The United States is undergoing a significant demographic shift that directly affects long-term care (LTC) demand and healthcare professional liability (HPL) exposure. According to the U.S. Census Bureau’s 2023 population projections (Table 3), the number of Americans aged 65 and older is expected to increase from 63.3 million in 2025 to 71.2 million by 2030 and 82.1 million by 2050. By the end of this decade, more than one in five Americans will be 65 or older.
At the same time, the Administration for Community Living (ACL) estimates that nearly 70 percent of individuals over age 65 will require some form of long-term care during their lifetime. This trend will place increasing pressure on LTC providers, including nursing homes, assisted living facilities, and home care services, to meet the needs of a growing and medically complex population.
This article provides an overview of residential long-term care facilities and their HPL insurance needs. While non-residential services such as home healthcare and adult day care also require coverage, this series will focus exclusively on residential facilities and their unique risk exposures.
Understanding Long-Term Care Services
Long-term care services can be provided in three main settings:
- At-Home Care – Personal care and medical services delivered in a private residence.
- Day or Outpatient Services – Facilities offering non-residential, daytime care and support.
- Residential Care Facilities – 24/7 housing and healthcare for individuals with long-term needs.
All of these providers require HPL insurance due to the inherent risks of serving aging populations, particularly those with functional or cognitive impairments. While most long-term care facilities cater to seniors 65 and older, some accept residents as young as 55, depending on their services and state regulations.
Types of Residential Long-Term Care Facilities
Each state categorizes long-term care facilities differently, making it challenging to compare across regions. However, insurers and underwriters commonly classify them under two main categories:
1. Nursing Homes (Highest Acuity)
Nursing homes provide round-the-clock medical care and are regulated under federal and state laws. Common subcategories include:
- Sub-Acute Care – High-intensity medical services such as ventilator care and post-surgical rehab.
- Skilled Nursing Facilities (SNFs) – Administer medication injections, oxygen therapy, and feeding tubes.
- Intermediate Care – Lower-intensity medical supervision, such as oral medication management and basic rehabilitation.
2. Residential Care (Lower Acuity)
These facilities emphasize personal care and assistance rather than intensive medical services:
- Assisted Living – Provides medication management, meals, and a protected environment.
- Independent Living – Offers housing and social activities for self-sufficient seniors but does not provide medical care.
Facility size is typically measured by the number of licensed beds, which affects operational scale, risk exposure, and insurance needs.
The CMS Rating System & Key Industry Statistics
*Table derived from CMS database, June 2025.
To understand the risk environment in long-term care facilities, it is essential to examine the quality indicators tracked by the Centers for Medicare & Medicaid Services (CMS). Through its Five-Star Quality Rating System, CMS assigns scores for health inspections, staffing levels, and clinical outcomes. These are then combined into an overall rating. Lower scores often reflect higher risk conditions for healthcare professional liability (HPL), such as regulatory noncompliance, underperformance in resident care, or staffing instability. The charts below reflect the national distribution of ratings as of June 2025.
Based on the star ratings for the health inspection domain, the staffing domain and the quality measure domain, CMS assigns the overall Five-Star rating in three steps:
Step 1: Start with the health inspection rating.
Step 2: Add one star to the Step 1 result if the staffing rating is five stars; subtract one star if the staffing rating is one star. The overall rating cannot be more than five stars or less than one star.
Step 3: Add one star to the Step 2 result if the quality measure rating is five stars; subtract one star if the quality measure rating is one star. The overall rating cannot be more than five stars or less than one star.
Note: If the health inspection rating is one star, then the overall rating cannot be upgraded by more than one star based on the staffing and quality measure ratings.
*Table derived from CMS database, June 2025.
Nursing Homes
According to the CMS Nursing Home Data Compendium, as of June 25, 2025:
- Nearly 15,000 nursing homes participate in CMS programs.
- For-profit ownership continues to dominate the market, making up 73% of nursing home facilities.
- Occupancy rates remain around 79%, following a post-pandemic recovery.
- 53.5% of all facilities incurred at least one financial penalty, highlighting systemic compliance challenges that elevate liability risk.
- 11.2% of nursing homes received one or more citations for infection control violations, a critical red flag for HPL exposure in post-pandemic regulatory scrutiny.
- 7.4% have not undergone a health inspection in over two years, limiting visibility into current care standards and increasing exposure to unmonitored risks.
- Falls, medication errors, and understaffing remain leading causes of HPL claims.
*Table derived from CMS database, June 2025.
Assisted Living & Residential Care
- 32,000+ assisted living facilities operate across the U.S. (AHCA & NCAL, June 25, 2025)
- Roughly 1,200,000 licensed assisted living beds are available nationwide. (AHCA & NCAL)
- Falls account for 45% of HPL claims in assisted living settings. (McKnights Senior Living, June 9, 2025)
- 70% of assisted living facilities say that staffing shortages are a rising concern, increasing liability risks. (Tangram Insurance Services, March 19, 2024)
*Table derived from CMS database, June 2025.
HPL Insurance Considerations for LTC Facilities
Understanding an LTC facility’s acuity level, staffing model, and claim history is crucial when evaluating its HPL insurance needs. Key considerations include:
- Regulatory Compliance Risks – Nursing homes face stricter federal regulations than assisted living facilities, impacting liability exposure.
- Claims Frequency & Severity – Higher-acuity facilities (e.g., SNFs) tend to have more severe claims due to medical complexities.
- Staffing & Training – Underwriting assessments increasingly consider nurse-to-resident ratios and staff turnover rates.
- Policy Exclusions & Coverage Gaps – Some HPL policies may exclude claims related to infectious disease outbreaks or negligence tied to staffing shortages.
Let’s Navigate LTC Together
The long-term care sector is not just growing; it is changing in ways that directly impact healthcare professional liability (HPL) exposures. Retail agents who understand how acuity levels, compliance gaps, and staffing trends influence risk will not simply respond to the market but will lead it.
Ethos equips agents with the insights, tools, and carrier access needed to confidently approach long-term care accounts. Now is the time to build fluency in this space. Your insureds expect more than a quote. They expect a specialist.
If you are ready to strengthen your expertise and expand your book of long-term care, we are ready to support you. Reach out today to start the conversation, or stay tuned for Part 2, where we will examine the top trends and regulatory changes shaping the future of long-term care liability.
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