Why do many financial advisors tell clients they can self-insure for long-term care but advise them to buy supplemental coverage to Medicare?
This question has plagued me for 30 years.
Why This Question Matters
The primary reason this topic is so important is that the most common objection my team and I encounter regarding long-term care insurance is, “I’m going to self-insure.” Many people genuinely desire the protection of insurance, yet their financial advisor often suggests that self-insurance is preferable.
Comparing Attitudes Toward Medicare Supplement Coverage
Despite hesitations about long-term care insurance, most people would never consider opting out of supplemental coverage for Medicare. They routinely purchase Part D drug coverage, either paired with Medicare Advantage or a traditional Medicare supplement. Financial advisors rarely advise against buying supplemental Medicare coverage. In fact, only 6% of Medicare beneficiaries lack any supplemental coverage.1
Analyzing Medicare Supplement Costs and Benefits
- Current research indicates that the average Medicare Supplement premium is approximately $2,600 annually.2
- Medicare Supplement premiums are subject to periodic rate increases as Medicare deductibles and copays increase.
- The average claim payment is significantly less than $4,000 per year, according to Telos Actuarial.
- For 2026, there is a $2,000 cap on drug coverage under Part D.
If you don’t believe me that the claim payments are small, look at the Explanation of Benefits that shows the claim payments from your Medicare Supplement or Part D drug plan.
The Real Cost of Long-Term Care
In contrast, long-term care expenses can easily range from $7,000 to $10,000 per MONTH.
- Home Care Trends and Affordability
Most individuals prefer to receive care at home. Between 2019 and 2024, home care costs have risen by nearly 50%—about 8% annually3—largely due to a significant shortage of caregivers. Twelve hours of daily home care from a home health agency now costs more than nursing home care in many areas. Around-the-clock home care exceeds $300,000 per year,4 and even informal care, costing half as much, remains unaffordable for most families. Think about having to pay for caregivers for many years.
Women who need care more than a year average 4.7 years. Men who need care more than a year average 3.8 years. (Society of Actuaries’ Long-Term Care Experience Reports). The Alzheimer’s Association will tell you Alzheimer’s patients can easily need care 10 years or longer.
The Odds of Needing Long-Term Care
The Center for Research at Boston College found that only 20% of retirees will not need long-term care, while another 20% are likely to experience a severe need.5 If you believed there was only a 20% chance your home wouldn’t be destroyed, would you cancel your homeowner’s insurance?
Misconceptions About Medicare and Long-Term Care
Some people maintain Medicare supplemental coverage because they mistakenly believe Medicare will cover their long-term care expenses. The latest survey from Nationwide’s Retirement Institute reports that 58% of U.S. adults age 29 and older with a household income of at least $75,000 expect Medicare to pay for long-term care.6
Medicare’s True Role
Medicare does not cover long-term care costs. It functions as health insurance to assist individuals recovering from illness or injury, but does not cover most in-home care, nursing home stays, or services at assisted living facilities.
Coverage Details: Medicare Supplement Plans
Plan G, the most popular Medicare supplement plan, covers 100% of Part B coinsurance and Part A deductibles/coinsurance after the annual Part B deductible ($283 in 2026) is paid. Doctors who do not accept the Medicare-approved charge can only bill up to 15% more, and Plan G covers this additional amount.
Relying on Retirement Savings
This brings us back to retirement savings. Suze Orman addresses the question of whether someone with $1.5 million in retirement savings can self-insure for long-term care.
The Odds of Needing Long-Term Care
The Center for Research at Boston College found that only 20% of retirees will not need long-term care, while another 20% are likely to experience a severe need.6 If you believed there was only a 20% chance your home wouldn’t be destroyed, would you cancel your homeowner’s insurance?
Professional Guidance To Help You Understand the Difference
Today, my team of six women helps clients design customized long-term care insurance plans without any obligation to purchase. There are more options available now than ever before. However, after hours of tailoring a plan to a client’s budget, it can be undermined by a single email from a financial advisor. Often, I fear their motivation is to retain assets under management.
My Advice
Before taking the advice of a financial advisor telling you to self-insure long-term care, please do two things:
- Send the advisor to my list of questions here: https://buddyins.com/learning-center/planning/financial-planning/7-questions-to-ask-your-financial-advisor/
- Click this link for a no obligation consultation with a member of my professional and knowledgeable team: https://gotltci.com/
You may very well be able to self-insure, but do you really want to? Long-Term Care insurance gives you many more dollars in benefits vs. premium dollars you pay, and half the plans we sell today will give you money back if you never need care.
If something is to be self-insured, let it be balances to Medicare, not LTC.
References
- 1,2 “A Snapshot of Sources of Coverage Among Medicare Beneficiaries,” Kaiser Family Foundation, 12/19/2025 https://www.kff.org/medicare/a-snapshot-of-sources-of-coverage-among-medicare-beneficiaries/
- 3 “Long-Term Services and Supports Are Becoming Even More Unaffordable for Middle-Class Americans,” AARP Public Policy Institute, March 2026 https://www.aarp.org/caregiving/financial-legal/long-term-care-affordability-report/
- 4 CareScout Cost of Long-Term Care Survey https://www.carescout.com/cost-of-care
- 5 “Retirees Get Ready to Need Long-Term Care. Here’s What to Know,” New York Times, May 24, 2025 https://www.nytimes.com/2025/05/24/business/retirement-long-term-care.html
- 6“Americans Plan to Lean on Medicare to Afford LTC Costs,” 401k Specialist Magazine, June 16, 2025 https://401kspecialistmag.com/americans-plan-to-lean-on-medicare-to-afford-ltc-costs/
