If you're like most people, you've heard of long-term care. And, like most people, you might not really understand how it factors into your retirement. Unfortunately, this is one instance when what you don't know could hurt you. The risk of needing long-term care is real. It's also something that most people try to put off thinking about until it's too late.Basically, long-term care is necessary when you have difficulty caring for yourself. If you've ever cared for an aging parent or loved one, you've seen how frustrating it is to no longer be able to do things you've always taken for granted.

But the big question is, who pays the costs of for long-term careft In most instances, the answer is not the government. They recently rolled out a nationwide long-term care awareness program called "Own Your Future" which encourages people to better understand and plan for long-term care. In fact, Congress has tightened the financial requirements to qualify for Medicaid, the federally and state-funded program for those who live at or below the poverty level. And Medicare is designed to cover acute illnesses like hospital stays but not long-term care.

It's clear, that the average person will be responsible for covering long-term care expenses privately. But, according to a 2006 study by the MetLife Mature Market Institute, the average cost of long-term care is over $75,000 annually. Will you be able to self-fund care for yourself or your spouse? Coming up with that kind of money might prove difficult for many people.

Fortunately, many insurance carriers are offering insurance plans developed specifically to cover the costs of long-term care. But with so many plans out there, how do you choose the one that's right for you? The easiest way is to start with the basics.

Long-term care insurance pays benefits when you require services covered under the policy. However, most plans have an elimination or waiting period (think of this as a policy deductible) that must be satisfied before they'll begin to pay. You choose the elimination period based on how much out-of-pocket expense you can afford. The shorter the elimination period you select, the higher the premium; and the smaller your out-of-pocket expenses will be when you actually need care. Many policies offer choices from 0-180 days, in some states even longer.

The next factor is how much you will need each day for care. If care in your area is around $200 a day and you think you can fund about $50 of that, choose a daily benefit of $150. And remember to consider inflation. With long-term care expenses rising continuously, you will want to add a rider that automatically increases your daily benefit by a certain percentage each year.

It's also important to consider where you want to receive care. Most policies pay for care whether it is received at home, in a nursing or in an assisted living facility. And while you might need to go to a facility eventually, most of us want to stay home as long as we can.

With all of the choices out there, it helps to consult a long-term care specialist before making any decisions. Your long-term care specialist has the training and experience to help you determine if long-term care insurance is right for you and make sure you get the benefits you need, so you don't have to settle for a plan that wasn't designed for you. A specialist will also have access to several companies, so he or she can help you understand the differences in policy offerings, pricing, and underwriting. Be sure to utilize this expertise to make an educated decision about whether long-term care is right for you.

Steve McFalls can be reached at Bruton Financial Partners at (866)518-3900 or by e-mail at smcfalls@brutonfinancial.com.

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