According to the Census Bureau, the number of Americans age 85 and older is expected to more than triple over the next quarter-century, resulting in a significant increase in the need for long-term care.
Assisting an older person with activities of daily living (ADLs), such as grocery shopping, meal preparation, dressing, and toileting, is a crucial aspect of long-term care. According to the United States Department of Health and Human Services, up to seven out of ten older adults will require some form of help.
According to Jesse Slome, executive director of the American Association for Long-Term Care Insurance, “the chances of needing long-term care are increasingly high” the longer one lives. Depending on the situation, this support can range from a few hours of unpaid family caregiving to several thousand dollars per month for nursing home care.
Experts advise that to be prepared for old age, you should first determine how likely you are to need long-term care, then consider your options. However, polls reveal that many Americans aren’t. According to a survey conducted by KFF, a nonprofit health policy organization, fewer than half of respondents have had a meaningful conversation with a loved one about their healthcare preferences and financial arrangements if they require assistance with daily tasks or other medical care.
What is the actual number of people in need of long-term care?
Despite the plethora of media coverage about an impending long-term care disaster, most people continue to underestimate their personal likelihood of requiring significant care in old age.
According to a recent study conducted by the Center for Retirement Research at Boston College, while many older people may manage with occasional assistance, 52% of adults aged 65 and older would face “high-intensity” demands for several months or more. Those classified as having high-intensity needs either have dementia or require assistance with two or more everyday activities.
Education, color, and gender all influence the chance of requiring more intensive treatment. According to the study, a greater proportion of women (56% vs. 46%) will need more extensive, long-term care.
An older white person has a 50% chance of requiring high-intensity care, compared to 57% for black and Hispanic people and 50% for white older persons. College graduates are statistically less likely to need it than high school dropouts, regardless of race.
How can people afford long-term medical care?
According to the American Association of Retired Persons, 46% of people believed Medicare would pay for nursing home care if needed. According to experts, one of the most widespread misconceptions is that Medicare pays for long-term care.
According to a 2021 study by the Center for Retirement Research, the majority of long-term care is provided by family members without compensation. Family members provide 33% of the caring hours for people aged 65 and over, while spouses contribute 17%.
However, if you do need professional care, it might be costly. According to Genworth Financial, a long-term care insurance provider, the median annual cost of an in-home health aide will be more than $77,000 in 2024, while assisted living facilities would cost around $70,800. A private room in a nursing home can cost up to $127,750 per year, making it the most expensive option. (A semi-private room costs $111,325 per year and is slightly less pricey.)
Medicaid covers the majority of these expenses. However, only low-income retirees who have either spent down all of their assets or have none at all are eligible. According to the Center for Retirement Research, following Medicaid, 8% of long-term care costs were paid out of pocket, with insurance covering the remaining 4%. These figures are consistent with industry experience; according to LIMRA, just around 3% of people over 50 have long-term care insurance, and more than 25% of adults without independent long-term care insurance cite financial concerns as the primary reason.
Your age, gender, and current and previous health status will determine your long-term health insurance premium. Premiums, like other insurance products, are level-dependent. According to the Long-Term Care Insurance Association, the average annual premium for a 60-year-old male is $2,060, and for a 60-year-old female, it is $3,325. This assumes a $165,000 benefit level and 2% inflation protection. (Because women live longer, they are more likely to require long-term care, which explains why their costs are consistently greater.)
According to Dick Weber, a fee-only insurance advisor, “Sometimes, needing long-term care can be confused with needing long-term care insurance.” This was his previous remark to Money. While many people will eventually require such care, few opt to acquire long-term care insurance.
Webber recommends that people in their 50s start looking at insurance options if they are thinking about buying coverage. Premiums frequently rise after the age of 65, as does the incidence of denial.
