Long-Term Care Costs More Than Americans Think And, No, Medicare Won’t Pay for It

by Howard Gleckman for his blog

Three things are true about long-term care, though many Americans don’t want to believe it: You are very likely to need it in old age. It will cost a lot more than you think. And, no, Medicare won’t pay for it.

Two recent studies help explain how Americans think about the financial aspects of their long-term care needs, and why they are so poorly prepared. But the results also may hold a key to future policy solutions to the challenges of funding personal care in old age.

The Reality

Let’s start with an analysis by Spencer Look and Jack VanDerhei of Morningstar’s Center for Retirement & Policy Studies. They looked at what long-term care is likely to cost the typical older adult and how the need for those services reduces the adequacy of their retirement savings.

The bottom line: If you need paid care, whether in a facility or at home, your likelihood of having sufficient retirement income falls from about 40 percent to about one-quarter.

Those at the highest risk: Single women, whose likelihood of running short of funds rises from about one-third to more than half; and Gen Z, whose chances of running out of money in old age will almost double if they have long-term care needs.

Two other results are very important, though unsurprising. The longer you live, the more likely you will need long-term care. And middle-income people, who are not poor enough to qualify for Medicaid but not wealthy enough to fund their care needs, are in big trouble.

Overall, this study found about 43 percent of Baby Boomers will need paid long-term care before they die. That’s similar to a 2022 study by my Urban Institute colleague Rich Johnson.

While about half of Baby Boomers will have no long-term care expenses, costs will be steep for those who do. Among Boomers who need care, EBRI projected the present value of the lifetime costs will average about $240,000.

The cost for a single male will approach $190,000. Care for a single woman, who likely will need help for much longer, will run nearly $250,000.

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