Long Term Care Self Insurance

Paying For Long Term Care Out Of Your Own Pocket

Whether people realize it or not, most of them are in fact self-insuring their long term care need if they have not yet purchased long term care insurance. But what does that really mean? Self insuring? It's simple, it just means that a person has personally assumed the liablity for any future care that may be required for their family. But how do you quantify that in terms of real dollars?

One way to do this is to estimate the cost of a typical long term care need today. For example, a semi-private room in a skilled nursing facility cost on average $76,000 per year, so an average term need of four years of care in a skilled nursing facility will therefore cost $304,000. This is the cost for the care of only one of the two spouses. No wonder financial advisors recommend that those who decide to self insure their long term care need set aside at least $500,000 that they don't need for either income or savings.

Even if you have enough money to comfortably self insure your long term care need, your should at least consider buying long term care insurance, no matter how much savings you have. The potential costs for extended care in a nursing home, in an assisted-living facility or in your own home can be so large that they could destroy your retirement savings, even if you start out with a substantial nest egg. This critical asset proection may even have a greater impact if your retirement savings have taken a beating over the past year or so.