Hassle-Free Health Coverage: Long-Term Care Insurance

A coverage that has been gaining national attention during the past decade is long-term care insurance. In the late 1980s, the number of companies selling this coverage doubled, according to the Washington Insurance Council. By December 1991, more than two million people were buying long-term care insurance protection.

Long-term care insurance provides a wide array of maintenance and health services -- medical care, nursing care, therapy, etc. -- if you become chronically ill or disabled and are unable to care for yourself for an extended period of time. It may pay for your care on an inpatient or an outpatient basis -- or even entirely at home. These services generally are not covered by other health insurance.

Long-term care can be very expensive. On average, a year in a nursing home costs about $40,000. In some regions, it may cost much, much more. Home care is less expensive, but it still adds up.

Home care can include part-time skilled nursing care, speech therapy, physical or occupational therapy, home health aides and homemakers. Bringing an aide into your home just three times a week -- to help with dressing, bathing, preparing meals, and similar chores-can easily add up to nearly $1,000 a month, or $12,000 a year. Add in the cost of skilled help, such as physical therapy, and your costs could be greater.

Most long-term care policies pay a fixed dollar amount, typically from $40 to more than $200 a day, for each day you receive covered care in a nursing home. The daily benefit for at-home care is usually half the benefit for nursing home care. Because the per-day benefit you buy today may be inadequate to cover higher costs in the future, most policies also offer an inflation adjustment feature.

Unless you have a long-term care policy, you are not covered for long-term care expenses under Medicare and most other types of insurance.

It makes sense for most people with some assets to protect to buy long-term care coverage. Recent changes in federal law may allow you to take certain income tax deductions for some long-term care expenses and insurance premiums.