Financial planning in retirement

Long-term care insurance, commonly abbreviated LTCI, is an important insurance product that helps pay for long-term care. Also called custodial care, long-term care refers to services that support daily needs and activities, such as feeding and bathing. It is different from medical care and is generally not covered by medical insurance, which is why long-term care insurance is so important.

There’s a Good Chance You Will Need Long-Term Care

Although no one likes to think of themselves needing long-term care in the future, the odds are high that you will.

According to the Administration for Community Living (ACL), part of the U.S. Department of Health and Human Services, there is a 70 percent chance that a person who turn 65 today will need long-term care services at some point.

In some cases, long-term care is provided by unpaid family and friends. In other cases, the assistance of an in-home home health aide or other professional is needed. Other times, an individual will need to go to a long-term care facility.

Long-Term Care Costs a Lot Out of Pocket

Long-term care can be expensive, and it’s not typically covered by medical insurance. Even Medicare does not generally cover long-term care.

Medicare provides coverage for hospital care, including long-term care in a hospital, nursing care in a skilled nursing facility and hospice care. It also covers limited home health services, including physical therapy and speech-language pathology services. However, Medicare does not cover personal care or homemaker services.

Medicaid can cover some long-term care services, but only after your state’s income and asset requirements are met.

According to ACL, in 2016, you could expect to pay an average of $20.50 for a health aid. Care in an assisted living facility cost an average of $3,628 per month. A private room in a nursing home cost $7,698 per month.

Long-Term Care Insurance Is a Good Solution

Because long-term care is expensive, and because medical insurance and government programs do not always pay for it, long-term care insurance is worth considering. This is especially true if you have some assets and savings, but not enough to pay for high costs of long-term care.

The younger and healthier you are, the more likely you are to be approved for long-term care insurance. The rates you receive will also be better.

If you think you will need long-term care insurance coverage at some point, you should think about applying soon after you turn 50, and before you start developing health problems.