Most Americans Are Unprepared for Long-Term Care Costs, New Research Shows

Amid the debate over whether the United States is officially in a recession, or just feeling that way, health care costs remain a main financial concern for Americans, second only to gas and transportation costs.

But as short-term financial concerns mount, new research suggests Americans may be overlooking their long-term health care needs and associated financial health.

According to the US Department of Health and Human ServicesNearly 70% of 65-year-olds will need some form of long-term care during their lifetime. These services include medical and personal care services, at home or in a facility, when people can no longer care for themselves independently. The average person will need services for three years and 20% will need help for five years or more.


Long-term care services can cost six figures a year, but a poll published last month suggests many middle-income adults will be unprepared for those costs.

The survey was conducted by HCG Secure in partnership with the Arctos Foundation and included approximately 400 adults between the ages of 40 and 64 whose annual household income was between $75,000 and $150,000.

While more than half of those surveyed said they assume they or their partner will need some kind of long-term care service, only about a quarter have or are seriously considering getting long-term care insurance or an account. savings for long-term care expenses. .


Most people don’t even talk about long-term care. More than half (57%) have not discussed their long-term care needs and preferences with family or friends.

This lack of open dialogue worries Tom Beauregard, founder and CEO of HCG Secure.

“Everyone should have conversations with their loved ones about wants and needs,” Beauregard said. “And from these conversations, they should put a significant portion of personal savings toward long-term care needs or they should sign up for lower-cost policies to cover at least a year of long-term care needs.”

The survey results suggest that it is not currently being prepared in many American households.

When asked how they expected to pay for future long-term care services, 54% of respondents said they expected to use their own savings. This figure was higher among people without a college degree (59%).


Only 22% expect to receive financial support from long-term care insurance.

Another 41% expect financial support from government insurance. But most people won’t be able to get everything they need from government-sponsored insurance.

Medicare, health insurance primarily for Americans 65 and older, covers some nursing home and rehabilitation center costs (up to 100 days) and some home health care expenses. However, it does not cover the costs of assistance with activities of daily living, such as eating, bathing, using the toilet, or moving around. About half (51%) of the people surveyed did not know that.

Medicaid, health insurance primarily for low-income Americans, covers some long-term care servicesincluding personal care services in some cases, but only for those who qualify based on income or other state eligibility rules.


A fifth of those surveyed are unsure how they will pay for long-term care.

People are not only unsure how they’ll pay for the cost of care over time, they’re also unsure how much it’s likely to actually cost. Only 7% said they were very familiar with long-term care costs, while almost half (48%) said they were not familiar at all.

Respondents were somewhat optimistic when asked to estimate how much it would cost to cover assistance with activities of daily living. The median “best guess” for these costs was $25,000 per year.

In fact, costs vary widely by type of service and location, but typically average higher than that. According to Genworth Care Cost Data for 2021the national average cost for a year of nursing home care ranges from $95,000 to nearly $110,000, depending on the type of room (private or semi-private).


In the HCG Secure survey, seven out of ten respondents said they want long-term care at home, and 10% said that’s the only option they’ll consider. But home care is also expensive. Genworth data shows that the average annual costs for home health aides and homemakers are about $60,000 each.

When presented with the true average costs for long-term care, respondents were unpleasantly surprised. Sixty percent said the actual costs are more or much more than they expected. Two-thirds (66%) said they would not be at all or not very prepared to pay for in-home help with personal care.

Once respondents understood the true costs, only 30% said they would change their long-term financial plans to be better prepared. Of those, about half (53%) said they feel like they need to save more money, and 25% would consider getting a different type of insurance coverage.


Some respondents simply don’t think they’ll need long-term care at all. More than a third (33%) said they feel unlikely to need any help with daily living in the future. More commonly, people who do not expect to need long-term care cited their good health habits and lack of family history.

Beauregard said the general lack of preparation is not surprising because long-term care insurance can be expensive and difficult to obtain, especially for people without financial resources. But he found the optimism about long-term care needs surprising.

“Despite a wealth of research showing that the vast majority of Americans will need this support as they age, people are still willing to risk the financial and emotional stability of their families in the future based solely on health status. current,” Beauregard said. “This is a real problem and it illustrates how current discussions about the situation in our country [long-term care] The crisis is not being communicated properly, with truly devastating impacts on middle-income Americans and families.”


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