Few plan for long-term care though most will need it


Faculty Editor, Harvard Health Publishing

Two of every three Americans who reach age 65 will at some point need long-term care for up to three years. Yet the majority of those age 40 and older have done “little or no planning” for how they might pay for long-term care when they get older.

That’s a key finding from a new survey of 1,019 Americans over age 40 on the topic of long-term care. The survey was done by the Associated Press and NORC at the University of Chicago. Other interesting results:

  • Most people underestimate the cost of nursing home care (it averages $6,700 a month) and overestimate what Medicare will cover.
  • Few people are setting aside money for long-term care even as most worry about key issues of aging such as memory loss or being a burden to family members.
  • Many people support public policy options for financing long-term care, either through tax incentives to encourage saving for long-term care or a government-administered plan.

Mismatch between perception and reality

As a primary care doctor, I see my patients struggle with how the cost of age-related care affects their lives and their financial realities. Long-term care costs are huge. We can’t afford not to think about them.

The U.S. Census Bureau estimates that $217 billion will be spent in 2015 on nursing home and residential care. This includes assisted living facilities and board and care homes. Currently, about 25% of these costs are paid out-of-pocket by older adults and their families. Almost two-thirds of the cost is paid by Medicaid and Medicare combined.

Medicare only pays for short-term care—20 days in a nursing home—when illness causes disability. After that, patients or their families must meet these costs out-of-pocket. Most older adults with chronic needs then “spend down” their funds to pay for long-term care until the money runs out. At that point, at poverty level, Medicaid support may be available.

Start early

Without a crystal ball, it’s tricky to plan for the future. It’s easy to convince yourself that you or a partner won’t need long-term care. But the statistics suggest you should start planning now, even if your plan isn’t perfect.

1. Talk with your family. Nearly 60% of older people who need long-term nursing or personal care rely fully on unpaid caregivers, usually their children or spouses. Sometimes this is an obvious arrangement. But your family must be flexible and committed. If a caregiver must stay at home, some family income will be lost. This is rarely a comfortable situation if everyone did not agree ahead of time.

2. Consider long-term-care insurance. Fewer than 3% of American adults have purchased a long-term care insurance policy. The average cost is high. A typical plan might cost $3,300 a year for a healthy 60-year-old couple. And it might pay only a $150 a day for up to 3 years. For a person who buys this insurance at age 65, there is a 45% chance of making a claim. If you never need long-term care, the payments you made to the plan are lost.

3. An “age in place” retirement arrangement might be right for you. Some campus-like retirement communities are designed to permit an older adult to “age in place.” This means you can go from a relatively independent life to a more dependent life while staying in the same community. Services often include recreation for the active elderly and 24-hour skilled nursing or rehabilitation services for the frail elderly. These organizations are called continuing care retirement communities. They are always expensive. Usually, they charge an up-front fee of $25,000 to $500,000. Then you pay a membership fee or rent each month.

4. Build up your savings. Making ends meet is a challenge. But in your working years, don’t underestimate how much you need to save. Many of us think, “After we no longer have our mortgage, we should be able to live on our savings.” It’s a good idea to factor long-term care into your savings plan. If disability strikes, you will need it.

5. Write an advance directive (“living will”). Some people receive intensive medical care after they become profoundly disabled. By then, some people who are in this situation are no longer able to communicate their wishes to family members and doctors. If you know that you would not want life-sustaining treatments in this condition, it is wise to record your wishes in a legal “advance directive.”


  1. Simon Wilby

    Simon Wilby here. I agree with Rachel, we as a whole, do not purchase insurance because we hope to use it, but because we hope we don’t have to face the hard times ahead should we need this type of insurance and realize that we do not have it.

    There are many Americans in the world today that do not care to face their mortality and therefore neglect to plan accordingly. Then later they discover that they should have taken the time to plan better in the face of tragedy.

    It is an epidemic of epic proportions.

    Simon Wilby | CEO
    The Smart Inventor

  2. Robin

    I’m 36, and looking at which long term plan to choose. There’s so many! And there’s no guarantee the insurance company will still exist when I need it, or still cover the benefits I paid for. And what if I need to move? And will inflation swallow my benefits? And you have no idea who to trust, what to believe. Everyone is trying to sell you a bag of goods, rather than seeing you as a person. I have no idea what to choose.

  3. toptruyen.mobi

    I hope you read the article I cited…it is much more comprehensive than my post.

  4. Dissertation help uk

    your post “Few plan for long-term care though most will need it ” is quite informative for my research, now I must complete my research for my paper.

  5. Matt N

    This might sound a bit morbid…but I kind of live by the philosophy of “live long drop dead.” I don’t want to just limp by for the last years of my life barely breathing and needing 6k a month of help to live. That being said, I think preventative health care is more important than ever. I plan to exercise and eat healthy foods until my final days. Hopefully I go quick in my sleep once I reach triple digits. I don’t ever want the decision to have kids to involve asking “who will take care of me when I get older?”

  6. lucky

    Long Term Care a reality for millions of Americans and it is time we as a nation stepped up and planned for our future.

  7. Minus

    many people never consider on their long term heath care…they prefer to life according what they need and what they like…without counting on what they should need

    Song Chord

  8. Polish auto

    Do not stretch to buy a policy that covers 100 percent of anticipated future costs. It is far smarter to buy the amount of coverage for which you are sure you can keep making the premium payments. It makes no sense to buy a policy today that you will have to abandon in a few years because it is too expensive; you will get no benefit if that happens. Focus on what is safely achievable: Better to buy a policy that will cover 25 to 50 percent of future costs than no policy at all.

    Posted May 30th, 2013 at 12:59 pm by polish auto

  9. Kyle Pflum

    I completely agree with your article above. Long Term Care is a fact of life for almost all of us and just because we may not need it today doesn’t mean we won’t at some point in the future. I think that it’s very important to plan for these types of situations. There are so many examples of people in society who have been stricken with some form of injury or illness and are now helpless when they need long term care most. I own a manufactured homes business and have met many seniors over the years who have lived through this type of situation. You honestly can’t help but feel sorry for them. Based on this, I try to now implore people to sign up for long term disability insurance. It is affordable and will ensure that you are covered when this type of issue occurs.

  10. Stephen Pierce

    Yes, I agree that there’s a high chance that most will need long term care services since more and more people are living longer and ending up alone without family members to provide care for them. So if you’re asking why long term care insurance is important, it’s simply because you need to have a strategy how to afford quality care in the future.

  11. Senior Assisted Living Florida

    We found that Long Term Care Insurance is very useful and needed in Florida. We help Seniors and Families for free to find safe housing in assisted living for the state of Florida. It is very hard these days and with this insurance and early planning it will help a lot….

  12. Rachel

    There is a good chance you will buy Long Term Care Insurance and never use it. There is also a good chance you will buy Homeowner’s Insurance and your house will never burn down. However, people recognize the fact that should their house burn down, they would have to exhaust all of their financial assets in order to regain a normal life.

    It is no different with Long Term Care Insurance. If you have a substantial amount of assets, it is in your best interest to invest in Long Term Care Insurance. It comes down to making a small mistake and paying premiums for a policy you will never use vs. not having coverage and having to pay an average of $80,000 a year for a nursing home out of pocket, for 3-5 years.

    That being said, do your research. At LTC Tree, we help consumers shop online, with NO sales meetings and no pushy sales tactics. We want our clients to make informed decisions about their specific needs so they are not underinsured or overinsured. It can be tempting to purchase the first policy you find, but do not make that mistake. Be sure you are purchasing a policy from a highly rated provider that has financial stability and longevity.

    Long Term Care is becoming a reality for millions of Americans and it is time we as a nation stepped up and planned for our futures.

    Good luck!

    Rachel McQuade
    LTC Tree

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