Long-term care insurance:
Do you need it?

As Baby Boomers reach retirement age, more and more will need help with everyday living. Long-term care insurance can help aging people to pay for the help they may need with daily activities, such as dressing, bathing, and using the bathroom.

According to the U.S. Department of Health and Human Services, the average cost per day for a private room in a nursing home was $209 in 2008.¹ That adds up to $76,285 per year, and those costs are expected to rise in coming years. Long-term care insurance can help to defray the expense of assisted living.

Most people purchase long-term care policies when they are in their 50s and 60s. According to AARP, few experts suggest buying long-term care insurance before age 50. However, if you wait until after you turn 70, you may not qualify due to health conditions, or the policies for which you do qualify could be prohibitively expensive.²

AARP suggests you may be able to forgo long-term care insurance and pay for long-term care yourself if you have assets over $1 million (for a single person) or over $1.5 million (for a couple).²

Buying long-term care insurance is a decision only you can make, and it’s a tough one. Whatever you decide, you may not want to plan on Medicare to help with long-term care. Generally, Medicare does not provide support services for activities of daily living.³ And most health insurance plans don’t cover long-term care, either. You may want to talk with an insurance advisor to find out how you can ensure that you’re protected in your golden years.

1. U.S. Department of Health and Human Services website, National Clearinghouse for Long-term Care Information Overview at http://www.longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_of_Care/Costs_of_Care.aspx, updated December 30, 2009. Accessed April 6, 2010.

2. Jonathan D. Pond. Long-term Care Insurance: Is it Right for You and Your Parents? Available at: http://www.aarp.org/money/personal/jonathan_pond/articles/pond_long_term_care.html, updated May 28, 2009. Accessed April 6, 2010.

3. U.S. Department of Health and Human Services Medical. What is Long-term Care? Available at: http://www.medicare.gov/longTermCare/static/home.asp, updated March 25, 2009. Accessed April 6, 2010.