Recent studies indicate that 40% of all people over age 65 will enter a nursing home at some point in time. This is a costly proposition, with Medicare covering very little of the expense. Medicaid is available only for people who have already depleted most of their financial resources.

Long-Term Care Insurance provides coverage for care of the chronically ill and, depending upon the policy, may provide:

• Nursing home care;
• Home health care;
• Personal care in your home;
• Services in assisted living facilities;
• Services in adult day care centers;
• Services in other community facilities.

Generally, you purchase a policy that pays for eligible expenses—up to a certain dollar amount—daily. You can determine how much coverage you may require by surveying the cost of nursing home and other care in your area. Usually, people buy enough coverage to supplement what they will owe, but not to pay the entire cost of care. Policies can be purchased for terms of two years to life. Most offer inflation protection, which enables you to increase your level of coverage as prices for care rise over the years.

Must I be in good health to get coverage?
You must undergo underwriting to be accepted for a Long-Term Care policy; if you have certain pre-existing conditions, you may not be accepted, or you may not get coverage for care related to that specific condition. In most states, Long-Term Care policies are guaranteed renewable; you will not be rejected if your health status changes. Any rate increases must be “across the board” or based on changes in the level of coverage you desire; they cannot be based on a change in your personal health condition.

How much do policies cost?
Long-Term Care policies can be expensive, currently costing as much as $3,000 annually for a person age 65. The factors that affect your costs are:

• Your age when you buy the policy;
• The amount of your daily benefit;
• The length of your maximum benefit period;
• Adding a home health care benefit;
• Adding inflation protection;
• Having a non-forfeiture benefit, which enables you to receive some cash back, or a reduced benefit, if you are unable to continue paying your current premiums.

Because coverage is somewhat costly, it is appropriate for you only if you can afford it. It may be beneficial if:

• You have significant income and assets which you wish to preserve for your heirs;
• You want to make sure one spouse does not experience a financial hardship because the other one requires long-term care;
• You want to supplement what you spend out-of-pocket for care.

Long-Term Care Insurance has many variations and available options. A personal consultation will help you determine if and what type you want to purchase.