This paper presents a comprehensive literature review of current progress in the application of state-of-the-art indoor positioning systems for telecare and telehealth monitoring. This review is the first in the literature that provides a comprehensive discussion on how existing wireless indoor positioning systems can benefit the development of home-based care systems. More specifically, this review provides an in-depth comparative study of how both system users and medical practitioners can get benefit from indoor positioning technologies; e.g. for real-time monitoring of patients suffering chronic cardiovascular conditions, general monitoring of activities of daily living (ADLs), fall detection systems for the elderly as well as indoor navigation systems for those suffering from visual impairments. Furthermore, it also details various aspects worth considering when choosing a certain technology for a specific healthcare application; e.g. the spatial precision demanded by the application, trade-offs between unobtrusiveness and complexity, and issues surrounding compliance and adherence with the use of wearable tags. Beyond the current state-of-the-art, this review also rigorously discusses several research opportunities and the challenges associated with each.