Recently, I have received a lot of questions about long-term care. The main questions are what is it and who pays for it?

Long-term care is assistance for months or years with basic activities of daily living like bathing, dressing, or getting in and out of a bed. Unlike medical care, which is designed to get you back to the way you were before you became sick or injured, the purpose of long-term care is custodial — that is, to keep you safe and comfortable for your period of incapacity.

Either you pay, the government pays, or an insurance company pays. Most long-term care is delivered by families for each other at home, perhaps with some paid help, depending on family financial resources. When the family becomes emotionally and physically exhausted, the family may decide to place the loved one in a nursing home, or other type of care facility. There they continue to pay until they become financially exhausted, at which time the government may begin to pay, but not with Medicare, a form of health insurance; rather it is paid with a welfare program called Medicaid. Private health insurance does not pay for long-term care either, because the purpose of the care is not to cure or restore, but to provide custodial care. Long-term care insurance, on the other hand is designed to pay for custodial care. Long-term care insurance will pay for facility care, but it is more commonly used to pay for professional caregivers at home. That helps the family to keep a loved one at home for a longer period of time and with less stress.

There are several types of long-term care services, depending upon the level of independence:

Assisted living: Provides help with bathing and dressing, medication reminders, and light housekeeping. It’s designed to assist those with minimal needs to remain as independent as possible.

Adult daycare: For those who want to remain at home, but need help with Activities of Daily Living while a caretaker is at work, adult daycare can be a good solution. Meals and some medical monitoring services are usually included, and transportation may also be available.

Home care: This can include companions to assist with housekeeping, cooking, and shopping. It can also include medical care provided by registered or licensed practical nurses. Home care can be part-time or full-time, depending on needs.

Nursing home: Mostly for those who need more intensive medical care, such as wound care, rehabilitation, or help with respirators or ventilators. Nursing home care may be temporary (recovering from surgery or an injury), or permanent (end-of-life services).

According to the United States Department of Health and Human Services—National Clearinghouse for Long-Term Care Information, the costs of long-term care may vary by region. The average costs in the United States in 2009 for various types of long-term care are shown here:

Long-Term Care Service	Costs
Home health aide	$21 per hour
Homemaker services	$19 per hour
Adult Day Health Care Center	$67 per day
Assisted living unit (one bedroom)	$3,131 per month
Nursing home/semi-private room	$198 per day, or $72,270 per year
Nursing home/private room	$219 per day, or $79,935 per year

Source: http://www.longtermcare.gov June 28, 2010

The big question and the dilemma for most families is, “can we realistically preserve our retirement assets and income while covering long-term care costs?” As discussed above—either you pay, the government pays, or an insurance company pays. If you plan to pay from personal savings, this means that you’ll need to estimate the future costs of long-term care and set aside enough money to cover those costs. If you prefer to purchase long-term care insurance you can elect traditional long-term care insurance which works much like car insurance with ongoing premiums, or you can elect to purchase a life insurance or annuity asset based long-term care policy with cash or possibly by exchanging an old life or annuity policy. Each has advantages and disadvantages. If you have questions about long-term care, please don’t hesitate to call.