Long term care is a broad range of skilled custodial and other care services provided over an extended period of time in various care settings, due to chronic illness, physical disability or cognitive impairment.

At some point in our lives we often become unable to care for ourselves. This state has been defined as the inability to perform "the activities of daily living," generally what we do in the first 60 minutes of the day. These include:

• Bathing
• Dressing
• Personal hygiene
• Using the toilet
• Maintaining continence
• Eating
• Walking
• Mobility inside the home
• Transferring in and out of a bed, chair or wheelchair

At that time you may wish to have someone come into your home to provide assistance, or you may need to go into a nursing home. This is not medical care -- provided by doctors and nurses. This is so-called "custodial care," provided by home health workers and nursing homes. About 60% of us will need LTC some time in our lives. Here are some sample costs:  

Source: Massachusetts Association of Insurance Agents, "Long Term Care and the MassHealth Requirement"

At that point the issue arises: how do we pay for this? Unfortunately, there are few options.

Family Members:

Health Insurance: This is designed to cover medical care, not custodial care.   

Medicare: You need a prior hospital stay of at least 3 days, and you must begin care within 30 days of release to qualify. Then it will pay:

Medicaid: This is a joint Federal and State program designed to provide health care for the poor without consideration for age. It currently funds 40-65% of LTC in the U.S. You must "spend down" pretty much all of your assets in order to qualify. If you are married and your spouse is still living, he or she, called "the community spouse," is allowed to keep certain assets. If you are planning to pursue this route, I encourage you to seek the counsel of an elder law attorney such as:

Continuing Care Retirement Communities (CCRC): This is a great solution. There are many different arrangements but one common model works as follows. You pay a substantial upfront fee, $100K-$300K or more, usually from the sale of your home, plus a monthly fee of something like $3,000. You must be healthy when you move in, but then the facility will provide custodial care, usually in a separate nursing unit, when you need it and for as long as you need it. There is a housing continuum in old age:

Source: The American College Press, "Managing the Retirement Income Plan" 

CCRCs provide the whole continuum in one place. Caution: It can be very difficult to back out of this arrangement if you change your mind, and there is a considerable loss of freedom. But I've seen this work beautifully.

Long Term Care Insurance:

Among the positives, please consider the following. Often you are not the decision-maker about whether to use the care. It is your heirs who make the decision, because you are not sufficiently "with it." This can put them in a difficult moral position: should they spend these funds, which would otherwise be coming to them and their families when you pass away, for this very expensive care about which you may not even be fully aware? With insurance, you can tell them ahead: "Spend the money (i.e., file the claim). Don't worry about it - that is what it's there for. I planned ahead."