Long term care is the type of care that you may need if you can no longer perform "activities of daily living" by yourself, such as eating, bathing or getting dressed. It also includes the kind of care you would need if you had a severe cognitive impairment like Alzheimer's disease. Care can be received in a variety of settings, including your own home, assisted living facilities, adult day care centers or hospice facilities.

Long term care can be covered completely or in part by long term care insurance. Most plans let you choose the amount of the coverage you want, as well as how and where you want to use your benefits. A comprehensive plan includes benefits for all levels of care, custodial to skilled.

In most cases, the cost of long term care is paid by you. Private health insurance may pay for some short-tem care in lieu of hospitalization. But it only covers nursing home services for a short recovery period.

Most people think that these expenses will be covered by Medicaid/Medicare. Unfortunately, Medicaid is designed to protect those with minimal assets. To qualify, many people "spend down" nearly all of their assets. In fact, because spouses have a legal responsibility to support each other, both must spend down their assets before an ill spouse may qualify for Medicaid benefits. Medicare only pays limited amounts for skilled care following a hospital stay. It does not cover purely custodial care, the type that's required by most people in nursing homes.