Long-term care policies preserve wealth: advisers recommend insurance policies, special savings plans to offsets costs.

When Leandra Ollie saw her sister rack up a $33,000 bill following a two-week hospital stay, she realized how the rising cost of healthcare could wreak havoc on household finances. "My sister was in her early 20s, still in grad school, and couldn't afford to pay the bill," she says. "As a result, I definitely know that if something happens to you suddenly, it can ruin any financial planning if you aren't covered."

A Harvard University study found that nearly half of all people who filed for bankruptcy in 2004 did so because of medical bills they couldn't pay. While health insurance is vital, it doesn't guarantee immunity from a medical-related financial crisis.

The challenge of paying medical debt is further complicated by the lag in wage increases as healthcare costs continue to rise, says Elise Gould, a health economist at the Economic Policy Institute. "For families barely making ends meet, unexpected healthcare costs of a few thousand dollars could put them over the edge," she says. Insurance premiums for employer-sponsored health plans increased 9.2% last year, while worker earnings went up only 2.8%.

To help cover unexpected medical costs, Ollie, 33, purchased long-term care insurance. For $88 a month, she's covered for extended hospital stays, nursing homes, assisted living, hospice, and home care visits.

Ollie, a federal government attorney who owns her home in Washington, D.C., asks, "What's the point of building assets and not protecting them?" She has about $55,000 in her thrift savings plan, a Roth IRA with $500, and mutual funds totaling $3,000.

Other strategies to cover healthcare costs include flexible spending and health savings accounts. Raphael Sebastian, vice president of the New York chapter of the National Association of African Americans in Human Resources, says such options aren't mandated by law and are offered at an employer's discretion. They can also be purchased from financial service firms.

Eric Bailey, a private wealth manager with Sagemark Consulting in Washington, D.C., says long-term care is a good strategy to protect assets but thinks Ollie may have purchased the coverage too soon. "Our analysis shows anyone under 50 in reasonable health doesn't need to spend the money," he says. "The real bump in medical costs doesn't happen until age 65." At that age, Ollie's monthly premiums could reach $200.

But Bailey says if Ollie took the difference of about $150 and invested it over a 15-year period, assuming a 7% rate of return, she'd yield $45,000--that would offset the additional cost of waiting. "There is an opportunity cost on the money that she's missing," he says. Ollie admits that Bailey's point about buying long-term care early in life has merit but says having the policy makes her rest easier. And in cases where medical problems run in the family, buying insurance early may actually save you money. "It's about peace of mind," Ollie says. "If something happens that requires long-term care, I'm already taken care of. There is no point in building wealth if you're not going to protect it."