Should You Buy Long-Term Care Insurance?

Last Updated Sep 26, 2010 5:34 PM EDT


I'm sorry to say, there's no simple answer to the question of whether you should buy long-term care insurance. Clearly, different circumstances call for different solutions. To give this subject the attention it deserves, I'll start here and continue with a series of subsequent posts, published every Monday, that delve into this critical topic.

You'll need to consider getting long-term care insurance in advance of the time when you can no longer complete ordinary, daily living activities such as bathing, using the bathroom, preparing your own meals, and following medical directives -- including taking prescription drugs. Paying for help with these activities can be very high. Addressing the threat of potentially ruinous long-term care expenses could be one of the most difficult challenges facing you in your retirement years. And while long-term care insurance may not be the answer for everybody, I strongly advocate that everybody needs to have a strategy to address the threat of long-term care expenses.

Many of us are already facing this issue with our parents. On their behalf, we might be shopping for assisted living facilities, buying long-term care insurance policies for them, or they even might move back in with us. These possibilities can significantly affect our career and retirement planning. Many of us are seeing first-hand the emotional and financial costs of the need for long-term care. It's wise to consider this as a warning for us in the next few decades, and take action so that we don't end up in the circumstances of some of our parents.

There are two primary reasons you may need long-term care in your future. The first is health-related: If you're in poor health and can't take care of yourself, you're going to have to find some help. The conditions that typically require long-term care and put people into high-cost facilities include Alzheimer's disease, dementia, advanced osteoporosis or the simple frailty that comes with old age. These conditions manifest themselves over time; usually there's a long period of onset accompanied by agonizing debate among family members regarding the need for long-term care. The good news is, these conditions can be delayed, mitigated or even prevented altogether with a healthy lifestyle, as I've previously written about.

The other primary reason you may need such care has to do with the availability of family or friends who can help take care of you when you need it. In our grandparents' day, families weren't dispersed across the country, and family members often took care of their frail relatives. These days, having family nearby to help out puts you in the minority. A report last year by the National Alliance for Caregiving in collaboration with AARP found that just one in five caregivers had their care recipient living with them. So unfortunately, formal long-term care may be the only solution for people whose health has deteriorated and who have no family nearby.


It's a common misconception that medical insurance policies and Medicare will pay for long-term care expenses. This misconception stems from the fact that these programs do pay limited benefits for rehabilitation and recovery at a skilled nursing facility immediately following a stay at a hospital. But they won't pay for the more common situation where you decline slowly and eventually need help with daily living activities, without a preceding stay at a hospital.

Medicare simply doesn't pay for "custodial care" that supports activities of daily living like dressing, bathing, and using the bathroom. Medicaid may cover these kinds of expenses for those who meet its financial requirements, but benefits can be hard to obtain. Moreover, Medicaid laws vary from state to state.

I've seen scary statements from insurance companies that sell long-term care insurance that say that two-thirds of people aged 65 and over will need long-term care in their lifetime. But is that really true? What's the real threat to your finances? My post next Monday will address this question.

Subsequent posts will cover various ways to buy long-term care services and strategies to address the threat of high long-term care costs. These posts will include the pros and cons of purchasing long-term care insurance, and tips for buying this insurance in case you decide you need it. If you decide not to buy long-term care insurance or just can't afford it, there are other options which I'll also review.

It's easy to ignore the potential risk of long-term care expenses when you're in your fifties, sixties, or seventies, since the threat seems so far in the future. Resist this temptation: Not only can long-term care be very expensive, but it can be an emotional and exhausting burden on your spouse and/or children. And I'm sure that most readers don't want place this burden on their loved ones. The steps you take now will significantly impact how well you will live in your final years, so the time you spend now is well spent.

P.S. For your convenience, below I've added links to the subsequent posts in this series.

Image from iStockphoto contributor bloodstone
More on CBS MoneyWatch
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Strategies for Addressing the Long-Term Care Threat
Long-Term Care Insurance vs. Other Strategies: Pros and Cons
Tips for Buying Long-Term Care Insurance
Can't Afford Long-Term Care Insurance? Consider These Creative Strategies
Long-Term Care Insurance: Should You Buy Your Employer's Plan?
Long-Term Care Advice from an Olympic Gold Medal Winner
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Uh-Oh: Good Health Will Cost You More in Retirement
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    View all articles by Steve Vernon on CBS MoneyWatch»
    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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