Many people mistakenly think their health insurance or Medicare will pay for any long-term care services they may need at some point. But health insurance really only pays for doctor and hospital bills. If you develop a chronic illness or become disabled and are unable to care for yourself for an extended period of time, you’ll need long-term care services. And these services aren’t cheap. Full-time nursing home care averages $69,000 to $78,000 per year or 8 hours per day of home health care can cost $43,000 to $70,000 annually.

Explore this section to learn more about who needs long-term care insurance, what types of care are covered, policy options and features, and where and when to buy it.

Who Needs Long-term Care Insurance?

If you can afford long-term care insurance, you should probably consider it. Why? Because the cost of long-term care, should you need it, can quickly deplete your life's savings. For instance, having a home health aide visit just three days a week can cost more than $20,000 annually. Full-time nursing home care, the most expensive type of care, now averages $69,000 to $78,000 per year. In some regions of the country, like the Northeast, the cost may be twice that amount.

While financial considerations cannot be understated, long-term care insurance isn't only about money. It's also about peace of mind. Having it ensures you'll have access to first-rate care when you need it. It also means you won't have to be dependent on others or be a burden to your children.

What are the odds you'll need long-term care insurance? Greater than you might imagine. There's about a 50 percent chance you'll need some type of long-term care after age 65. And long-term care services are not just for older people. A young or middle-aged person who has been in an accident or suffers from a debilitating illness may very well require long-term care services. In fact, 40 percent of patients receiving long-term care are under age 65.

If you can afford to pay for care without significantly impacting your assets, you may not need long-term care insurance. Conversely, if your assets, not including your home, are less than $80,000 if you're married (or $30,000 if you're single), you may not be able to afford the premiums. But If you're somewhere in between, long-term care insurance should be part of the discussion the next time you sit down with an advisor to review your financial plans.

Long-term care insurance pays for a wide range of services and procedures that typically aren't covered by a person's medical insurance. The types of care fall into three categories: skilled, intermediate and custodial. Read on to understand the differences between the various types of care.

Skilled

If you have a serious illness or injury that you can recover from, you will probably receive skilled care from nurses or professional therapists. Skilled care is provided daily, usually ordered by a physician, and involves a treatment plan. In short, skilled care helps get you better.

This type of care is the same as skilled care, but not provided on a daily basis. For instance, if you injured your leg and need to visit a physical therapist five times a week to help you heal, that would be considered intermediate care.

Unlike skilled and intermediate care, which is used to improve your health, custodial care isn't intended to get you better. Instead, custodial care includes assistance with daily activities like bathing, eating, dressing, toileting (getting on and off the toilet and other tasks associated with personal hygiene), continence and transferring (getting in and out of bed and chairs). Catheter or colostomy drain are other examples of custodial care. Custodial care can range from in-home care provided two or three days a week, to 24-hour nursing home care.