Needing long-term care services can have a significant financial impact on individuals and their families. Long-term care can be very expensive, depending on the type, amount, and duration of care needed. Some average costs of long-term care services in 2020 were:
- $105,850 per year for a private room in a nursing home
- $51,600 per year for a home health aide
- $19,500 per year for adult day care
- $51,480 per year for assisted living
Most people do not have enough savings or income to pay for these costs out of pocket. Long-term care insurance can help cover some of the expenses, but it can also be costly and not everyone qualifies or can afford it. Only about 7 percent of Americans aged 65 and older have long-term care insurance.
Government programs such as Medicare and Medicaid can also help pay for some long-term care services, but they have limitations and eligibility requirements. Medicare only covers short-term skilled nursing or home health care after a hospital stay, and does not pay for custodial care or assisted living. Medicaid covers long-term care for low-income people who meet certain criteria, but it may not cover all the services or facilities they need or prefer?.
As a result of these gaps in coverage, many people rely on unpaid care from family members or friends to meet their long-term care needs. An estimated 53 million Americans provided unpaid care to an adult or child with special needs in 2020. While this can help reduce the financial burden of long-term care, it can also have negative effects on the caregivers' health, well-being, income, and retirement security.
The financial impact of long-term care is expected to increase in the future as the population ages and the demand for long-term care services grows. According to one study, the total cost of long-term care in the United States could reach $2.5 trillion by 2030. Without adequate planning and financing options, many Americans may face financial hardship or inadequate care as they age.
(1) The Economic Impact of Long-Term Care on Individuals | ASPE. https://aspe.hhs.gov/reports/economic-impact-long-term-care-individuals. (2) COVID-19 Exacerbates Financial Challenges Of Long Term Care Facilities. https://www.ahcancal.org/News-and-Communications/Press-Releases/Pages/COVID-19-Exacerbates-Financial-Challenges-Of-Long-Term-Care-Facilities.aspx. (3) The Ballooning Costs of Long-Term Care - AAF. https://www.americanactionforum.org/research/the-ballooning-costs-of-long-term-care/. (4) Financing Long-Term Care - American Affairs Journal. https://americanaffairsjournal.org/2018/08/financing-long-term-care/.