It’s an existential dilemma that keeps many awake at night: How to pay for long term care, either for yourself or a loved one. Few of us will escape this challenge, and few of us can easily afford the care and support we or a loved one may need. So it’s natural that this is a source of deep worry for so many. For several years, we’ve tracked this concern: how to pay for necessary care in your home or how to afford a long term care facility. We wish we could report that the problem has been addressed and resolved by policymakers at the state and federal levels, but unfortunately, no such solutions exist, nor are any on the horizon. So people worry, and rightly so. According to a recent survey from the University of Michigan and published in JAMA, out of 26 health-related issues that concern older adults, the largest majority (56.3%) identified paying for long term care as their top concern. Other top ten worries related to the costs of medical care more generally, along with prescription medications, dental care, and insurance costs. An earlier, related study (also from the University of Michigan) confirmed that paying for the costs of long term care was a top worry for older adults, and for good reason. As Judith Graham, from KFF Health News, reported, between living at poverty levels and relying exclusively on social security payments, a significant number of older adults simply cannot afford the costs of long term care, either at home or at a facility. And even if you planned, the money saved or the policies taken out often are insufficient to meet the moment.

And what are those costs? According to the most recent report from Genworth, the annual median cost for a home health aide is $75,500, for a semi-private room in a nursing home the annual median cost is $104,000 and for a private room in such a facility it’s going to cost you on average $116,800. The average annual cost of assisted living in this country is $66,000. These reflect an almost 5% increase from the previous year and of course, prices will vary depending on the level of service you need and where you live. These prices are beyond the reach of most older adults, while at the same time providing services that many if not most older adults will need at some point in their lives. According to Federal estimates, about 70% of people aged 65 and over will need long term care before they die. Women are more likely to need paid services compared to men, often because they live longer. It’s estimated that 61% of older women will develop a chronic disability requiring long term care support as compared to only 39% of men aged 65 and older needing such help. But it appears everyone underestimates the costs of that care in their retirement and how much they may need. Many even fear that the costs of long term care mean their retirement options may be significantly affected by caregiving costs and responsibilities. According to a recent survey from Nationwide, 42% of survey respondents believe caregiving will use up money they had planned to leave as an inheritance; 43% believe caregiving expenses will keep them from retiring; 56% said they may have to take out a loan from their retirement account to pay for caregiving. And only 1 in 5 have purchased long term care insurance to help pay for the costs of care.

Long term care insurance premiums are often very expensive and provide limited coverage, if it’s even available in your area. Many conditions disqualify you from receiving such insurance and the older you get, the more expensive the coverage.  Many companies no longer can afford to offer such policies. If you haven’t been alerted to buying such insurance at a younger age when you’re more likely eligible and can afford the premiums, you may be out of luck securing it when you actually need the care. There are more creative policies these days, including policies that combine life insurance coverage with long term care insurance, or that cover both spouses and are flexible with coverage if one spouse requires more assistance than the other. And there are other methods to help cover the costs of long term care, including reverse mortgages, veterans programs, or tax deductions for caregiving costs if you meet the requirements.    

As you likely know, Medicare will not cover much if any care in a long term care setting or the home setting. Medicaid, the joint state and federal program, is a complicated program, and, depending upon your financial situation and the state that you live in, it may cover your costs for home care or care in an institutional setting. In 2022, Medicaid was the largest single payer in the US of nursing home care and paid more than ½ of the $415 billion spent in the United States on long term care, but that doesn’t mean it will be available for you or will meet your needs. Most people don’t initially qualify for Medicaid and must spend down their assets to a minimal amount and then hand over their pension and social security payments in return for Medicaid long term care coverage. To read more about Medicaid eligibility, take out your bank book and read here. Bottom line? We have a long way to go in this country to help individuals and families meet their need for long term care. As Bloomberg recently stated, we are in a “slow burn” crisis in this country when it comes to long term care. And for those in need of help paying for care, the solutions are currently slim to none.