While some baby boomers may never enter a nursing home, many are expected to need some form of care as they grow old.

That’s why boomers are being encouraged to consider long-term care insurance as part of their retirement planning, particularly in the event a chronic illness makes them incapable of caring for themselves. The most important step is determining how much coverage is needed – if any.

The issue is taking on increased importance because growing old is pricey. The average national cost in 2007 for a single year in a private nursing home room is $74,806, a 15% increase since 2004, according to a new study by Genworth Financial. That’s 28 percent more than the average 401(k) account balance of $58,328. It’s also nearly double the average amount of $51,184 needed for tuition, room and board to attain a four-year college degree.

Many Americans are ill-prepared to pay for long-term care, according to a poll by Genworth. Three-quarters of Americans have made no long-term care plans, and 59 percent are worried about how they would pay for such care, Genworth found.

Consumer Reports, which rates long-term care insurance providers and has published a list of shopping guidelines, advises that most individuals consider buying a policy around age 65. That’s because purchasing insurance in your 40s may make the coverage useless if new health care systems emerge that are not covered. Consider that it wasn’t long ago that assisted living facilities were considered new systems and not covered.  

If however, you have a chronic condition such as diabetes, you may want to look into long-term care insurance much earlier than 65, Consumer Reports said. But overall, there’s no hard-and-fast rule about the best time to buy insurance. When in doubt, consider talking with a financial planner or an insurance broker.

Here are some key issues to keep in mind:

Ratings: Make sure you’re purchasing a policy from a reputable provider. Since you’re buying a policy for use in 20 years, for example, it’s best to deal with well-rated, experienced insurance providers that are more likely to keep rates stable and honor claims when the time comes.  Check Web sites such as Standard & Poor's, A.M. Best Co. and Moody's for ratings

Factor in future costs: Consumer Reports advises calling several nursing homes in your area to make sure the benefit amount will cover their charges. It’s important to be sure the daily benefit increases along with the price of care. The best available option pays 5 percent a year compounded, according to Consumer Reports. Overall, premiums tend to rise as you age.

Remember to weigh not just how much you can pay for premiums, but also how long you could pay for your own care. Most carriers offer a choice of deductible ranging from zero to 100 days. A 30-day elimination period, for example, means that your policy will begin to pay benefits starting on the 31st day. The longer the elimination or deductible period, the lower the premium.  However, you could face higher-out-of-pocket costs, warns America’s Health Insurance Plans, an industry trade group, in its long-term care insurance guide. The association cites the following example: if have a policy with a 100-day waiting period and you go to a nursing home for a year, you must pay for 100 days of care. If your stay costs $150 a day, your total cost would be $15,000. With a 30-day elimination period, your cost would be only $4,500. 

Don’t forget to ask providers about marital and good health discounts, too, said Rebecca Brumbaugh, a long-term care specialist in Novato, Calif.  

Premiums for tax-qualified long-term care plans, as well as out-of-pocket expenses, may be applied toward the federal tax codes’ 7.5 percent floor for medical expense deductions. But there are limits, based on a policyholder’s age, so as always, talk to a tax professional. More information can be found on the America’s Health Insurance Plans’ website, which offers a long-term care insurance policy checklist with pointers to review before purchasing a policy.