The US Department of Health and Human Services (Administration for Community Living) estimates that someone turning 65 today has almost a 70% chance of needing some type of long-term care, and that 20% will need it for longer than five years. For those who self-insure and then need extended care, the financial outcome is stark: a JAMA Network Open cohort study of 191,416 nursing home residents (2018-2022) found that among self-payers who entered without Medicaid and remained four years, 61.8% had spent down all their assets onto Medicaid. Against that, the action path carries its own loss: the Center for Retirement Research at Boston College finds that more than one quarter of people who buy long-term care insurance at age 65 let the policy lapse before death, forfeiting all previously paid premiums and receiving no benefit unless a non-forfeiture rider was purchased at additional cost.
The market context matters. The traditional LTC insurance market has contracted sharply as major insurers exited after severe losses from underpriced legacy products, and the CareScout (formerly Genworth) Cost of Care data put a private nursing home room near $9,581-$10,798 per month in 2025 — figures that make even a few years of care potentially catastrophic for middle-income households without coverage. The Medicaid spend-down requirement that triggers coverage only after near-total asset depletion means that self-insuring is not a neutral default: it is a choice to absorb the full cost of care, which the spend-down data show most long-stay residents cannot do without exhausting their savings.
The action-regret dynamic here is unusual: LTC insurance is a product where the primary form of regret is the policy lapsing, not the initial purchase itself. Someone who purchases at 55 and maintains coverage through their late 70s when care is needed rarely regrets the decision; the lapse rate captures those for whom the ongoing cost became prohibitive before benefits could be used. The product’s financial risks are therefore concentrated in the action path’s continuation costs rather than its initial decision. The two rates are not strictly comparable: the 62% spend-down figure is conditional on a four-year nursing home stay (the overall spend-down rate across all stay lengths is 16.4%), while the action lapse figure is across all buyers — so the headline gap overstates how often a typical self-insurer is wiped out. LTC insurance is most clearly relevant for the “middle-wealth” bracket: those with minimal assets qualify for Medicaid immediately without a spend-down, and those with substantial wealth can absorb care costs without devastation, so the product’s value is concentrated in the range between those two floors.