While most baby boomers understand their chances of needing long-term care are significant, they badly - dangerously - underestimate the cost of that care. 

Many adults have no clue about the price of nursing home care, annual out-of-pocket costs paid for long-term care (LTC) services and the limitations of Medicare. Others don't know that you should consider buying the insurance while still healthy and working.

"Many people still believe you look into long-term care insurance when you're retiring," said Suzanne Schneider, a long-term care insurance agent in Fairfax, Calif.

A study by the John Hancock Life Insurance Co. found most Americans lack basic information necessary to secure good care, if the need arises. A majority of 959 respondents, who were aged 21-75, failed a 14-question quiz on LTC basics, highlighting the need for better planning.

The survey is part of a national educational effort launched by the company ahead of Long-Term Care Awareness Week, slated for Nov. 4 to 10. The campaign includes videos, prepared in conjunction with Kiplinger, that address financial challenges associated with long-term care planning in an aging population.

By 2020 there will be over 50 million Americans ages 65 and above, according to Mathew Greenwald, chief executive officer of Mathew Greenwald & Associates, a Washington firm specializing in retirement issues. It's estimated that more than six in 10 Americans over 64 will need some form of long-term care. 

That's why it's smart for boomers to plan for long-term care well before retirement while they are still in good health. The most important step is determining how much coverage might be needed. When in doubt, consider talking with a financial planner or an insurance broker.

Long-term care is intended to provide assistance to adults with chronic illnesses and mental or physical disabilities, either in a nursing facility and at home. This kind of help doesn't come cheap, but may be required for performing daily activities such as bathing, meal preparation or physical therapy. The average national cost in 2007 for a single year in a private nursing home room is $74,806, which is up 15 percent from 2004. 

However, Schneider said "people all have different experiences with long-term care."

"A lot of long-term care situations, and the expense, vary widely," he said.

Dispelling Myths
Clearing up cost misconceptions is one part of the educational effort. The insurance provider found :

• Seven in 10 think the average cost of nursing-home care is $30,000, which is less than half the national average. 
• Four in five believe fewer than 8 million Americans are receiving paid long-term care services. Actually, 12 million are.
• About two-thirds of respondents were unaware that 40 percent of those receiving long-term care are under age 65. 
• About 40 percent believe Medicare covers the cost of nursing-home care for Alzheimer's disease patients. It does not.

Schneider added that it's important to apply for coverage when you're in good health because down the road, the presence of certain health conditions may preclude you from getting a policy. For example, insulin diabetics often have fewer insurance choices, she said. 

"People think long-term care means you go to a nursing home. That's not [necessarily] true," she said. "Long-term care is mostly for people who are at home with family members, friends and a community helping them. They are buying (coverage) for their families ..."

Schneider said boomers who have already purchased policies would be wise to revisit their coverage every three to five years to ensure the benefit is keeping up with inflation. Major illness is another trigger for re-evaluating coverage.