LTC Insurance: The Golden State’s Silver Bottleneck
TL;DR
Background: California faces a financing challenge for the state’s long-term-care needs. By 2040, nearly a quarter of the state’s population will be over age 65. Many households will need long-term care for years and Medi-Cal cannot offer middle-income families a practical planning path.
Private long-term-care insurance, including standalone policies and hybrid or linked-benefit life/long-term-care products, should help fill that gap. These products help households manage risk, preserve assets, and reduce long-term pressure on public budgets.
But… California’s regulatory system has made the market harder to sustain. ICLE analysis of 43 substantive California long-term-care filings submitted between 2020 and 2025 found average review times of 905 days for rate filings, 951 days for form filings, and 957 days for combined rate/form filings. Nearly one-third took more than three years, and some remained pending for more than four.
Moreover… Those delays matter because long-term-care insurance depends on timing. Consumers usually buy in midlife, before premiums rise and underwriting tightens. Long reviews delay access, reduce choice, and keep newer products out of California.
KEY TAKEAWAYS
Aging Into It
By 2040, Californians 65 and older will grow from 14% to 22% of the state’s population. The old-age dependency ratio will rise from 24 to 38 older adults for every 100 working-age adults. Even as more Californians need long-term services and supports (LTSS), while the working-age population that finances much of the system grows only modestly.
California’s long-term-care costs already exceed national averages. AHIP’s 2025 state report estimates annual costs of about $86,944 for homemaker services, $89,232 for home health aides, $88,200 for assisted living, $140,343 for a semi-private nursing-home room, and $182,135 for a private nursing-home room.
Many households will need care for years, not weeks. Federal estimates show that someone turning 65 today has nearly a 70% chance of needing some form of LTSS, and 20% will need care for more than five years. Another federal estimate finds that 48% of older adults will receive paid LTSS over their lifetimes, and 24% will receive paid care for more than two years.
Medi-Cal cannot absorb this burden alone. It plays a vital role for low-income residents and those who spend down their assets, but it offers middle-income families no practical planning path. In 2025-26, Medi-Cal is estimated to cost $197 billion, making it California’s largest program on a total-funds basis. From 2017 to 2022, Medi-Cal enrollees using LTSS grew by 20%.
Private coverage must complement public financing. When private markets shrink, households have fewer tools to manage risk, and the state faces greater long-term fiscal pressure.
Protected From Choices
California’s prior-approval system for long-term-care insurance is fragmented, slow, and hard to navigate. It combines detailed substantive rules, divided review authority, and limited coordination among regulators.
Other states have moved toward more standardized review. The Interstate Insurance Product Regulation Compact includes 48 member jurisdictions, and 40 have adopted long-term-care standards. California does not participate. The National Association of Insurance Commissioners has also developed model rules and a multistate rate-review framework to promote consistency.
California instead produces more variable outcomes, longer timelines, and less predictable decisions. National data and carrier surveys suggest the problem lies in institutional design—not merely stronger consumer protection. The state protects consumers in theory, but often limits their choices in practice.
Approved Too Late
In California, long-term-care insurance reviews often take years, not months. A 2024 Association of California Life and Health Insurance Companies survey found that average review times approach or exceed 600 days. Comparable filings in other states typically receive approval in fewer than 85 days.
ICLE analysis of 43 substantive California long-term-care filings submitted between 2020 and 2025 found even longer delays. Average time to disposition was 905 days for rate filings, 951 days for form filings, and 957 days for combined rate/form filings. Nearly one-third took more than three years. Some remained pending for more than four.
Filing fees add another barrier. California’s document-specific fees can reach thousands of dollars before regulators reach the merits. A standalone long-term-care filing with one policy, one application, and three riders generates $9,830 in posted California fees, excluding any separate rate filing. Texas charges $100 for a comparable filing and $100 for a long-term-care rate filing.
Those delays and costs make California harder to enter and easier to leave. They also create a timing problem: by the time regulators approve a product, it may already be outdated. The result is fewer filings, fewer choices, and weaker incentives to offer newer designs in California.
The Clock Runs Out
Long-term-care insurance depends on timing. Consumers usually buy in midlife, when premiums are lower and underwriting is easier.
That window is narrow. The American Association for Long-Term Care Insurance (AALTCI) reports that 55% of traditional long-term-care buyers are 55 to 65, while only 18% are 66 or older. Another summary finds that more than 76% of new buyers are 50 to 69.
Waiting costs more. AALTCI’s 2025 price index shows that an illustrative couple buying traditional coverage with a $165,000 initial benefit pool for each insured and 3% annual growth would pay about $5,050 at age 55, $5,800 at age 60, and $7,150 at age 65, based on Illinois benchmark rates. Underwriting also tightens with age: Insurers decline 38.2% of applicants 65 to 69, and decline or defer 47% of applicants 70 to 75.
When consumers cannot get coverage, they lean more on savings, family caregivers, or both. AARP estimates that family caregivers spend an average of $7,242 annually out of pocket. Its 2026 caregiving valuation report estimates that family caregivers of adults provide 49.5 billion hours of care each year, valued at about $1.01 trillion.
Practical Fixes for Regulatory Inertia
California can restore market function without weakening consumer protection. It should establish timeline accountability, create escalation protocols, and publicly report delays.
The state should also consolidate review authority for hybrid life/long-term-care and annuity/long-term-care products, rationalize filing fees, create a pathway for limited-duration long-term-care coverage, and evaluate interstate review mechanisms. These reforms would make approvals more predictable, reduce needless friction, and expand long-term-care insurance options for California consumers.
For a state facing rapid aging and rising care costs, better long-term-care insurance regulation is not a marginal fix. It is a necessary step toward more sustainable long-term-care financing.
For further analysis, see the ICLE issue brief “From Friction to Function: Reforming California’s Long-Term Care Insurance System” by R.J. Lehmann and Ian Adams.