Long-Term Care: Your Financial Planning Guide

Written by a former long-term care insurance agent, this book — updated and revised since its first publication in 2001 -- has two main objectives: to convince more Americans that they must plan ahead for long-term care coverage and to offer solid advice on buying a long-term care insurance policy.

Author Phyllis Shelton argues that if you have assets of between $50,000 and $2 million (excluding home and automobile), you should seriously consider purchasing long-term care insurance. The book will unsettle those who believe that the need for such coverage is for someone else, not them. The actual odds that an individual will require some form of long-term care are one in two, reports Shelton. (Although she fails to mention that the vast majority of those people will be in a nursing home so briefly that they wouldn't even qualify for coverage under a long-term care policy.) Still, the average nursing home stay is 2.4 years, and about one in seven residents remain institutionalized for more than five years.

With nursing home costs now averaging $62,000 a year, who will pay for this? Shelton devotes one chapter to the Medicaid option and lays out the many reasons why she believes relying on Medicaid is a bad idea for those who have the means to avoid it. But Shelton paints what many elder law attorneys would consider an unnecessarily bleak picture of "Medicaid planning." For many older Americans of modest means who wish to pass at least some of their hard-earned savings on to their children or other loved ones, the Medicaid option makes the most sense. Moreover, many cannot qualify for long-term care insurance because of preexisting medical conditions, high premiums, or both.

Having made her case for purchasing long-term care coverage, Shelton outlines in plain English the features a good long-term care insurance policy should contain and how to evaluate the financial soundness of an insurer. She explains why it's a bad idea to shop for the lowest premium and why inflation coverage is essential. Shelton also argues against waiting until one's 50s or 60s to purchase coverage. Incapacitating accidents or illness are not the sole province of the elderly, she notes. For example, one-third of stroke victims each year are under age 65.

Long-Term Care devotes a highly useful chapter to alternative strategies for financing long-term care that may be options even for those who cannot afford long-term care insurance premiums. These options include accelerated death benefits, viatical and life settlements, reverse mortgages, and long-term care annuities. The book also helpfully explains the new Partnership for Long-Term Care, an effort in a handful of states to assist those who cannot afford long-term care insurance but whose assets or incomes are too high for Medicaid coverage.

Despite the large print and clear explanations, on another level this book is not an easy read: no one likes to think about his or her own, or a loved one's, decline and disability. But most of us will face these issues eventually, whether we like it or not. Long-Term Care can forewarn and forearm.