Let’s face it: Deciding who’s going to change your clothes and feed you when you no longer can is not something any of us want to think about. But planning for your long-term care is a more important retirement decision than choosing between the condo by the beach or the one on the slopes.

Long-term care is not an attractive subject. People too often neglect to plan for a time when they may not be able to take care of themselves. But long-term care is an essential element of retirement planning. Failing to make these decisions now can wipe out a lot of your assets later.

Here's a guide to deciding whether long-term-care insurance is for you — and, if it is, what to look for.
Click here for more information on long term care insurance and more

What is long-term-care insurance?
Long-term-care (LTC) policies can cover nursing home care or custodial care in your own home.

Do I need it?
Probably. Some 40 percent of Americans over age 65 will eventually need some kind of long-term care. That care might range from occasional help at home to 24-hour nursing-home care.

As Americans live longer, that need is likely to increase. The average age for needing long-term care is 84 for women and 81 for men.

You’re more likely to need care if:

• You’re a woman
• You have no relatives who would take care of you
• Your family members tend to live longer than average
• Your family has a history of serious or chronic health problems, such as stroke, Alzheimer’s or Parkinson’s disease.

Long-term care is expensive. Today, nursing-home care costs an average of $40,000 a year — much more than that in some parts of the country. The average nursing home stay is 2.5 years, but stays of up to 15 years are not unheard of.

The result: Long-term-care expenses can wipe out all but the most massive life savings.

How can I pay for long-term care?
Your health insurance does not cover the cost of long-term care. There are several options for paying, some better than others:

• Medicare. Medicare covers only two percent of U.S. nursing home expenses. Coverage is limited to short-term care in a nursing home or in your own home while you recover from an illness or injury.
• Medicaid. Medicaid pays the bills for half the nation’s nursing home residents. If you can’t afford your nursing home expenses, Medicaid will pick them up — at the facility of the state’s choice, not yours.

  If you do have assets, you’ll have to spend them before Medicaid kicks in. Don’t plan to artificially "spend down" by giving your assets to family members or setting up a trust to hold your property. That’s illegal. The state can — and does — try to collect the money it spent on your care from your estate after you die.

• Family. Family members provide at least 75 percent of long-term care. But do you want to place that burden on your children?
• Self insurance. If you have assets of $1 million or more, not counting the value of your house, you can probably cover long-term-care costs yourself.

  Long-term-care insurance is a product for the middle class. Low-income people can’t afford it. High-wealth people have assets to cover their LTC expenses.

  But remember: Whatever you pay for long-term-care expenses is a chunk of your estate that you can’t pass on to the next generation or to charity.

• LTC insurance. It’s no surprise, then, that LTC coverage is the fastest growing insurance in the country.

What should I look for in a policy?
Make sure your policy includes the right features and options. You’ll need:

• Guaranteed renewable. Makes sure the insurance company can’t cancel your policy if it finds out you’re in poor health.
• Benefit period. The number of years of coverage you’re buying. Statistically, five years will suffice: Fewer than 15 percent of nursing home residents stay more than five years, according to Business Week. But the best bet is to get the longest benefit period you can afford.
• Daily benefit. The number of dollars available per day. Most people try to cover 80 percent to 100 percent of the daily cost of long-term care. You can find out how much care costs in your area by asking your state insurance office.
• Elimination period. The number of days you’ll need to pay for your own care before your coverage kicks in. Most planners suggest 30 days. Make sure you have to meet the waiting period only once during your lifetime.
• Benefit triggers. The conditions that activate benefits. Your benefits should be triggered if you become mentally or physically impaired or need assistance with at least two activities of daily living. Get the maximum coverage.
• Inflation rider. Increases the benefit amount for inflation each year. If you buy when you’re 60 or younger, get the most generous rider you can afford. If you have to make tradeoffs, it’s better to have inflation coverage than a big daily benefit.
• Home health care coverage. Get the option of staying home to receive care, as well as being able to get all levels of care in a nursing home.
• Definition of nursing home care. Make sure you’re covered for skilled, intermediate, respite or custodial care.

How can I find an insurer I can count on?
Increase the chances that your insurer will be around when you need the benefits. Make sure the company you buy from has:

• Been in the LTC coverage business for more than 10 years
• Received a rating of A or higher from more than one rating service

What rating services should I contact?
Before you buy, request ratings on your policy from one or more of the following ratings services:

• A.M. Best
• Duff and Phelps Credit Rating Company
• Moody’s Investors Service
• Standard & Poor’s
• Weiss Ratings

How much will it cost?
From as little as $350 a year at age 55 to as much as $1,200 a year at age 65. Buy when you turn 60, and you could pay more than $25,000 before you need care. Then again, one year in a nursing home could cost almost twice that.

Focus on picking the best policy, not finding the cheapest insurance. You get what you pay for.

Ask about discounts. You might get up to 20 percent off when you and your spouse buy policies at the same time. And you might get as much as a 20 percent discount if you’re in exceptionally good health.

Can I deduct my premiums?
Long-term-care policies are tax-deductible both coming and going:

• You can add your LTC premiums, up to a limit determined by your age, to your medical expenses if you itemize. If your medical expenses are higher than 7.5 percent of your adjusted gross income, you can deduct your premiums.
• Reimbursements from a qualified policy are not taxable income, so you don’t pay taxes on your benefits.

Unfortunately, lawmakers are looking at this now. So you can’t count on it forever. But for the time being, the double tax deduction is one piece of good news about long-term-care policies.

To be deductible, your policy must:

• Be guaranteed renewable
• Not provide for a cash surrender value
• Provide that refunds and dividends are used only to reduce premiums or increase benefits
• Not pay items reimbursed under Medicare

When should I buy?
When you’re 55 to 65.

During that timeframe, you’ll get a policy before premiums reach astronomical levels. Plus, you’re less likely to be disqualified for chronic conditions like Parkinson’s or Alzheimer’s disease.

If those diseases run in your family, however, buy a policy as soon as possible.

The younger you are, the lower your annual premium. But LTC insurance is a relatively new product, and policies are improving every day. Buy too early, and you might get stuck with an obsolete policy.

You can’t start planning too early, though. Experts recommends that you start weighing your options when you turn 50.

For many of us, long-term care is a scary topic. You shouldn’t be scared into buying a policy. But you might need to be scared into addressing the issue.
Click here for more information on long term care insurance and more