Getting old is a depressing prospect for many Americans, particularly those who are destined to need extended nursing home care. It's OK if you're rich, and can afford $40,000 a year or more for the average nursing home stay. And there's a safety net if you're poor: Medicaid will pay long-term care costs if you have no money.
      But for the big group in the middle, people who have worked to save some money for their retirement or to give their children, the options are grim. It doesn't take long to wipe out a nest egg for round-the-clock care. And to take advantage of Medicaid, middle-class Americans must impoverish themselves by spending down to a small savings account. If they're lucky, they might be able to keep the house.
      The sorry state of long-term care is the dirty little secret of the U.S. health care system, otherwise touted by its supporters as the best in the world. But the system virtually ignores the fact that many families can't take care of their elderly at home, and expensive care (skilled, Intermediate, custodial, in home or facility) is the only option. The Medicaid system, never designed to take on the burden of America's frail elderly, isn't up to the task.
      In the 1980s, the insurance industry took a look at this scenario and saw a big, fat opportunity: Why not sell insurance that covers nursing-home care?
      The idea seems sensible: Buy the insurance when you're young to ensure you won't wipe out the family's finances when you're old. Unfortunately, those early policies weren't especially well designed for consumers, and many people who bought them got little in return. In recent years however, regulators and insurers have made big changes to long-term care insurance policies that now make them a much better deal.
      Still, this form of insurance isn’t for everybody. And it’s an extremely complex decision to make, in part because you’re gambling on the future. Will you need nursing care 20 years from now? (Of course, life insurance is also gamble, but the premiums are much cheaper.)
      So how do you figure out whether this is a good way to insure your future?
      For one thing, don't usually consider it unless you're at least 60 years old, counsels Bonnie Burns, education director for the California HICAP Association, a group of consumer counselors for the elderly.
      You'll also want to assess your own risk of ending up in a nursing home, or needing care and for how long. Women are more likely to need nursing care because they live longer than men. Based on the numbers, Consumer Reports calculates that the average person would want enough insurance to cover at least a four-year stay; 10 percent or more of the people will stay longer than that.
      The next question is ask yourself is whether you have assets to protect. There's no point in buying insurance if you have a moderate income or have little in savings, because you'll have nothing to lose and can simply turn to Medicaid for help in the event you'll need custodial care. Insurance is also probably unnecessary if you can afford to take about $160,000 or more and set it aside to cover a projected four-year stay in a nursing home.
      United Seniors Health Cooperative recommends insurance only if you have total assets of at least $75,000. You'll want to take a look at how much your state (or the state you'll retire in) allows you and your spouse to hold onto and still use Medicaid as you assess your need for coverage.
      If you decide to pursue insurance, calculate how much of a premium you can afford to get adequate coverage.
      Another important consideration is what types of benefits are covered by the policy. Burns recommends policies that will kick in early in a disability, and will cover home care, to help you get better before you end up in the nursing home. "You want a policy that pays for things that will assist you to stay in your home," she says.
      Be sure to check how an insurer will decide whether you are disabled enough to get benefits. In the long-term care world there are so-called “activities of daily living” (ADLs), such as eating or bathing without help. You want a policy that recognizes as many of them as possible, but requires only a couple of them to be impaired before paying out.
      You'll also hear a lot about whether a policy is "tax-qualified." This refers to whether you can take the premiums off on your taxes, along with other medical costs on the deduction page known as Schedule A. Of course, you can only deduct medical costs once they go above 7.5 percent of your income, so this may not be relevant for many people.
      When you're ready to start shopping to long-term care insurance, check whether your employer offers a group plan. You can also try an insurance broker who represents a number of different insurers, or better yet one that specializes in senior coverage. Be sure to compare the policies carefully. It's a good idea to seek out expert help when making this decision. Just be sure that whatever source you use is familiar with the laws and regulations in your state, because there are significant differences in the Medicaid systems and long-term care insurance rules among states.
      Here are some good sources for help:

Long Term Care Return