Almost 70 percent of Americans over 65 will require some form of long-term care insurance to cover medical needs such as dementia or the inability to perform certain tasks. However, Medicare and other conventional insurance do not cover them. Therefore, individuals must explore other options, such as long-term care insurance.

Out-of-pocket medical expenses have become costly. For example, the median charge for a year’s stay in a semiprivate nursing home room is $94,900. On the other hand, a long-term care policy for a single man in good health costs about $2,100 a year for $165,000 in benefits. Women generally pay higher premiums than men, and married couples pay lower than single people.

Individuals can start claiming benefits when they can no longer perform two out of six activities of daily living without assistance (ADLs). ADLs include dressing, eating, bathing, getting on and off the toilet, handling elimination, and moving from a bed or chair to the floor. Determining when someone can’t do ADLs alone is up to a personal physician, nurse, or doctor from the insurance company.

Claiming benefits requires a waiting period. It ranges from 20 to 100 days; some policies shorten the “elimination period,” depending on its cost. During this time, the individual must pay all expenses. Most policies limit the per-day benefit, and all have a lifetime cap.

In addition to protecting savings, long-term care insurance offers policyholders more choices in terms of care. Premiums are also tax deductible. In contrast, people relying on Medicaid can generally only go to nursing homes covered by their state’s plan.