{"id":56900,"date":"2025-08-20T22:54:33","date_gmt":"2025-08-20T22:54:33","guid":{"rendered":"https:\/\/prosfunds.com\/?p=56900"},"modified":"2025-08-20T22:54:37","modified_gmt":"2025-08-20T22:54:37","slug":"long-term-care-costs-more-than-many-think-and-no-medicare-wont-pay","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=56900","title":{"rendered":"Long-Term Care Costs More Than Many Think And, No, Medicare Won\u2019t Pay"},"content":{"rendered":"
\n

Three things are true about long-term care, though many Americans don\u2019t 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\u2019t pay for it.<\/p>\n

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.<\/p>\n

The Reality<\/h2>\n

Let\u2019s start with an analysis by Spencer Look and Jack VanDerhei of Morningstar\u2019s 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.<\/p>\n

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% to about one-quarter.<\/p>\n

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.<\/p>\n

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 trouble.<\/p>\n

Overall, this study found about 43% of Baby Boomers will need paid long-term care before they die. That\u2019s similar to a 2022 study by my Urban Institute colleague Rich Johnson.<\/p>\n

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 their lifetime costs will average about $240,000.<\/p>\n

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.<\/p>\n

The Expectation<\/h2>\n

That\u2019s a credible picture of reality. Here\u2019s what people think<\/em> their futures will look like.<\/p>\n

A survey by Bridget Bearden of the Employee Benefit Research Institute found that workers have a pretty good sense of their chances of needing paid long-term care. But they wildly underestimate what it will cost and have little understanding of who will pay for it or where to get it.<\/p>\n

EBRI surveyed about 2,400 workers between ages 20 and 70. About 40% thought they\u2019d need long-term care, close to expert projections. But one-third did not know what their chances were.<\/p>\n

Fewer than 30% even tried to estimate their expected costs of care. Nearly half figured their annual expenses would range between $11,000 and $50,000, well below reality.<\/p>\n

Who would pay the bill? More than four-in-ten thought it would be Medicare, and 29% said Medicaid. Less than one-third thought they\u2019d pay out-of-pocket for a loved one\u2019s care or the care recipient would pay.<\/p>\n

The reality: With some very narrow exceptions, Medicare generally does not pay for long term care at all. Medicaid does pay, but only if you are very poor and have a high level of need.<\/p>\n

The vast majority of middle-income people will pay out of retirement income, savings, or home equity. A few will have insurance. Some will go broke and become Medicaid-eligible, though federal funding for Medicaid is shrinking.<\/p>\n

Unprepared<\/h2>\n

Given the widespread public confusion about who pays for long-term care, it should be unsurprising that so many workers are unprepared. For instance, while about one-quarter said their employers offered a long-term care insurance benefit, only about 9 percent enrolled. The biggest impediment: premium prices.<\/p>\n

Oddly, about 40% said they purchased a long-term care insurance rider with their life insurance policies. But industry estimates only about one-quarter of life policies are sold with an LTC add-on.<\/p>\n

And it isn\u2019t just lack of resources. Nearly four-in-ten said they had little or no knowledge about where or how to get the services and supports their loved ones need.<\/p>\n

For all that discouraging news, there was one potentially important result of the EBRI study: Many workers favor a government solution to the LTC financing problem.<\/p>\n

About 27% preferred a state-based solution, while about 20% felt the federal government was best positioned to provide long-term care insurance. And by 58% to 42%, they preferred a catastrophic benefit, such as the WISH Act, to a front-end version.<\/p>\n

Only 11 percent thought private insurance is the best alternative.<\/p>\n

Almost two-thirds say they\u2019d pay higher state payroll taxes to fund a public program, 57% said they\u2019d pay higher Medicare taxes, and 55% would pay more Social Security taxes. Fewer than half say they\u2019d rather buy a policy on the insurance market.<\/p>\n

These two valuable studies paint a complex picture: The public remains dangerously il-informed about long-term care and how to pay for it,but seems open to a public insurance program even if they have to pay more taxes to fund it. Lawmakers should take note.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Three things are true about long-term care, though many Americans don\u2019t 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\u2019t pay for it. Two recent studies help explain how Americans think about the financial aspects of their […]<\/p>\n","protected":false},"author":1,"featured_media":56901,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[24],"tags":[],"class_list":{"0":"post-56900","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance"},"yoast_head":"\nLong-Term Care Costs More Than Many Think And, No, Medicare Won\u2019t Pay | Prosfunds<\/title>\n<meta name=\"description\" content=\"Three things are true about long-term care, though many Americans don\u2019t want to believe it: You are very likely to need it in old age. 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