Buying your first house, sending the kids to college, funding your retirement — you’ve spent a lifetime saving for these important milestones. Don’t overlook long-term care. It’s the largest looming expense facing America’s 77 million baby boomers, according to the Long-Term Care Champions Network.

Climbing Costs

If you’re like many boomers, you’re healthy now, so you haven’t thought about your future care. The fact is, once you reach age 65, you have a 40% chance of entering a nursing home. And consider this: Just one year of care will cost you more than $50,000. 2 In some areas, that price doubles.

The good news is that many long-term care options exist to help you stay in your home and maintain your independence. But be prepared to pay an average of $12,000 a year for a home health aide to assist you 2 to 3 times a week with household chores.2 Costs will be more for visits from a skilled health-care practitioner, such as a therapist or nurse.

Footing the Bill

The price tag for long-term care may seem shocking. Even more surprising to retirees is that Medicare, private medical insurance or disability insurance doesn’t cover all long-term care costs. It’s your responsibility, and here’s the common ways seniors pay for care:

1. Out-of-pocket. Using life savings, retirement funds and other assets, 1 in 4 people pay for their nursing home costs out-of-pocket. 2 Generally, many retirees find it difficult to save the amount of money needed to pay for care, which may last several years. Most people would also rather pass these assets on to their family.
2. Medicaid. A federal-state program, Medicaid provides healthcare to the poor. It pays for long-term care, but only if your income and assets are less than $2,400. That means you must spend down your assets — including cash, savings, retirement funds and investments — to qualify.
3. Long-term care insurance. Private companies sell long-term care insurance that covers costs at home or in a skilled nursing facility. It helps protect your assets and gives you peace of mind that you’ll receive the care you need. However, make sure the premium payment fits into your budget — aim to get the most coverage for what you can afford.

It’s never too late (or too early) to get your long-term plan in order. If you have questions, talk to a family member or consult an advisor familiar with long-term care. Additionally, you can print a free copy of the Pennsylvania Insurance Department’s brochure An Overview of Long-Term Care Insurance from their Web site at www.insurance.state.pa.us.