Q: What is long term care?
A: Long-term care is the care you need when you are no longer able to care for yourself. It is personal care, such as help with bathing, eating or dressing required over a lengthy period of time.

It can range from simple assistance in your own home to assistance required in a residential care facility, or it can be highly skilled care in a nursing facility.

Cognitive impairments such as Alzheimer's and other diseases may also trigger the need for long term care, even though physically the person appears to be fine.

Typically long term care is not covered by health insurance, HMO's, Medicare or supplemental policies. These are for short-term not long term care.

Q: Who needs long term care insurance?
A: Anyone concerned about providing for their potential future needs and looking to protect their life savings and assets for themselves, their family and heirs.

The number one problem is that people don't think they need it, or maybe they'll need it sometime in the future, but not now, not today. They get up, they dress, and on their way to work they get rear-ended and need months or a lifetime of care. Then they learn that their health insurance or Medicare only covers the first few weeks. Reality has a way of overcoming denial.

Long-term care can be caused by such things as motor vehicle accidents, falls, sports injuries, strokes, heart attacks, surgery, illness, old age and frailty. Healthy, active people of any age can suddenly find themselves in the situation where their lives are changed.

We all have experienced a change of health. We go to bed feeling fine and wake up sick. Most of the time it's a minor illness. Changes of health are sudden, we're fine then we're not.

At any given time in America, 40 percent of all those on long term care are not elderly but between the ages of 18 and 64. If you are not insured today but plan on insuring later I recommend you do it two months before your health changes.

The uninsured are exposed to a huge financial risk. Americans don't save enough and they don't insure enough. One way or another Americans are going to pay for their long term care -- savings or insurance. Over 56 percent of adults who receive long term care will pay out-of-pocket, 39 percent will be on Medicaid (welfare). Many of the 56 percent will spend-down their savings and then go on Medicaid.

Purchasing long term care insurance while young keeps the cost down over time while avoiding becoming uninsurable later. If a 55 year old waited until they were 60 to insure they could end up spending a lot more over their lifetime.

The reason most people don't buy long term care insurance is because they are not sure they will ever need it. But that is a question that will only be answered when they either die without needing long term care or when they need it. The fact that it cannot be answered in advance is why they should insure.

People also argue that if they have this insurance then die they would have wasted their money. True enough, but over half are going to need long term care before they die. That's greater than 1 in 2. Are you willing to risk your families future on odds of 1 in 2?

Now life insurance is a guaranteed payout because there is a 1 in 1 chance you'll die at some point. But let me ask you this, what are you insuring now that you hope to collect on? Car crash, catastrophic health or home insurance, surely not life insurance! No one wants to collect on insurance. Your choice with long term care is pay now (insurance) or pay much more later (savings).

Q: How much does it cost to stay in a nursing home?
A: According to a 2006 Survey the average cost of nursing home care nationally is $70,900 a year. This is about $194 per day. The cost of care is different in different regions. A nursing home private room in New York City averages $385 a day ($140,000+ per year).

Nursing home care is reserved for those who need medical attention yet most long term care is not medical care but custodial care, which is not covered by health insurance or Medicare.

When family and friends provide the care there is no bill presented for the care provided, but the toll to the family and friends can be very high.

When people no longer can stay in their homes or no longer want to but are not sick they have the option of moving into senior housing that provides assistance on demand.

Another option for custodial care is assisted living housing. Since this level of care is custodial and not considered medically necessary you pay out-of-pocket or with insurance.

Q: Doesn't Medicaid, the state health care program for low-income people, pay for long term care?
A: Medicaid has always been for people who are at the low end of the economic scale based income and assets. The Medicaid system is somewhat complex and if someone has questions they should contact their local office.

Each state may have their own names for the program. Examples include "Medi-Cal" in California, "MassHealth" in Massachusetts, and "TennCare" in Tennessee.

Medicaid allows a person to keep up to $2,000 in cash assets, not counting a home, a car and some personal items. Even if they can qualify for long term care under Medicaid when they pass on, their estate is subject to recovery by the state. That means the house can be sold to reimburse the taxpayers for what Medicaid spent.

For example if the state Medicaid reimbursement rate is $150 a day and they spent 3 years on Medicaid their estate would have to reimburse the state $164,250.

Some people may look to legal ways to keep their assets and still qualify for Medicaid. That might work for some unless the government changes the rules again. It is a federal crime to try to defraud Medicaid. Even if you had a legal angle you would be on welfare and is that really how you want to live?

Q: What does long term care insurance cost?
A: An average long term care insurance policy with a top company that pays $5,000 a month benefit for 3-years would cost a 40-year old $2,000 a year, a 50 year-old $2,400 a year, a 60-year old $3,200 a year and a 70-year old $6,300 a year. These amounts are exclusive of discounts that lower the premium. Example discounts are spousal, multi-life, and preferred health.

If you have chosen the Inflation Protection benefit your $5000 benefit increases every year to keep up with inflation without a requirement of an increase in your premium. For example with a compounding benefit increase your monthly amount will double every 14 years. That $5,000 a month benefit is now $10,000 a month.

The older you are the more the premium will be but it will always be a lot cheaper than paying out of savings. You don't save money by waiting to insure and it's likely you may not qualify later in life.

Anyone who thinks long term care insurance is expensive hasn't yet seen assets drained by long term care costs. Financial advisors see it all the time.

Q: Who should you buy long term care insurance from?
A: Like most businesses there are three or four companies that stand out. The big companies differ only slightly on their rates and underwriting requirements.

What the big companies offer are; benefit increases without increasing rates, rate stability, good claims service and their rates are comparable or sometimes better than the smaller companies.

The bigger and better companies also have tougher underwriting. They want healthy people and you do to. That insures against future rate increases and that the money will be there when you need it.

Smaller companies in order to have future financial viability must charge higher premiums or if needed they raise policyholder rates. Smaller companies may take higher risk people, this also provides an opportunity for those with health issues to get insurance.

Q: Who should not buy long term care insurance?
A: For many, having no way to pay for coverage, no assets to protect, or not having a family to leave assets to may be a consideration. Long-term care insurance shouldn't put a strain on your income and lifestyle.

Some people assume they can't obtain coverage because of their health when they might. The only way to find out is to apply to see if you qualify. There is no obligation to see if you qualify.

A single person with no family may not think they need coverage but if they have assets and are in an accident, they may need care. Without coverage they may find themselves physically recovered later but their assets drained. A policy would provide care and potentially leave their assets intact.

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