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It might be hard to imagine now, but chances are you’ll need some help taking care of yourself later in life. The big question is: How will you pay for it?

Buying long-term care insurance is one way to prepare. Long-term care refers to a host of services that aren’t covered by regular health insurance. This includes assistance with routine daily activities, like bathing, dressing or getting in and out of bed.

A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will reimburse you for care given in a variety of places, such as:  your home, an assisted living facility or a nursing home. 

Considering long-term care costs is an important part of any long-range financial plan, especially in your 50s and beyond. Waiting until you need care to buy coverage isn’t an option. You won’t qualify for long-term care insurance if you already have a debilitating condition, and long-term care insurance carriers won’t approve most applicants over the age of 75. The majority of people with long-term care insurance buy it in their mid-50s to mid-60s.

Nearly 70% of 65-year-old people will need long-term care services or support, according to 2020 data from the Administration for Community Living, part of the U.S. Department of Health and Human Services. Women typically need care for an average of 3.7 years, while men require it for 2.2 years.

Regular health insurance doesn’t cover long-term care. And Medicare won’t come to the rescue, either; it covers short nursing home stays or limited amounts of home health care when you require skilled nursing or rehab only. It doesn’t pay for custodial care, which includes supervision and help with day-to-day tasks.

If you don’t have insurance to cover long-term care, you’ll have to pay for it yourself in most states. You can get help through Medicaid, the federal and state health insurance program for those with low incomes, but only after you’ve exhausted most of your savings.

The situation has become serious enough that some states are taking notice and implementing proactive measures. 

For example, starting in 2025, Washington state will provide long-term care insurance to eligible residents, funded by a payroll tax that begins in 2022. Washington workers may opt out of the program if they buy a private long-term care insurance policy before November 1, 2021. Visit the WA Cares Fund website for more information.  Other states may soon follow suit as many propose legislation to address long term care improvements. 

The bottom line is that people are living longer and many don’t have enough retirement savings to cover their daily living expenses,  let alone the cost of a nursing facility which can run upwards of $90k annually.  Buying a policy can help protect savings and give individuals more choices when it comes to their care.  It is one of the most important things to consider when making your long-range financial plan.