Long-term care is a vastly misunderstood part of the health-care world. Many people assume that Medicare, the federal program that provides health coverage for people who are 65 and older or disabled, also provides long-term care, but those benefits are limited, mainly to brief rehabilitation stays in nursing facilities. Here are the basics:

Question: What exactly is long-term-care insurance?

Answer: Long-term-care insurance typically provides custodial care needed when an elderly or disabled person becomes so frail that he or she needs help with two "activities of daily living," such as bathing or eating. Newer policies generally cover dementia care as well.

Q: How does it work?



Coverage periods typically range from two to six years. If you select $250 a day for three years, for example, you would have a "pool" of $273,750. If you used less than $250 a day, your benefits typically would stretch longer than three years.







Costs of care are climbing as well. But home care can cost much less than more-intensive institutional care, as long as you don't need round-the-clock assistance.

Q: What are the risks?

A: The biggest risk is that rates will go up beyond what you can pay. Although insurers can't raise rates on individuals, they can do so on a defined group of policyholders if they get state approval. So, it pays to look for insurers with strong financial statements who conduct significant business in your state.



Q: What are some alternatives?




Married couples with some savings might want to consider buying an immediate annuity that pays benefits for a set number of years to preserve savings for the "well" spouse while the other spouse gets care.


Q: Doesn't Medicare pay for long-term care?




Hospice care is covered as well, as long as you meet specific conditions. Medicare's consumer handbook, "Medicare & You," spells out what it does and doesn't cover (at medicare.gov).




Q: Where can I get help online?

A: Two insurers, Genworth Financial Inc. GNW +1.42% Genworth Financial Inc. Cl A U.S.: NYSE $15.36 +0.21 +1.42% Dec. 4, 2013 11:05 am Volume (Delayed 15m) : 2.49M P/E Ratio 14.46 Market Cap $7.48 Billion Dividend Yield N/A Rev. per Employee $1,540,480 11/07/13 Wealth Adviser: Clients Want I... More quote details and news » (Genworth.com/costofcare) and MetLife Inc. MET +0.56% MetLife Inc. U.S.: NYSE $51.63 +0.29 +0.56% Dec. 4, 2013 11:05 am Volume (Delayed 15m) : 1.52M P/E Ratio 23.06 Market Cap $57.56 Billion Dividend Yield 2.13% Rev. per Employee $1,107,310 11/08/13 Insurers in Talks to Settle Ne... 10/31/13 MetLife Not Ruling out Legal C... 10/30/13 MetLife Swings to Profit of $9... More quote details and news » (metlife.com) track future daily costs by metro area nationwide. Those studies can give you a sense of daily costs where you expect to retire or already live.

And the U.S. Department of Health and Human Services has extensive resources at longtermcare.gov.

Write to Kelly Greene at kelly.greene@wsj.com