Lots of people are tempted to ignore planning for their possible future health care needs. In this article, Laura Wood tells why this is a bum idea.

As our population ages, more and more people are confronting the fact that they or their loved ones may someday need long-term care for conditions such as arthritis, dementia or Alzheimer’s disease.

Nobody loves this topic, but I believe it is one of the most important and overlooked areas of planning today. Getting this right – or getting it wrong – could make a huge difference in your family’s future standard of living.

The bad news: One of every five people age 65 or older will require some level of long-term care in the future. For those who live to 85, the chances jump to about 50/50. Some people assume Medicare or Medicaid will pick up the tabs. But in reality, very few people qualify.

I can also tell you that Medicaid facilities are not the most pleasant places to spend several years. In the case of Medicare, even those who qualify never receive coverage for more than 100 days, even though the average need lasts more than four years.

The average cost per-year in an assisted living facility is now $35,600; full care costs roughly twice that much. Costs are rising faster than inflation.

The good news: Individuals who plan now will be more likely to get good quality long-term care later if they need it. Long-term care insurance policies can protect people from using up all their assets or becoming dependent on family members. As a rule of thumb, individuals with more than $2 million in assets can self-insure if they are willing to face the prospects of having high costs erode their nest egg. Those with fewer assets should consider long-term-care insurance to preserve their options and future independence.

Buying long-term care insurance isn’t simple. Policies often come with a dizzying array of choices and optional riders. Three worthwhile features include a level premium, inflation protection and comprehensive coverage that allows for all levels of care including home health care.

Premiums vary depending on the maximum payment for daily care, the waiting period and the length of benefits. Some policies reimburse your costs up to a prescribed daily limit. Other (more expensive) policies pay a daily amount and let you spend it as you see fit. Pay attention to just what is covered: assisted living, home health care or some combination of the two.

If you’re shopping for a policy, try to get one that pays for at least four years of care. And make sure your own savings will cover the waiting period.

To fully understand your options, you may want to get some help from an independent agent or other source. This is not a fun task, but its difficulty pales in comparison with the hassle of needing care and discovering you don’t have the coverage that you thought you did.

Laura Wood is a financial advisor representative at Merriman Berkman Next.