Retirement Insurance Stack

Long-term care insurance pays for custodial care — help with bathing, dressing, eating, toileting, and other daily activities — that Medicare does not cover. About 70% of Americans over 65 will need some form of long-term care. The average claim lasts 2.5 years. Without coverage, a two-year nursing home stay costs $230,000+ and can eliminate decades of savings. LTC insurance is not right for everyone: if you have under $200,000 in assets you may qualify for Medicaid, and if you have over $2–3 million you may self-insure comfortably. The people who benefit most are those in between — with $300,000–$2,000,000 in retirement assets they want to protect.

Annual premiums for $165,000 of initial LTC benefit (2025 estimates): Age 55: $950–$1,500 single / $1,700–$2,600 couple. Age 60: $1,200–$2,000 single / $2,100–$3,400 couple. Age 65: $1,900–$3,200 single / $3,300–$5,400 couple. Age 70: $3,500–$5,500 single / $6,200–$9,800 couple. Key insight: buying at 55 vs. 65 saves roughly $1,000/year in premiums for the same coverage. Over a 25-year holding period, early buyers often pay less in total premiums.

Traditional LTC insurance: ongoing premiums (typically $100–$400/month), pays only if you need care — "use it or lose it." Premiums can increase over time. Hybrid LTC insurance: combines life insurance or annuity with an LTC rider. Usually funded with a lump sum ($50,000–$150,000) or 10-year premium pay. If you never need LTC, the death benefit passes to heirs. Hybrids are better if: you dislike ongoing premium payments, you want a guaranteed benefit regardless of whether you need care, or you're doing estate planning. Traditional is better if: you want the lowest upfront cost, you prefer flexibility, or you need maximum benefit for minimum premium. Hybrid products are currently outselling traditional LTC policies roughly 4:1.

Yes. Tax-qualified LTC insurance premiums are treated as medical expenses and deductible to the extent total medical expenses exceed 7.5% of AGI. The IRS sets age-based premium limits: 2025 limits: Age 51–60: $1,880/yr; Age 61–70: $4,220/yr; Age 71+: $5,270/yr per person. Self-employed individuals can deduct 100% of premiums above the age-based limit as a business expense on Schedule C. Businesses can deduct LTC premiums for employees as a business expense. Note: if LTC benefits are paid from a tax-qualified policy, they are generally tax-free up to $420/day in 2025 or actual expenses.

Medigap fills the cost-sharing gaps in Original Medicare — the 20% coinsurance for Part B services, the Part A deductible ($1,676 in 2026), skilled nursing facility coinsurance, and excess charges. Plan G is the most comprehensive plan available to new Medicare enrollees (Plan F was discontinued for new enrollees in 2020). Plan G covers everything except the Part B deductible ($257 in 2026). Monthly premiums: $120–$200/month depending on age, gender, and state. Plan N is the budget alternative: lower premiums but copays up to $20 for office visits and $50 for ER visits. You must be in Original Medicare Parts A + B — Medigap does not work with Medicare Advantage.

Four main options: (1) ACA Marketplace — premium tax credits available if income is under 400% FPL ($58,240 single in 2026). Strategic income management (Roth conversions, withdrawal sequencing) can make ACA the most affordable option at $0–$200/month with subsidies. (2) COBRA — continue your employer plan for 18 months at full cost, typically $600–$1,800/month single. Useful as a bridge while waiting for ACA open enrollment. (3) Spouse's employer plan — if your spouse is still working, this is typically the cheapest option. (4) Federal employees (FEHB) — if you're a federal retiree eligible for FEHB, coverage continues worldwide with the government paying ~72% of premiums. Use the Health Insurance Navigator to compare your specific options.