Over the last few years, Americans have become increasingly concerned about financing the expenses of long-term care. Long-term care is the broad range of medical, custodial, social and other care services that assist people who have an impaired ability to live independently for an extended period. This period can range from a few weeks to the remainder of a person's life.

Long-term care is provided in a wide variety of settings, including the home, community and alternative living arrangements; and institutions such as nursing homes, assisted-living facilities and Alzheimer’s facilities.

The cost of long-term care service can be astronomical. According to the Metlife Market Survey of Nursing and Home Care Costs (September 2004), the average daily rate for a private room in a nursing home is $192 ($70,080), and for a semi-private room $169 ($61,685 annually). The hourly rate for a home health aide is $18 (a private licensed practical nurse would charge twice that amount). Assisted-living facilities are averaging $2,400 per month ($28,000 annually). These figures are for one person and are expected to triple in the next 20 years.

Your health insurance is not likely to provide any long-term care coverage. Once you turn 65, Medicare prvoides very limited coverage for only a limited amount of time if you are admitted to a nursing home. Medicaid is a government entitlement program that provides medical asistance for individuals and families with low incomes and resources. To qualify for benefits, one must essentially be impoverished. There are a number of significant shortcomings to Medicaid as a source for financial long-term care services. These shortcomings are becoming more noticeable every day, as most states are tightening up on eligibility, and some have even considered Medicaid benefits as loans to be collected from the estate after death.

Should you consider long-term care insurance to pay for this cost, protect your assets, and lessen the burden on your family? If you have few assets, you can skip long-term care coverage and rely on Medicaid to pay your nursing home costs. If you are wealthy, you may also forgo the purchase of long-term care insurance. Consider that the average cost of a nursing home room being $70,000 a year (it could be twice if both you and your spouse need care). If you can cover that cost with Social Security, your pension and investment income, you probably can get by without the coverage. Of course, this considering that you don’t really care if you are able to pass along any of your wealth to your children.

The people who should consider this coverage are the people in the middle, because they are going to have to pay out of their pockets, and their pockets may not be deep enough. The cost of the long-term care insurance policy isn't cheap, but it isn't unreasonable, especially if you consider what hte cost of long-term care services are today and expected to be in the future. The common thinking today is to not buy the very expensive lifetime benefits unless your family ha a hisotry of Alzheimer's, or some other form of dementia. Less expensive, shorter benefit periods (i.e., four to six years) will probably do. Also, you can pay for your services by analyzing your retirement income and subtracting it from today's nursing home costs. That will give you an idea of how much you need from your insurance company to pay for your care. Buying inflation protection on your policy will help you keep up with the ever-spiraling cost of health care.