Experts Warn of Financial Strain as Long-Term Care Costs Rise

A growing number of Americans are unprepared for the high costs of long-term care, which experts say can exceed $100,000 and remain largely uncovered by health insurance or Medicare.

“People don’t plan for it in advance,” said Carolyn McClanahan, a physician and certified financial planner. “It’s a huge problem.”

According to a 2022 report from the U.S. Department of Health and Human Services and the Urban Institute, 57% of Americans who turn 65 today will develop a disability that requires long-term care, with average costs projected at $122,400. Roughly 1 in 7 Americans are expected to pay at least $100,000 out-of-pocket over their lifetimes.

The cost of services varies. In 2023, the national average monthly cost was $6,300 for a home health aide and $9,700 for a private nursing home room, according to insurer Genworth.

Woman in a wheelchair | Source: Pexels

Health insurance and Medicare offer limited coverage. While Medicare may cover short-term “skilled” care, it does not cover long-term “custodial” care such as help with bathing or eating, McClanahan explained. Medicaid, the largest payer of long-term care, is only available to those with limited financial assets. “You basically have to be destitute,” McClanahan said.

Only about 7.5 million Americans had long-term care insurance in 2020, according to the Congressional Research Service. Hybrid policies combining life and long-term care benefits are recommended for those with higher care risks, McClanahan said.

Man holding stress ball | Source: Pexels

Experts emphasize the importance of early planning to avoid costly, last-minute decisions. “When you think through it in advance, it keeps the decisions way more level-headed,” McClanahan said.