Question: My husband and I have been considering the purchase of long-term care insurance, but have become very confused about the amount of coverage to buy and the length of coverage. We are both in our early sixties. Can you shed some light on what we have found to be a very complicated decision?

Answer: The purchase of the right long-term care insurance policy is essential. After you have determined that you can afford the coverage, have chosen a financially stable company, and have satisfied yourself with the policy definitions that entitle you to begin coverage, your next decisions deal with the amount of coverage - the "benefit amount" -- and for how long you want to be covered - the "benefit period" or "term."

Statistics tell us that nearly 45% of people over age 65 will need some nursing home care during their lives and, if these, more than half will remain in a facility for at least a year and nearly one-fourth will stay at least five years. As you age, there is a greater chance that one of you will need nursing home care.

The benefit amount should be based not only upon the cost of nursing home and home health care in your locale, but also the monthly amount -- if any -- you feel you will be able to afford should one of you enter need long-term care. Generally, nursing home beds range from $100 to $300 per day throughout the country. So if you think you can afford to pay $50 per day out of your pocket to pay for care and want the long-term care policy to supplement that amount, you might consider reducing your benefit amount by $50 per day. In this way, you can reduce your premium. You can also reduce your premium by increasing the period of time between the time you qualify for payment and the insurance company begins payment. Increasing this "elimination period" is much like increasing the deductible on your automobile insurance: The longer you wait to collect, the less your premium will be. But remember that during the elimination period, you will probably be paying for your care out of your pocket, so don't be pennywise and pound foolish and purchase less than you might need to save a few dollars now.

The policy benefit period can range from one year to your lifetime and, if course, the shorter the benefit period, the less premium you will pay. If you can afford to purchase the coverage, we think the lifetime benefit is the safest buy; however, in any event, we don't suggest that you take less than three years which is the present look-back period for Medicaid qualification.

You should make sure that the policy you choose provides the same benefit amounts and coverage period for nursing home and home health care needs. Some policies contain flexible benefits or "sharing" provisions which allow you to apply unused nursing home daily benefits to other covered services. For example, if you have a three year benefit period which provides a daily nursing home benefit of $125 and you only use $100 per day, some companies will allow you to use the unused portion of the benefit toward other services until the total to which you are entitled under the policy has been spent.

There are many other facets of long-term care insurance that should be addressed before you purchase, some of which will be covered in subsequent columns.

Question: My husband was a veteran of World War II and for the last five or six years, has been treated at the Veterans Administration hospital near us his health problems. He has now been diagnosed with dementia, and the VA doctor tells me that he will probably need a nursing home within the next year. Because we always counted on the VA, we made no plans for paying for this type of care. We can't seem to get a straight answer from the hospital about what the VA will cover, and I am concerned because other than his retirement and Social Security, we have nothing.

Answer: While the Veterans Administration provides some health-related benefits for veterans, generally, VA does not cover long-term care expenses. Although the VA may provide custodial care within limits on a space available basis for "combat related" injuries, you can't count on VA to provide what your husband will need. We suggest that you contact your local VA office to see what may be available for your husband, but also check out Medicaid in your state because we have a feeling that will be your funding source.