​According to the U.S. Department of Health and Human Services, most seniors will require long-term care at some point in their lives. The department estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care at some point.1 As you might guess, long-term care can be costly and financially challenging. Without a plan in place, you could struggle to pay for the care you need.
 
Long-term care insurance is one tool you may want to consider to minimize the financial impact. You pay premiums to an insurer. Then, when you need care in the future, the insurer pays some or all of your long-term care costs. Policies can vary greatly in terms of cost and coverage. You may find the options overwhelming.
 
If you understand the parts of long-term care insurance, however, you can better analyze your choices. Below are descriptions of a few key components of every long-term care policy. A financial professional can also help you find the right policy for you.

​What’s your plan to pay for health care in retirement? If you’re counting on Medicare to fund all of your expenses, you may want to reconsider. According to a study by Fidelity, the average married couple will pay $275,000 for out-of-pocket medical expenses in retirement. That figure doesn’t even include the cost of long-term care.1
 
Why do retirees pay so much for health care? There are two answers. One is the simple fact that as you age you become more vulnerable to illness and injury. It’s common for seemingly small issues to balloon into larger medical challenges, especially in the later years of retirement.
 
The second reason for high out-of-pocket costs is that Medicare doesn’t cover everything. In fact, some medical services aren’t covered at all. Others are only partially covered. If you require treatment or service that isn’t covered by Medicare, you’ll have to foot the bill. You’ll also likely face premiums for your Medicare coverage, as well as deductibles, copays and other costs.

​According to the U.S. Department of Health and Human Services, today’s 65-year-olds have a 70 percent chance of needing long-term care at some point in their lives.1 Long-term care is extended assistance with basic daily living activities such as bathing, eating, dressing, mobility and more.
 
Long-term care is usually provided either in a facility or in the home. As you might expect, this kind of care can be expensive. A recent Genworth study found that the average monthly cost of an extended living facility was $3,750. A full-time home health aide cost more than $4,000 per month.2
 
Many seniors need long-term care for several months or even years. The cost can add up over time and quickly deplete your retirement assets. Fortunately, there are tools you can use to cover the cost.
 
One popular strategy is to use long-term care insurance. You pay premiums today, and the insurer pays for some or all of your long-term care costs in the future. Many long-term care policies cover care provided in either a home or a facility. 

Approaching retirement? If so, you may be surprised to learn that one of your biggest expenses could be health care. Many retirees assume that Medicare will cover most of their medical expenses. While Medicare is a valuable program, it doesn’t cover everything. According to a recent study from Fidelity, the average married couple will pay $275,000 for out-of-pocket health care costs in retirement.1
 
Those out-of-pocket costs include a number of different expenses, such as premiums, deductibles, copays and more. You also may face significant costs for long-term care, which is not reflected in the Fidelity estimate. As you get older, you may become more vulnerable to illness and injury. It’s possible that health care and long-term care costs could deplete your assets.
 
The good news is there are steps you can take to limit the impact of health care costs on your retirement. Below are three tips you may want to consider as part of your health care funding strategy. If you haven’t yet developed a plan, now may be the time to do so.

​If you’re approaching retirement, it’s likely that you’ll have to plan for a long-term care need at some point in your lifetime. According to the U.S. Department of Health and Human Services, today’s 65-year-olds have a 70 percent chance of needing long-term care.1
 
Long-term care is extended assistance with basic daily living activities such as mobility and bathing. It’s often provided in a facility, but it can also be offered in the home via a private nurse or home health aide.
 
Regardless of where care is provided, it’s usually a costly service. According to a 2017 Genworth study, the average cost of a room in an assisted living facility is $3,750 per month. In-home care may actually be more expensive. The average monthly cost of a full-time home health aide is more than $4,000 per month.2 If long-term care is needed over many months or several years, it can become a sizable drain on one’s retirement assets.
 
Unfortunately, long-term care usually isn’t covered by Medicare. It’s true that Medicare Part A covers skilled nursing care and nursing home care. However, those services are only covered temporarily and only if the care is related to a specific ailment that was treated in a hospital. Medicare doesn’t cover long-term assistance services.

​Will you be prepared if your ability to care for yourself diminishes? The prospect of long-term care is an important consideration for anyone planning an upcoming retirement.
 
There are many reasons long-term care becomes necessary. Illness, restricted mobility, cognitive decline and increased risk of injury are common challenges that come with aging and can make daily functioning difficult.
 
When it becomes a struggle to complete basic activities of daily living, such as preparing meals, bathing or getting dressed, you’ll need ongoing assistance that could have considerable cost. If you haven’t planned ahead for this possibility, it could result in severe financial strain or an inability to acquire the level of care you’d prefer.

​As you might imagine, those costs can add up. Without a plan in place, you could drain your retirement assets paying for in-home care, assisted living, nursing home care and more. If you don’t have assets to pay for care, you may have to settle for a level of care that doesn’t meet your standards. And if you have a healthy surviving spouse, he or she may be left with few assets after you pass away.
 
If you are approaching retirement or in the early years of retirement, now may be the time to develop a long-term care funding strategy. If you wait until you actually need care to address the issue, you may find that you have few feasible options available.