Many Buying Insurance for Long-Term Nursing Care : Elderly: Americans are planning ahead for financial security after retirement, when Medicare falls short.

Like other medical care, nursing home costs are steep. A year’s stay now averages about $30,000, reaching $80,000 in some places--a wallop on the wallet that could wipe out a lifetime of savings.

Fearing this, many people are buying insurance that will cover long-term nursing care, said Jan Walsh, a retirement planning expert at the College for Financial Planning in Denver, which offers training for financial advisers.

The poor qualify for Medicaid, a combination of federal and state benefits that pays for health care, Walsh said. And the federal Medicare program pays some medical bills for people over age 65 and others receiving Social Security benefits, she said.

But Medicare provides minimal coverage for what the government classifies as skilled care, such as that needed by someone recovering from surgery. It does not cover most custodial care, such as for stroke victims, Walsh said.

“Fortunately, more and more Americans are becoming aware of the risk long-term care expenses pose to their financial security in retirement,” she said.

It’s a predicament for increasing numbers of people.

“Americans are living longer, which means that with a current life expectancy of 20 years after age 65, we face increased odds of spending some time in a nursing home,” Walsh said.

That also increases the odds of depleting precious savings.

“Take a typical retired couple living in their own home with annual expenses of $35,000,” Walsh said. “If either spouse becomes ill and enters a nursing home for an extended period of time, their annual expenses will nearly double.”

Walsh says there are two ways to protect retirement savings from the potential bite of long-term care. “Either begin saving at an early age, not only for retirement but also for potential long-term care costs, or insure the risk,” she said.

Insurance companies began offering such coverage within the past 10 years and are finding a receptive market, Walsh said.

According to the Health Insurance Assn. of America, an industry group, there were 815,000 Americans in 1987 with long-term care health insurance policies. By December, 1991, that figure had tripled to more than 2.4 million policies.

The usual purchaser is an individual between 50 and 80 years old, Walsh said.

“A typical policy with a lifetime inflation hedge of 5% compounded would carry an annual premium of $852 for a 50-year-old,” she said, citing industry figures. “For somebody age 65, the premium would be $1,781, and for someone 79 years old, it would be $5,627.”

The annual costs for a base plan, without inflation protection, would be $477, $1,103 and $3,989 a year, respectively, Walsh said.

When considering a long-term care policy, Walsh suggests consumers consider these features:

* Whether premiums cease when the individual enters a nursing home.

* Levels of care covered, whether it’s for skilled, intermediate and custodial, as well as home health care.

* Daily benefits paid. The range is commonly $40 to $120 per day of nursing home care and half that for home care.

* How benefit eligibility is defined, whether for medical necessity or mental impairment.

* Maximum benefit period, generally five years to unlimited.

* Duration of the deductible, none to 100 days.

* Guaranteed renewable, a policy in force so long as the insured person pays the premium.

* Waiting period for a pre-existing condition. If that condition is the reason for needing nursing home care, the policyholder may have to wait up to six months before the coverage starts.

* Inflation protection built into the benefits.