long-term care insurance
Insurance covering the costs of extended care services — such as nursing home, assisted living, or home health aides — not covered by regular health insurance or Medicare.
Example
“Without long-term care insurance, a nursing home stay averaging $9,000 per month would quickly deplete retirement savings.”
Memory Tip
LONG-TERM CARE insurance = pays for nursing homes and home aides. Medicare doesn't cover this.
Why It Matters
Long-term care insurance matters because the cost of extended care can deplete your savings quickly, potentially leaving little for heirs or other financial goals. Without this coverage, you or your family may face difficult choices between paying out-of-pocket for care or relying on government programs that have strict eligibility requirements.
Common Misconception
Many people mistakenly believe that Medicare or regular health insurance will cover nursing home stays or in-home care services. In reality, Medicare only covers limited skilled nursing care for short periods, leaving families responsible for the majority of long-term care expenses.
In Practice
A 65-year-old woman purchases long-term care insurance for $2,500 per year and later requires three years in an assisted living facility costing $60,000 annually. Her insurance policy covers $50,000 per year, meaning she only pays $10,000 annually out-of-pocket instead of the full $60,000, saving her $150,000 over the three-year period.
Etymology
LONG-TERM (extended duration) CARE (health services) INSURANCE. Coverage for LONG periods of CARE needs.
Common Misspellings
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