We've all heard the horror stories about elderly people who can't take care of themselves moving into costly nursing homes and "outliving their money."' As Americans live longer, more and more of us will need some sort of long-term care, and the insurance industry has a blizzard of policies to help pay for it. Today, the cost of nursing home care averages about $71,000 a year nationwide, and the average patient stays for 2.4 years "" for a total cost of about $170,400, according the AARP. So I contacted AARP and got a quote from its designated provider, MetLife. The results seemed encouraging. For $44.76 a month, a 55-year-old man can get a policy that would pay up to $131,400 in long-term care costs. Suppose I paid $44.76 a month for 30 years, moved to a nursing home and used the entire benefit. I'd have paid a mere $16,114 to get all that coverage. Unfortunately, it's not that simple. This "Basic"' policy would pay for an assisted living facility or nursing home, but not for care in my home or to help defray costs of care provided by friends or family. And you can't just decide to move to a nursing home and begin drawing the money. To get benefits, one has to satisfy a set of "triggers,"' such as needing help bathing, dressing or eating. Also, the premium is likely to rise over time. Most important: The total benefit might fall far short of the costs I'd face 30 years from now. So I also looked at the top-of-the-line "Select"' policy. It would cover those things the basic policy wouldn't, and it would start out providing $219,000 in coverage. And that limit would increase by 5 percent a year. Cost: $218 per month. If I invested $218 every month instead of getting this policy, I might have more than $300,000 in 30 years "" enough to pay for lots of health care, at today's cost. But what about inflation? Inflation protection in the "Select" Long Term Care insurance policy means it could pay out nearly $1 million three decades from now. You get the picture: There's no simple answer. So who should have it? The National Association of Insurance Commissioners, the organization for state regulators, offers some guidelines on who should "consider"' getting one of these policies: People who have significant assets and income that they don't want to run through if they need care. People who are confident they can afford current and future premiums. Those who don't want to rely on others to support them. And those who want some flexibility in choosing the type of long-term care they get. But this insurance is not right for people who can't afford the premiums, those who qualify for Medicaid or live entirely on Social Security or Supplemental Security Income, or anyone who has trouble paying regular expenses.
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