Understanding Short-Term Care Insurance

Short-term care encompasses services people usually need when they are unable to perform daily activities independently. This includes stays in an assisted living facility or skilled nursing home, services from home health care aides or even certain prescription medications. Additional recovery time at home – or even additional long-term care – is often necessary after being released from a hospital, and short-term care is often useful in addressing these needs. Paying for these services, however, becomes another question 

A financial advisor may be able to help you determine if short-term care insurance is right for you.

Why Get Short-Term Care Insurance?

Short-term care is sometimes known as recovery care and typically covers home care, assisted living and nursing homes when the patient can’t take care of themselves.

While many people look to Medicare to cover certain out-of-pocket costs related to short-term care, it can be limited and may have specific eligibility requirements. In comparison, short-term care insurance policies can help shield customers from out-of-pocket costs. Additionally, with rising premiums and stricter eligibility requirements for long-term care (LTC) insurance, more people are turning to short-term care insurance. 

Short-term care insurance policies typically cover services lasting up to 12 months. This makes them a viable option to cover gaps in Medicare coverage or an elimination period for a long-term care insurance policy you already have. They also may be worth considering if you waited too long to buy long-term care insurance and are now faced with higher costs.

How Much Does Short-Term Care Insurance Cost?

Benefits for short-term care insurance are usually offered for up to a year. Coverage may provide customers with $100 to $200 a day to help offset long-term care costs. 

It can go a long way, especially given the costs of long-term care facilities and services.

Projected 2026 Average Costs for Long-Term Care

Source: CareScout and Genworth

When it comes to paying for the insurance that will cover these costs, according to the American Association for Long-Term Care Insurance (AALTCI), typical premium costs can run about $63 to $280 a month, depending on your age, gender and coverage.

Short-Term Care Insurance vs. Long-Term Care Insurance

Since both short-term and long-term care encompass various services that may be necessary for people who have disabilities or debilitating health conditions, the need for either can arise for anyone at any time. 

Both can involve assistance with custodial care, including help with bathing, using the bathroom, eating and dressing. These are known as activities of daily living (ADLs), and they involve more comprehensive daily care than other forms of healthcare provided by a general or specialized medical practitioner.

Companies such as AARP and New York Life provide insurance that typically covers services not covered by other types of health insurance. Some policies may also cover services and care related to chronic conditions, certain diseases or impairments from unexpected accidents.

The primary difference between short-term care insurance and long-term care insurance is duration, which also affects cost. Short-term care policies are available for 12 months or less with a zero-day deductible or elimination period and a full year of benefits without the typical waiting period. This is not possible with LTC insurance policies.

It’s also important to note that short-term care payments are in addition to Medicare, serving as another key difference between short- and long-term care policies. Furthermore, short-term care applications are often simpler with fewer questions. This could be beneficial for those with existing health problems who may be ineligible for an LTC insurance policy.

When Does Short-Term Care Insurance Make Sense in a Financial Plan?

Short-term care insurance is often most appropriate for those who recognize potential care needs but do not have long-term care insurance. This may include individuals approaching retirement, managing chronic conditions or anticipating recovery after surgery or illness. In these situations, short-term care coverage serves as a targeted risk management tool rather than a permanent care solution.

Another common use is bridging gaps left by Medicare. Medicare may cover short-term skilled nursing or rehabilitation under specific conditions, but it does not generally pay for extended custodial care. Short-term care insurance can help pay for home health aides, assisted living stays or nursing facility services once Medicare benefits end.

Short-term care insurance can also coordinate with long-term care insurance. Many LTC policies include elimination periods of 30, 60 or 90 days before benefits begin. A short-term care policy can help cover medical costs during that waiting period, reducing the need to rely on personal savings.

Another scenario involves individuals who do not qualify for traditional long-term care insurance or face very high premiums. Short-term care policies often involve simplified underwriting and lower initial costs, which can make coverage available later in life.

Households with moderate savings sometimes use short-term care insurance as a way to protect emergency funds. Instead of using cash reserves to pay for temporary care needs, the policy can offset a portion of those expenses and preserve liquidity for other priorities.

Within a broader financial plan, short-term care insurance serves as a limited-duration safety layer. It does not replace long-term care insurance or comprehensive retirement planning, but it can reduce short-term financial pressure when temporary care needs arise.

Bottom Line

Affording any kind of insurance policy can be difficult, especially if you don’t have enough savings. With long-term care insurance, many companies encourage paying for a policy as early as possible before certain health issues disqualify you from coverage approval. Short-term care insurance can provide a better alternative on shorter notice, as its application process is less involved, it has fewer disqualifications and it works alongside Medicare. 

Be sure to contact insurance companies directly to learn more about the different policies they offer, and consider working with a financial advisor to ensure they work for your retirement plan.

Tips for Planning for Extended Medical Care

• If trying to plan for future care for you or a loved one makes you feel overwhelmed, consider consulting a financial advisor. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• If you’re leaning towards long-term care insurance coverage, the timing of your application can affect what your premiums are, what your elimination period is and more. Check out SmartAsset’s guide for when to apply for LTC insurance to learn more.

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