Long-term care: Investigate your options early

• Two-thirds of Americas over age 65 will need long-term care
• Most middle class Americans can%27t afford long-term care insurance
• Key to planning%3A %27Figuring out your budget and your biggest risks%27

Karen Thomas has learned the hard way about the harsh realities of long-term care.

Three years ago, her mother was diagnosed with Alzheimer's and the doctor said she could not return home. "I had never given it a thought that my mom one day would need long-term care," says Thomas, who lives in Atlanta. "I'm a professional business woman and yet I did not know where to begin. It was completely overwhelming."

Since then she has had to sort through the complicated and often expensive maze of long term care options for her mother. Thomas and her husband, Don, also realized that they should not put off planning for their own long term care.

Americans now put health problems it at the top of their retirement worries, says a recent Bank of America's Merrill Lynch Retirement Study. And yet it's not a subject that people spend much time thinking about.

"But if you've done no planning or thinking about it, the likelihood is that the decision will be made a crisis situation," says Sally Hurme, elder law attorney for AARP. And because middle class families face the biggest financial squeeze, they don't have as many options.

Although long-term care insurance could help protect their retirement nest eggs, it is typically more expensive than the middle class can afford. And they will not be qualified for Medicaid unless they impoverish themselves.

And even if they qualify for Medicaid, they can't always count on it. For example, Thomas' mother lived on limited means and could qualify, but when she needed Medicaid she was put on a waiting list.

While Karen's mother waited, the couple helped to pay for the Personal Care Home where she became a resident and received around the clock care. "But to fork out $1,000 extra every month was not in our budget," says Karen. "That took a big dent in our savings."

Karen, who was then the CFO of a large frozen food company, decided to change her career so that she would not have to work 70 hours a week or often travel out of town for business.

Now, because she is the CFO of a non-profit organization, she is able to stop by and see her mother every morning on her way to work. At her new job, she was instrumental in starting a long-term care insurance policy for the organization's employees.

"The circumstances that occurred in my life gave me the opportunity to make things better for my entire organization," she says. Now she and Don can pay a portion of the insurance premium, making it affordable.

Americans need to start planning for health care needs in retirement before it's too late. At least 70% of people who are over age 65 are going to need long-term care, research shows.

SAFEGUARDING YOUR RETIREMENT NEST EGG

Long-term care insurance is one of the few ways to protect retirement savings. But it's not cheap. The average insurance premium for those between age 55 and 64 was $2,261 a year for policies sold in 2010, according to a 2012 AARP report.

The price of long-term care premiums are not locked in, so the cost can increase over time, says Byron Udell, founder and president of AccuQuote. And people often don't like to buy a long-term care insurance policy because if they never need it, their money goes down the drain.

There is no cookie-cutter solution. "A lot of it comes down to figuring out your budget and your biggest risks," says Steve Sperka, Northwestern Mutual vice president of long-term care. If long-term care insurance seems too expensive, you can decide to only insure a portion of the risk. At least you would have some retirement security, he says.

The insurance industry also has begun to offer hybrid products that address some of the concerns. For example, some life insurance policies have a rider for long-term care insurance. If the policy holder never needs long-term care, the family receives the life insurance benefit.

SHOPPING FOR LONG-TERM CARE

Many people associate long-term care with nursing homes. They are extremely expensive because they provide 24-hour-care. Fortunately most people have short nursing home stays, because the average national cost for a private room in a nursing home is $83,950 per year, according to the Genworth 2013 Cost of Care Survey.

Home care is much less expensive, and most people would prefer to stay at home as long as possible. Family members are responsible for finding and paying for a caregiver to take their parent to a doctor's appointment or go shopping for groceries. They also may need a home health aide to help with bathing, dressing and making sure the elderly person is taking their medication.

Some family members contact a home care agency for help. It can make them feel more secure, because the agency has screened the caregiver and is liable for their acts, says Robyn Grant, the director of public policy and advocacy at the National Consumer Voice for Quality Long-term Care, which provides information about the types of services available.

There are also a number of websites that help families find reliable and affordable home care, such as CareFamily.com, Carelinx.com, and AARP Care Scout Service.

Because CareFamily.com is very tech-savvy and automated, its costs are much lower. Compared with agencies that on average charge $21 an hour, it charges about $14 an hour, with $12 of that going to the caregivers, says founder Tom Knox.

The service is particularly helpful to family members who live far away from their parents. CareFamily.com makes it easier to hire a caregiver, remotely provide lists of things to do and receive audio updates from the caregiver did during the day.

When Karen Thomas suddenly had to learn much about long-term care services, she decided to rely on a Personal Care Home for her mother. It provides a cozy home with supervision and assistance. But when the home closed and the owner moved away, Thomas was not successful in finding a similar place for her mother.

The Thomas' didn't give up. Instead, they decided to buy their own Personal Care Home. They hired a staff and manager. And since the doors opened last November it is filled to capacity with six residents. "We provide services that big assisted-living facilities offer and yet maintain the more affordable prices of a Personal Care Home," she says. "And it's wonderful to have my mother there."