Insurers are ramping up efforts to sell long-term-care insurance, offering new products and forging alliances with employers to make the policies more widely available in the workplace.

Congress helped boost those efforts last week when it passed new rules that tighten eligibility for Medicaid coverage of nursing-home costs. That means more middle-class Americans will likely be on their own later in life when it comes to paying for long-term-care needs, which can run into the tens of thousands of dollars for even a relatively short period.

Insurers are hoping to ignite consumer interest with a slew of new products. Genworth Financial Inc. is planning to launch a new "combination" product that marries a long-term-care contract with an annuity. That aims to address a key consumer grievance: If they never need long-term-care coverage, they have nothing to show for their premiums. With the combination contract, money not used for long-term care is paid out as part of the annuity distribution.

Prudential Financial Inc. plans to offer employers long-term-care policies in the middle of next year that allow workers to change how they're reimbursed from month to month to better match the long-term-care costs they accumulate. Mutual of Omaha Insurance Co. -- hoping to address two of the biggest hurdles consumers face with long-term-care insurance: cost and complexity -- says it will cut rates by 15 percent on some shorter-term policies, pushing prices for some contracts below $1,000 a year. The Nebraska-based insurer also plans to introduce a "shared care" feature that will allow couples to piggyback off each other's policy should either run out of benefits on their own.

Employers, meanwhile, are increasingly offering long-term-care insurance to their workers as an employee benefit. A few years ago, the U.S. government began offering federal employees the option of buying the policies through payroll deductions. General Electric Co. offers the same option to its employees. Early next year, Genworth Financial Inc. plans to begin aggressively marketing long-term-care policies to groups of workers through employers, much like the way group-life insurance has typically been sold. Genworth itself offers a base amount of long-term-care coverage to its employees for free.

These initiatives come as the costs of long-term care -- which include nursing-home and assisted-living-center bills and the price of home health care -- are increasing at a rate nearly double that of overall inflation. The average cost for one year in a nursing home is nearly $70,000, while the average hourly rate for a home-health aide tops $18 an hour, equivalent to more than $37,000 a year. Those costs are sharply higher in major metropolitan areas. Traditional health insurance and Medicare generally do not cover these expenses.

Nearly half of all Americans will need long-term care at some point, according to the American Health Care Association, though how long they'll need it for will vary. Depending upon how you measure it, the average stay in a nursing home ranges from less than one year to about 2 1/2 years. Still, long-term-care needs can extend well beyond a nursing home and into one's own home, lasting for several years.

Those without the assets to afford expensive care often resort to a ploy known as "Medicaid planning," which involves transferring their assets to other family members to make themselves appear impoverished and thereby eligible for Medicaid, even if they aren't.

The insurance industry has had a tough time selling long-term-care policies, which were first marketed only a few decades ago, because of widespread concern that coverage becomes worthless if it is never used. (Policies can cost several thousands of dollars per year, depending on age and other factors.) Last year, the industry sold just 326,000 new policies worth less than $700 million, down 25 percent from the previous year.

Yet insurers are betting that baby boomers will increasingly gravitate toward these policies, because many are now watching their own parents deal with long-term-care headaches. Already, the average age of a policyholder has fallen into the 50s from the high 60s and 70s last decade, according to insurers.

At the same time they tightened eligibility rules, lawmakers also approved expanding a limited pilot program that allows long-term-care policyholders to protect their assets yet still be eligible one day for Medicaid, which typically requires that retirees impoverish themselves before being eligible for assistance. Congress has approved a national rollout of the program, which is currently in just four states.

Under the measure approved by Congress, consumers who purchase, say, $250,000 in long-term-care benefits could shelter up to $250,000 in assets and still be entitled to receive Medicaid if their insurance benefits run out.

"This means a whole new way of marketing to people that will allow them to think about long-term-care insurance as a real component of financial planning," says Laura Moore, a senior vice president at John Hancock, a unit of Canada's Manulife Financial Corp. Hancock recently began rolling out nationally a group-based long-term-care plan for employers with as few as 50 workers, substantially smaller than its current employer-plan client.

But just because long-term-care insurance is becoming more visible doesn't mean the policies are right for all individuals. The rich generally don't need it, and the poor can't afford it. And premiums can be unpredictable, rising indiscriminately because the insurer did a poor job of pricing the policy originally, or overestimated how many policyholders would drop coverage before filing for claims. Some policyholders in recent years have seen their premiums surge, forcing them to drop their coverage and lose access to benefits as well as the premiums they'd already paid.

Furthermore, many individuals already have a potential alternative to long-term care insurance: a cash-value life-insurance policy. Depending upon the value of the contract, you can tap that cash or borrow against the policy to afford what long-term-care insurance would otherwise cover, says Jim Hunt, a life-insurance actuary and Vermont's former insurance commissioner. "It's not the perfect hedge, but I suggest to people that it might be an alternative to long-term-care insurance."

Long-term-care insurance can be appropriate, however, for people who have a few hundred thousand to a couple of million dollars in assets, and whose family would face financial hardship if an extended need for assisted living whittled those assets to nothing.

Insurance executives expect that as a result of Congress's actions, 2006 could be the best sales year for long-term care policies since 2002, the year John Hancock, the Boston insurance firm, and Metropolitan Life Insurance Co. joined forces to create the group long-term care plan for federal employees. That year, the industry sold more than $1.2 billion in new policies.

Long-term-care insurance could benefit from another piece of legislation approved last week. Under a measure adopted by the House, but which lawmakers must address again early next year, consumers would get tax breaks when buying long-term-care policies with the cash accumulated in an annuity or life-insurance policy. As it stands now, cash withdrawn from an annuity or insurance contract is taxed as ordinary income.

Yet these combination contracts, insurance consultants say, are so complex that even they can't figure out if consumers are getting a square deal.

"It's hard enough to understand an annuity and a long-term care contract on a stand-alone basis," says Glenn Daily, a fee-only insurance consultant in New York. "Consumers can't make an informed decision on what they're buying if they can't understand the underlying components."

Paying for Care

Here are some long-term-care products that insurers plan to roll out over the next year:

"Shared care" features that will allow couples to piggyback off each other's policy should either run out of benefits.

"Combination contracts" that marry a long-term-care policy with an annuity -- meaning that money not used for long-term care will be paid out as part of the annuity.

Employer-sponsored policies that allow policyholders to change how they're reimbursed from month to month.

Long-Term-Care Insurance: The Basics

Here's what you need to know about long-term-care insurance before you plunk down a thousand dollars or more a year for a policy:

Premium stability: Unlike life insurance, long-term insurance premiums can rise unexpectedly. Look to buy from big, stable insurers that have high credit ratings. Their premiums may be higher to begin with, but they have a history of keeping premiums stable through the years.

Daily benefits: This represents how much the policy will cover in daily costs. You'll want to know what nursing-home, assisted-living and home- health-care rates are in your specific area.

Benefit period: How long do you want your policy to remain in effect? Some people aim for lifetime coverage; others choose a couple of years. The average nursing-home stay lasts from less than a year to about 2 1/2 years. Only a small percentage of people require nursing-home stays of five years or longer.

Elimination period: Many policies require you to pay for the first three months before the policy takes over. Shorten this period and your premiums go up.

Inflation protection: The annual costs of long-term care have risen at a rate nearly double the pace of inflation since 1990. You want to be certain that any policy you buy has built-in inflation protection.

Expense-incurred benefits: This is money paid to you directly, or to your care provider, to reimburse eligible costs up to the daily benefit maximum.

Indemnity benefits: This is essentially cash paid to you to cover your

costs, which don't always have to be eligible expenses. This type of benefit is generally more expensive.

Forfeiture benefits: Some insurers include this so that if you stop paying the premiums you remain eligible for at least a reduced level of benefits.