An important part of planning for long-term care is deciding how to pay for services. This is because long-term care is very expensive, and contrary to what many people believe, their Medicare coverage will not pay for most of the long-term care services they need. While some people may qualify for Medicaid – the major payer of long-term care services, most people won't. There are other federal public programs, such as the Older Americans Act, or state funded programs, that pay some long-term care services, but like Medicaid they target those people with the most functional and financial need. Consequently, if you are one of the 70% of people over the age of 65 who will need long-term care services – there's a very good chance you will have to pay for some or all of your long-term care services out of your personal income and resources.

Paying for long-term care out of your personal income and resources can be challenging. Even if you have a modest need for assistance at home with personal care, say a visit from a home health aide 3 times a week, based on 2008 average costs, you would have to pay about $18,000 a year for those services.

To make the best decisions about how to pay for long-term care you need to understand what services cost, what public programs you are eligible for and what they cover, what private financing options are available, and which ones work best for you.

The average costs in the United States (in 2008) are:

• $187/day for a semi-private room in a nursing home
• $209/day for a private room in a nursing home
• $3,008/month for care in an Assisted Living Facility (for a one-bedroom unit)
• $29/hour for a Home Health Aide
• $18/hour for a Homemaker services
• $59/day for care in an Adult Day Health Care Center