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Ohio Department of Aging Boomerang: It all comes back to you!

Boomerang: It all comes back to you!

My Future - October 2009

Financial Planning for Long-term Care
Are You Willing to Risk the Cost of Not Planning Ahead?

Denying that you might need long-term care could end up costing you and your family members greatly in the future.

The Ohio Senior Health Insurance Information Program (OSHIIP) helps Ohioans better understand various insurance policies and benefits. Call 1-800-686-1578 to talk to an OSHIIP counselor.

Many people first learn about long-term care at the worst possible time - during a crisis when they or a loved one needs care immediately. That's when they learn that long-term care is expensive and that Medicare and Medicare supplements generally do not pay for it. Most people who need long-term care end up paying for some or all of it out of their own pockets, which can be an expensive proposition, given the $60,000 average annual price tag for nursing home care and $38,000 annual cost for home care in Ohio. Sure, Medicaid will pay for long-term care services, but only after you've exhausted almost all of your financial resources.

While we may not want to accept that we'll need long-term care, almost seven out of 10 people turning age 65 today will. Denying that it could happen to you could end up costing you and your family members greatly in the future. If you plan now for the costs of long-term care you may need, you can save money in the long run and have a broader range of services and settings when the time comes. One option to make sure you have the money when you need it is long-term care insurance.

Long-term care insurance can help cover care in a nursing home, assisted living facility and home care and allow you to protect your financial assets. The cost of a policy depends on how much coverage you buy and when you buy it. Premiums are based on your age when you buy the policy. If you purchase the policy when you are younger, you will pay less for it than if you put it off. The type of policy you choose also affects the premium price.

Generally, financial planners recommend long-term care insurance if you:

  • Have financial assets totaling at least $75,000 (excluding your home or your car);
  • Have or will have an annual retirement income of $25,000 to $35,000 for an individual or $35,000 to $50,000 for a couple;
  • Are able to pay the insurance premiums without financial difficulty; and
  • Want to leave an inheritance to family members.

Consult with a trusted insurance agent to find out whether long-term care insurance is right for you and your situation. Also, reach out to friends and family who have bought long-term care insurance to learn about their experiences. Find out what their situation was and what type of coverage they purchased.

Don't put off planning for long-term care because you think, or hope, you won't need it. Make decisions and arrangements now and live your life with the peace of mind that things are taken care of.