Most Americans Misjudge Long-Term Care Costs

Caregiving costs in the United States are often underestimated by most Americans. When individuals or their loved ones are no longer able to perform basic daily tasks like cooking, cleaning, or bathing, the expenses can add up quickly. A recent study by the Employee Benefit Research Institute (EBRI) found that 8 out of 10 U.S. workers expecting to provide long-term care in the future estimated the cost to be under $100,000 per year. However, the actual cost is around $121,000 for just under a year of care, according to research from the U.S. Department of Health and Human Services (HHS).

The HHS research shows that 56% of older Americans will require some form of long-term care for an average of 3.1 years. During this time, most care is unpaid and provided by family or friends. Typical costs are incurred over a nearly 10-month period when paid services are necessary. Despite these statistics, a significant portion of U.S. workers are unprepared for the financial implications of long-term care.

One common misconception highlighted by EBRI’s survey is the belief that Medicare covers long-term care expenses. In reality, Medicare does not pay for typical long-term care services. It is Medicaid, the state-federal health care partnership program for low-income families, that covers the majority of average long-term care expenses. Medicaid has strict eligibility requirements based on income and assets, making it challenging for many retirees to qualify.

Even with private insurance and government benefits for those who meet the criteria, out-of-pocket costs for long-term care can still be substantial. The HHS report estimated an average out-of-pocket cost of $44,800 per person for long-term care. This financial burden can be overwhelming for older adults, leading to significant out-of-pocket expenses and reliance on unpaid help from family members.

In conclusion, the cost of long-term care in the United States is often underestimated, and many individuals are unprepared for the financial implications. Understanding the true cost of care and the limitations of Medicare coverage is essential for planning for future caregiving needs. Proper financial planning, including exploring long-term care insurance options and understanding Medicaid eligibility requirements, can help individuals and their families better prepare for the potential costs of long-term care.