HMOs and PPOs, move over -- the hottest phrase in the insurance industry these days is "long-term care" coverage.

In what experts say is a long-overdue development, private insurers are moving to fill the largest remaining hole in the health care system for the elderly: inadequate coverage for the often-catastrophic expenses of nursing home care.

More than 70 companies offer some sort of long-term care coverage, up from 16 just three years ago, according to a recent survey for the federal government. As of last April, the study found, about 423,000 people were covered by such policies, or twice the number experts believed were covered a year before.

For consumers, though, the emergence of the fledgling long-term care market can best be described as a mixed blessing.

No one can argue with the basic thrust of the insurance: to protect the elderly from draining away their life savings because of a long stay in a nursing home.

But coverage isn't cheap. Depending on the age at which you buy a policy, monthly premiums can cost as much as several hundred dollars. Some policies pay barely enough to cover even one-fourth of the cost of a day in many nursing homes. And many contain restrictive clauses that can dramatically reduce their usefulness when the time comes to draw benefits.

"The good policies are only affordable for a few people, not to the majority of people over 65," said Barry Wilson, vice president of the local Blue Cross and Blue Shield organization, which is planning to start selling its own long-term care policy next year. "The answer to theneeds of the majority of people for benefits of this sort hasn't been found yet."

One of the biggest stumbling blocks to affordable and useful long-term care insurance, experts say, is a lack of consumer awareness.

When the American Association of Retired Persons (AARP) asked members in a survey several years ago how they expected to pay for a stay in the nursing home, 79 percent of those who thought they might need such care wrongly assumed that the costs would be covered by Medicare, the federal health insurance program for the elderly and disabled.

In fact, Medicare picks up only a tiny fraction of nursing home costs and will continue to do so even after the expected expansion of the program to cover so-called "catastrophic" expenses. Medicaid, the federal-state program for the poor, does pay for such costs -- but only after thousands of middle-class people exhaust most of their assets in order to qualify.

"There is less than complete awareness by people that they are at risk," said Ronald Hagen, an official of the AARP.

With the average cost of nursing home care running at $29,000 a year, that lack of awareness can becostly, as Hagen knows firsthand. His 90-year-old uncle has been in a nursing

home in Rochester, N.Y., for 2 1/2 years, running through savings of $85,000. He is now on Medicaid.

"It is not unusual," said Hagen. "We see letters from people every day who have saved up $60,000 to $70,000 and seen it all vanish."

Each year, about 110,000 otherwise middle-class people are impoverished by their need to go into a nursing home, forced to "spend down" their assets to qualify for Medicaid, according to an aide to Sen. Barbara A. Mikulski (D-Md.). Medicaid administrator Lee Partridge said that in the District alone, almost 40 percent of the 3,317 Medicaid recipients in nursing homes last year fit into this category.

Clever lawyers have urged couples to juggle their assets to shield at least the spouse who stays out of the nursing home from bankruptcy. And a bill designed to help with the problem and being pushed by Mikulski is expected to pass Congress. The measure would make it easier for a spouse to keep some of a couple's assets even if one of them is forced to go on Medicaid.

Nevertheless, other than traditional saving mechanisms, retirement experts say there remains little that elderly couples can do to protect against a nursing home catastrophe except to consider one of the new long-term care policies, limited as they are.

Unlike most health insurance, most of these policies are sold on an individual basis rather than through employer groups. Annual premiums can range from $20 to $7,030, according to a recent General Accounting Office report, with costs varying because of age and the level of benefits.

In a typical example, a policy offered jointly by Prudential and AARP pays for $50 a day in nursing home costs, as well as a certain number of home visits by registered nurses or home aides. The benefits are paid after a waiting period of 90 days of either nursing home care or home health visits. Such a policy costs $18 a month for people who start buying coverage between the ages of 50 and 59, rising to $115 a month for those between 75 and 80.

"For someone who has assets to protect, who realizes that they may be at risk for lengthy institutionalization, who has a spouse to protect, it makes all the sense in the world to look at ... private insurance," Hagen said.

But Hagen and other officials said consumers have to tread very carefully when selecting a plan. Among the reasons:

Long-term care policies can pay from $10 to $120 a day in the nursing home, while the average cost of a day in a private nursing home is about $60 a day, although this care varies across the country. Thus, in many cases insurance policies will not cover all -- or even most -- of the cost of a person's stay in a nursing home. Complicating things is that few policies adjust benefits for inflation -- meaning that what may seem like a generous policy today may turn out to be meager in 10 or 20 years.

Many policies contain restrictive clauses that may make it difficult for policyholders to collect benefits. For instance, most policies surveyed by the GAO last year made payments for nursing home care contingent on some sort of prior hospitalization. This may make access to coverage difficult for someone with Alzheimer's disease or some other chronic condition for which nursing home treatment -- but not hospital care -- is needed.endqua