Asset-Based Long-Term Care Insurance in Ohio: How Hybrid Policies Work

By the eGoodwin Insurance team· Reviewed by Mark Goodwin, President, licensed Ohio insurance agent since 1990 (OH Lic. #11973)· Updated November 2, 2026· 21 min read· Powell & Marion, OH

Maybe you watched a parent move from their own house to assisted living and saw what it cost. Maybe you’re in your fifties or sixties, you’ve saved carefully, and the thought of one long illness eating through it keeps coming back. Or maybe you looked at traditional long-term care insurance years ago and walked away from the idea of paying premiums for something you might never use.

That last worry is exactly why asset-based long-term care exists. It’s the coverage we feature at eGoodwin Insurance, and it’s one we spend a lot of time explaining carefully, because the details matter.

This guide covers what long-term care is and who pays for it, how hybrid policies work, how they compare with traditional coverage, and how people fund them. We’ll also look at what care costs in Ohio, how the Ohio Long-Term Care Partnership Program fits in, and the questions we’d ask before buying any policy. We’ve been helping Ohio families plan since 1990, from our offices in Powell and Marion, and we work for you, not an insurance company.

What is long-term care, and who pays for it?

The short answer: Long-term care is everyday help with things like bathing, dressing and eating, at home or in a facility, and without a plan it’s usually paid from savings, by family, or by Medicaid after assets are spent down.

When people hear “long-term care,” they often picture a hospital. Most long-term care is something else. It’s help with the basics of daily life after an illness, an injury, a stroke or memory loss, sometimes for a few months and sometimes for years. It might be an aide who comes to the house in Marion three mornings a week, an assisted living apartment near the kids in Dublin, or a nursing home.

The same ACL page puts the average need at about three years. Women tend to need care longer than men, averaging 3.7 years against 2.2. And 20% of today’s 65-year-olds will need care for more than five years. About a third may never need any. Nobody knows in advance which group they’ll be in, and that uncertainty is the whole planning problem.

So who pays? It’s usually some mix of these:

• You and your family. Savings, retirement accounts and sometimes the house. Family members also pay in time and stress, often more than they expected.
• Medicaid. It can pay for long-term care, but only once you meet strict income and asset limits. For many households that means spending down savings first. Medicaid planning is legal territory, and an elder law attorney is the right person to guide it.
• Insurance you bought ahead of time. A traditional long-term care policy, or a hybrid life or annuity policy with long-term care benefits.

One more thing catches a lot of families off guard. Medicare generally doesn’t pay for long-term custodial care, according to Medicare.gov. That gap is why planning matters.

What is asset-based long-term care insurance?

The short answer: Asset-based (or hybrid) long-term care is a life insurance policy or an annuity with long-term care benefits built in or added by rider, so the same money may help pay for care if you need it and leave something behind if you don’t.

You’ll hear several names for it: asset-based, hybrid, combination or linked-benefit long-term care. They all describe the same basic idea. Instead of buying a policy that only pays for care, you buy a life insurance policy or an annuity that also carries long-term care benefits.

Federal tax law treats the long-term care part of these contracts as its own piece. 26 U.S.C. 7702B(e) says that when long-term care coverage comes as part of a life insurance or annuity contract, the long-term care portion is treated as if it were a separate contract.

In plain English: the care benefits in a hybrid can be built to the same federal standards as a standalone policy, depending on how the specific policy is designed. How that affects your taxes is a question for a tax professional.

Hybrid policies generally come in a few shapes:

Linked-benefit vs. rider-based, in practice. A linked-benefit policy is built from the ground up to pay for care, so the care benefits are usually the main event. A rider-based policy is a life policy first, with care benefits added on.

Rider-based designs can be simpler and more flexible as life insurance, while linked-benefit designs often put more weight on the size and length of the care benefit. Neither is better for everyone. It depends on whether your main goal is care, legacy or both.

How does a hybrid policy pay long-term care benefits?

The short answer: Benefits may start once a licensed health care practitioner certifies that you can’t perform two of six activities of daily living or have a severe cognitive impairment, and after any waiting period the policy sets, depending on the policy.

Every long-term care policy has benefit triggers, the conditions that must be met before it pays. For tax-qualified coverage, federal law defines them. Under 26 U.S.C. 7702B(c)(2), a licensed health care practitioner has to certify that you either:

• can’t perform at least two activities of daily living without substantial help from another person, for a period expected to last at least 90 days, or
• need substantial supervision because of a severe cognitive impairment, such as Alzheimer’s disease or another dementia.

The six activities of daily living (ADLs) listed in the statute are eating, toileting, transferring, bathing, dressing and continence. “Transferring” means getting in and out of a bed or chair. The Ohio Department of Insurance’s Long-Term Care Insurance Guide explains the same triggers and reminds buyers that each policy has its own.

Once you qualify, a few policy features decide how much is paid and when:

• Elimination period. The number of days you pay for care yourself before benefits begin, like a deductible measured in time. Policies usually let you choose from several lengths.
• Monthly benefit. The most the policy may pay in a month. Some policies reimburse actual expenses up to that amount; others pay a set cash amount. Ask which yours does.
• Benefit period or pool. How long benefits can last, or the total pool of money available for care.
• Inflation protection. Whether the benefit grows over time, which matters a lot if care is 20 years away.

What if you never need care? This is where a hybrid differs most from traditional coverage. With a life-based hybrid, a death benefit generally goes to your beneficiaries. If you used some long-term care benefits, the death benefit is usually reduced by what was paid out. With an annuity-based policy, what’s left depends on the contract. Either way, the money isn’t simply gone because care was never needed.

How does hybrid long-term care compare with a traditional policy?

The short answer: Traditional coverage is built only for care and usually charges ongoing premiums that can rise, while a hybrid is usually funded up front or over a few years and may leave a death benefit if care is never needed.

Both approaches can make sense. Here’s how they generally line up. Specific policies vary, so we always compare real quotes before anyone decides.

Premium stability. For many families, rising premiums were the deal-breaker with traditional coverage. A hybrid funded with a single premium, or paid up after a set number of years, takes that worry off the table, depending on the policy. You know the cost up front.

The use-it-or-lose-it concern. Traditional long-term care insurance works like other term-style coverage: it pays if the risk happens, and nothing comes back if it doesn’t. ODI’s guide says it plainly: “Long-term care insurance is term insurance.” A life-based hybrid answers that concern with a death benefit.

Where traditional can still win. Because every premium dollar is aimed at care, a traditional policy can sometimes buy a larger care benefit for the same budget, and paying over time may suit cash flow better than a lump sum. If that’s the better fit for you, we’ll say so. You can see more on our asset-based long-term care page.

How do you pay for an asset-based long-term care policy?

The short answer: Most hybrids are funded with a single premium or a few years of payments, and some people use the value of an older life policy or annuity through a 1035 exchange, which is a step to take only after talking with a tax professional.

Hybrid policies tend to be funded in one of three ways, depending on the policy:

• A single premium. You pay once, often by moving money from savings or a CD you’ve already set aside for “just in case.” The premium question is settled for good.
• A limited number of payments. Some policies let you spread the cost over a set number of years, until the policy is paid up. It can be easier on cash flow.
• A 1035 exchange. Moving the value of an existing life insurance policy or annuity into a new contract.

How the 1035 exchange fits. The Pension Protection Act of 2006 expanded section 1035 of the tax code so that life insurance and annuity contracts can be exchanged for qualified long-term care insurance contracts. The IRS confirmed in Notice 2011-68 that these exchange rules apply to exchanges after December 31, 2009, and that a contract doesn’t lose its status as life insurance or an annuity just because it carries a long-term care rider.

In plain English: an old life policy or annuity you bought years ago for a different purpose may be able to fund a long-term care combination policy, if the exchange is done correctly. Whether it makes sense depends on the old contract, the new one and your tax picture.

Surrender charges, loans on the old policy and how the transfer is handled can all matter. Talk with a tax professional before you make any exchange. We’ll gather the policy details so that conversation is easy.

If your main goal is protecting your family if you die early, life insurance may be the bigger piece of your plan. Our life insurance page covers term and permanent options, and we often look at both together.

What does long-term care cost in Ohio?

The short answer: CareScout’s 2025 Cost of Care Survey put Ohio’s median at $73,230 a year for assisted living, $110,230 for a semi-private nursing home room and $124,666 for a private room, slightly below the national medians.

These figures come from the CareScout Cost of Care Survey 2025, the long-running survey formerly published as Genworth’s Cost of Care Survey. CareScout collected the data from July through November 2025 and released it in 2026. Medians are the middle of the range, so half of providers charge more and half charge less.

Put those numbers next to ACL’s estimate that the average need is about three years, and it’s easy to see how care for one spouse can draw down the savings the other spouse will live on. Costs also differ across Ohio. Care around Columbus, Powell and Dublin can price differently from care in Marion or a rural county, so check local providers when you plan.

Home care vs. facility care. Most people would rather stay home as long as they can. ACL’s figures show that home is where most care happens, much of it unpaid help from family. Whether a policy pays for paid home care, assisted living, adult day care and nursing home care, and at what levels, is one of the most important details to compare.

What is the Ohio Long-Term Care Partnership Program, and does a hybrid qualify?

The short answer: Ohio’s Partnership Program lets you protect a dollar of assets under Medicaid for every dollar a qualifying policy pays, but Partnership status depends on the specific policy, so ask whether a specific policy is Partnership-qualified before you buy.

Ohio law created a qualified state long-term care insurance partnership program under Ohio Revised Code 5164.86, run by the Ohio Department of Medicaid with Partnership policy rules set by the Ohio Department of Insurance. The idea is simple: if you buy a qualifying policy and later need Medicaid, you may be able to keep more of your savings.

Ohio’s required Partnership disclosure notice, set out in the appendix to Ohio Administrative Code 3901-4-02 (rule filed in 2024), explains it this way:

• You may be able to shield one dollar of your assets under Medicaid for every dollar of benefits the Partnership policy pays.
• Buying a Partnership policy does not automatically qualify you for Medicaid. You still have to meet Medicaid’s other rules.
• Changing the policy, such as cutting benefits, or moving to a state that doesn’t recognize it, can affect the protection. Check before you make a change.

ODI’s Long-Term Care Insurance Guide lists the basic requirements: the policy must be federally tax-qualified, it must include certain inflation protection, and you must be an Ohio resident when coverage begins.

For a lot of families, the Partnership question isn’t the deciding factor. A hybrid can still be a good fit for someone who mainly wants to protect savings, avoid rising premiums and leave something to their kids. The point is to know exactly what you’re buying.

What should you ask before you buy a hybrid policy?

The short answer: Ask how benefits are triggered and paid, how long the elimination period and benefit pool are, whether benefits grow with inflation, where care can be received, and what happens to the death benefit if you use the care benefits.

Hybrid policies vary a lot from one company to the next. These are the questions we walk through with every family, in this order:

1. What triggers benefits?

   Confirm the policy uses the two-of-six ADL test or severe cognitive impairment, and ask who certifies it and how. Ask whether it’s a long-term care rider or a chronic illness rider.

2. How long is the elimination period?

   Know how many days you’d pay for care yourself, and whether those days have to be consecutive or can add up over time.

3. How big is the benefit pool, and how long can it last?

   Ask for the monthly benefit, the total pool and the number of months it covers. If there’s an extension rider, ask how it works after the death benefit is used.

4. Is there inflation protection?

   ODI’s guide notes that Ohio law requires companies to offer inflation protection on long-term care insurance. On a hybrid, ask what’s available and what it costs. Care 20 years from now won’t cost what it does today.

5. Where can you receive care?

   Check that home care, assisted living, adult day care and nursing home care are all covered, and whether a family member can be paid as a caregiver, depending on the policy.

6. Is it reimbursement or cash?

   A reimbursement policy pays actual covered expenses up to the limit. An indemnity or cash policy pays a set amount. Each has trade-offs.

7. What happens to the death benefit?

   Ask how care benefits reduce it, and what’s left for your beneficiaries if you use some, all or none of the care benefit.

8. What’s the underwriting, and what if we’re a couple?

   Ask what health questions apply. Couples should ask whether a shared or joint option is available, depending on the carrier.

ODI’s guide says long-term care policies come with a 30-day free-look period after you receive the policy, so read yours carefully once it arrives. If you ever have a problem with an insurance company you can’t resolve, ODI’s Consumer Services Division takes calls at 800-686-1526.

Why work with an independent agent?

Because the right hybrid for you depends on details that differ from company to company: how benefits are paid, how long they last and what underwriting asks. A captive agent can show you one company’s version. As an independent agency, we represent multiple insurance companies, so we can lay several options side by side from our lineup and explain the trade-offs in plain English. We help you buy insurance rather than sell it to you.

We also stay with you afterward. When your health, your family or the market changes, we’re the people you call. And if a hybrid isn’t the right answer for you, we’ll tell you that, too.

Reviewed by Mark Goodwin. Mark has been a licensed insurance professional since 1990. He took over his father’s family agency in Marion and grew it into eGoodwin Insurance, an independent agency with offices in Powell and Marion, and he serves on the boards of the Powell Chamber of Commerce (past president) and the Powell Development Corporation. Asset-based long-term care is the coverage our team spends the most time explaining, because the details are what decide whether it fits. “We work for you, not an insurance company.”

The bottom line

Long-term care is one of the biggest financial risks in retirement, and one of the least planned for. Asset-based long-term care gives families a way to plan for it without the use-it-or-lose-it gamble: benefits that may help pay for care if you need it, and a death benefit for your heirs if you don’t, depending on the policy.

The decisions that matter most are the details: how benefits are triggered, how long the elimination period is, how big the benefit pool is and whether it grows, and how you fund it. Ask whether a specific policy is Partnership-qualified, and bring your tax professional in before any 1035 exchange.

If you’d like to talk it through, send us your ZIP below or call (740) 387-8335. Bring your spouse, your adult children or anyone who should be part of the decision. You can also start on our long-term care page or meet us at our Powell or Marion office, Monday through Friday from 9 to 5.

Last reviewed by Mark Goodwin on November 2, 2026.