Image source: Flickr user Garry Knight.

Retirement brings on a whole new set of financial question marks, especially when it comes to paying for healthcare-related expenses such as long-term care. Long-term care can cost retirees tens of thousands of dollars per year, and if your plan to pay for it includes relying on health insurance, you might be in for a surprise because Medicare, Medigap, and private health insurance typically won't foot the bill.

Debunking the Medicare myth
Medicare is great because it can significantly lower your healthcare expenses in retirement. Medicare Part A provides coverage for costs associated with hospital inpatient care and Medicare Part B provides coverage for doctor visits, but neither Part A or Part B typically pays for long-term care.

Medicare will pay for a short stay in a skilled nursing facility and it will also cover some home healthcare expenses, but it will only do so if that care is required after an illness of injury that has kept you in a hospital for three days or more and only if you're admitted to a facility for that care within 30 days of your prior hospital stay. Additionally, Medicare won't cover the cost of normal daily activities, such as bathing, which can account for the lion's share of long-term care costs.

Filling the gaps won't help
If you sign up for Medigap insurance that helps pay for some healthcare costs that Medicare doesn't cover or if you choose to get private health insurance, such as a Medicare Advantage plan, you'll still be out of luck when it comes time to pay for long-term care.

Medigap plans can pay co-payments, co-insurance, and deductible costs that Medicare doesn't pay for, including the Part A hospital deductible and the 20% co-insurance for doctor visits covered under part B. However, Medigap plans typically don't cover the costs that are associated with long-term care (they also don't pay for vision, dental, or hearing aids).

Similarly, Medicare Advantage plans, which can sometimes offer somewhat more comprehensive coverage than traditional Medicare, don't usually pay for long-term care, either.

Why it matters
Long-term care could be one of the biggest expenses you face in retirement, and although many retirees might think that they won't need it, it's historically common for seniors to need long-term care at some point in their lifetime.

According to the U.S. Government's Administration on Aging, a person turning 65 years old today has an almost 70% chance of needing some type of long-term care before they die, and on average, the amount of time that a man or woman will need to spend in long-term care is 2.2 years and 3.7 years, respectively.

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There are many reasons why a retiree may end up needing long-term care, including cancer or a serious injury, but Alzheimer's disease is the most common reason. According to the Alzheimer's Association, one in nine people over age 65 and nearly one in three people over age 85 has Alzheimer's disease. Sadly, because there's no cure for Alzheimer's disease, most patients won't be able to continue to live independently.

Of course, not all long-term care is performed in a facility, but when it is, the costs can be enormous. For example, a private room in a nursing home cost nearly $7,000 per month and the cost of care in an assisted living facility ran about $3,300 per month in 2010.

Considering options
If you're concerned about the potential expenses associated with long-term care, one of the best things you can do is to plan ahead for them. That planning can include earmarking savings to be used to cover these expenses or buying long-term care insurance. Planning may also include an open and honest discussion of your wishes with your loved ones, including your health proxy.

Medicaid may also be an option for some seniors, but only if your income is below certain levels and you meet individual states' requirements, which generally include strict limits on assets, including savings.

Finally, you may also want to investigate life insurance options, such as accelerated death benefits, which can be used to pay for long-term care costs.