There isn't anybody who likes to think about having a physical or mental frailty that would cause them to need help with daily activities. But about 70 percent of people now over age 65 will, at some point, require such assistance. Some people might decide to hire a home health aide, while others might choose to move into an assisted living facility or nursing home.
Whatever the decision, long-term care can be expensive. Medicare pays for only some medically related home care and short term stays in a nursing facility, and nothing at all for long-term care. Medicaid generally covers some home health care and most nursing home costs, but you have to exhaust most of your personal assets before you become eligible. It also covers care in a few assisted living facilities, but most of those costs must be paid with private funds. If you hire a home health aide, expect to pay about $29 an hour. The average monthly cost for a one-bedroom assisted living facility in 2008 is $3008. Costs are expected to go up at least 5 percent a year for the foreseeable future.
You might be able to cover some of these expenses with a long term care insurance policy. The coverage , however, does have some drawbacks. It can be expensive, especially because you might be paying for it for decades before you use it - if you use it at all. And it often provides only limited benefits with many restrictions and conditions that might leave much of your costs unreimbursed. Some insurers have hiked premiums by double digits, forcing policy holders to drop their coverage and lose part or all of the money they had paid.. Deciding whether or not you should purchase a policy, therefore, should take into account these factors as well as your estate planning goals.