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Take Charge of Your Future

Do You Have the Right Insurance?

Advice to help you determine whether a long-term care policy makes sense for you.

En español | It's no small number: Each year, about 11 million Americans over age 18 receive some type of long-term care. Women are more likely to need care, and for longer periods of time—on average, about 3.7 years versus 2.2 years for men. Still, many people are confused about what long-term care is and how long-term care insurance works.

"Long-term care" refers to all the different kinds of help that people with chronic illnesses, disabilities, or other conditions need to function each day, for an extended period of time. Most people only need help with simple daily activities, such as bathing, dressing, and eating. Others may also need skilled care from nurses, therapists, or other professionals.

Long-term care includes a full range of services and support that people can receive in their homes, in their communities, or in an alternative-living arrangement, such as assisted living residences or nursing homes.

But long-term care can be expensive. How much the care services cost depends on the type of care you need, how much you need, and how long you need it. Costs vary depending on where you live. According to the Genworth 2009 Cost-of-Care Survey, the average price in the United States for a one-year stay in a nursing home, in a private room, was roughly $74,000. One year in a private, one-bedroom, assisted living arrangement was $35,000. And one hour of help from a home-health aide was about $19.

Neither employer-based health insurance nor Medicare pays for long-term care services for extended periods, so some people choose to buy long-term care insurance to help cover potential expenses. Depending on the policy options you select, long-term care insurance can cover home care, adult day care, assisted living, nursing home care, care coordination, and other services—sometimes including fees for modifying your home so that you can keep living in it safely.

Keep in mind that long-term care insurance usually doesn't cover all your long-term care expenses; you'd still have to pay some out-of-pocket costs. There are several factors to consider before deciding whether long-term care insurance is right for you.

Your Age and Health

Policies cost less if you purchase them when you're younger and in good health. If you're older or have a serious health condition, you may not be able to get coverage. And if you do find it, you may have to spend considerably more.

Cost of Premiums

Decide whether or not you can afford to pay the premiums for long-term care insurance, now and in the future, without breaking your budget. Premiums often go up, and your income may go down. If you find yourself unable to afford the premium, you could lose all the money you may have already invested in your policy.

Reduced Income

If you have difficulty paying your bills now or are concerned about paying them in the years ahead, when you may have fewer assets, spending thousands of dollars each year for long-term care insurance might not make sense.

If your income is low and you need long-term care, however, you may quickly qualify for Medicaid. Unlike Medicare, Medicaid pays for the cost of your care in a nursing home. However, you must first exhaust almost all your resources before you're eligible for coverage. You'll also have to meet Medicaid's other eligibility requirements. In most states, Medicaid pays for a limited amount of care you receive in your home.

Support System

You may have family and friends who can provide some of your long-term care, should you need it. Think about whether or not you would want their help and how much you can reasonably expect from them.

Self-Insuring Through Savings and Investments

A financial adviser or a lawyer who specializes in elder law or estate planning can advise you about saving to cover out-of-pocket expenses for long-term care. If you have enough money to pay for long-term care insurance but want to save your assets for your heirs, consider buying long-term care insurance.

Who Needs Long-Term Care?

According to the most recent data, about 70 percent of people above age 65 will require long-term care during their lifetimes. On average, someone who is 65 today will need some type of long-term care for about three years. And within that time, the person would probably receive almost two years of care at home. A number of factors influence whether or not you're more likely to need long-term care services:

Age: As you get older, your need for long-term care generally increases.

Marital Status: Single people are more likely to need care from a paid provider.

Gender: Women are more likely than men to need long-term care, primarily because women tend to live longer.

Lifestyle: Poor diet and exercise habits can increase your need for care.

Health and Family History: An inherited history of poor health may increase your need for long-term care.

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