings rising between one and five percent, against 9.2 percent the year before. Anyone telling you care inflation reliably runs at two to three times general inflation is quoting a period, not a law. Plan for costs that rise faster than your other expenses; do not plan on a fixed multiple.

Why Affluent Families Insure Anyway

The households I work with can generally write the checks. That is exactly why the question deserves better than a reflex answer in either direction.

The HHS projections break out by income, and the pattern is instructive. Among people in the top income quintile at 65, only 5.7 percent will ever receive Medicaid-funded care — the safety net is not coming. Their average lifetime out-of-pocket care cost is $75,400, the highest of any quintile. And roughly one in ten of them will spend more than $250,000 out of pocket, in 2020 dollars, at national prices. In California, on the cost table above, that tail is heavier still.

So the affluent household faces a real but manageable central case and a genuinely damaging tail. That is the textbook shape of an insurable risk: not the loss you expect, but the loss you cannot absorb without dismantling something you spent a career building. The question is never whether you could pay. It is whether paying from portfolio — liquidating in whatever market happens to exist in the year care begins, with the tax consequences that follow — is a more efficient use of capital than transferring part of the exposure at a known cost.

For some households the honest answer is that it is not, and they should keep the risk. I say so when I think so.

Three Things This Page Will Not Relitigate

Each of these has its own treatment elsewhere on this site. In summary:

A Design That Returns Value Even If Care Is Never Needed

The most reasonable objection to this coverage is the oldest one: that premiums paid for years may buy nothing at all. That objection had real force against the traditional products, and it has a structural answer in the modern ones.

Asset-based designs — also called hybrid or linked-benefit contracts — are built so that if care is never needed, a death benefit passes to beneficiaries instead. Some designs also keep a guaranteed surrender value accessible during life, subject to surrender charges and the contract’s own terms, and any amount drawn reduces the benefits that remain. The capital does something either way. What it does, and on what guarantees, varies enormously between carriers.

That variation is the whole reason an independent review is worth running. In recent engagements, comparing the same client across multiple carriers has produced materially different structures and materially different guaranteed benefits for comparable outlay. That outcome is not luck. It is what an independent multi-carrier analysis produces, as against selecting a single insurer’s product and accepting its terms. I do not publish specific case results here, because the design that fits one client’s age, health, entity structure, and objectives tells you almost nothing about what would fit yours.

What a funded plan actually preserves