The 2008 exclusion for per diem long term care (LTC) payments is $270 per day. This should cover most ongoing care expenses. You can read more about it here at the IRS website.
I have long term care insurance provided as an employment benefit.
It's fairly unusual for someone so young (usually people in their 50s get it), but as long as I could attach an annual increase rider to the policy, I felt the monthly premium would not be prohibitive.
Long Term Care Insurance does just that, it pays for your long term care should you be in a situation where you need long term care either in a nursing home or with help at home. Not all policies provide the same coverage at home and in a facility, so you should check to see what your options or policy says.
I look at it as a form of protection for disability insurance income. If I were disabled, I could easily spend much if not all of my disability income on care services and have little left over for my mortgage, etc....
PS Keep in mind that I'm not an accountant, but an investor and business person like many of you. Please consult your tax and insurance adviser before making any decisions on these topics.