In last week’s post we examined how long the average person might need long-term care. While no one can predict the future with certainty, U.S. Department of Health and Human Services (DHHS) data indicate that roughly 70 percent of people who turned 65 in 2020 will require some form of long-term care during their lifetime. That raises the next question: how much will that care cost the seven out of ten seniors who need it?
Calculating the “what ifs”
Estimating future long-term care costs requires considering several key factors. DHHS data show that women tend to need care longer than men, largely because women live longer on average. For the cohort that turned 65 in 2020, the typical woman could expect to need long-term care for about 3.7 years, while the typical man could expect about 2.2 years of care.
DHHS projections also emphasize variation in need: if roughly 70 percent of that cohort will require care, around 30 percent will likely never need care services. Among those who do need care, about one in five (20 percent) will require it for more than five years. Those differences make it difficult to predict precisely how much care any individual will need, how long it will last, and what it will ultimately cost.
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A typical long-term care story
Consider a common scenario that illustrates how care needs often develop.
A senior couple lives in their longtime home. The husband has chronic back arthritis and begins to need help with daily activities like dressing and bathing. His wife assists him but is developing vision issues that make driving unsafe.
They have two adult children: one lives several hours away, the other about 30 minutes away. The nearby child helps with appointments, shopping, and other tasks but also juggles a demanding job and young children.
Then the husband has a stroke, leaving him with permanent weakness on one side and requiring a wheelchair. Family members do their best—taking turns to help with bathing, dressing, eating, and toileting—but the wife lacks the strength to transfer him safely. The family decides they need paid caregiving support to meet his long-term needs.
This is just one of countless variations, but it reflects a typical way long-term care needs arise: beginning with informal family assistance at home, then moving to paid home care and, eventually, facility-based care when needs increase.
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Playing the long-term care cost odds
DHHS provides a useful breakdown showing how long-term care is distributed across settings and how long people typically use each type of care. The data indicate that most people who need care will receive it at home and for longer periods there than in facilities such as assisted living communities or nursing homes.
Distribution and duration of long-term care services |
||
| Type of care | Average number of years people use this type of care | Percent of people who use this type of care |
| Any Services | 3 years | 69% |
| At Home | ||
| Unpaid care only | 1 year | 59% |
| Paid care | Less than 1 year | 42% |
| Any care at home | 2 years | 65% |
| In Facilities | ||
| Nursing facilities | 1 year | 35% |
| Assisted living | Less than 1 year | 13% |
| Any care in facilities | 1 year | 37% |
More often than not, care starts with unpaid help from family at home, may progress to paid in-home support, and sometimes ends with paid care in a facility when needs require more intensive assistance.
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The average cost of long-term care services
Now for the dollars. What might a typical American turning 65 in 2022 expect to pay for future long-term care? An August 2022 report from DHHS’s Office of the Assistant Secretary for Planning and Evaluation estimated the average cost at about $120,900 in today’s dollars.
On average, seniors are expected to pay roughly 37 percent of that amount out of pocket, with the remainder covered by public programs and private insurance when applicable. Still, about 14 percent of seniors should plan to spend at least $100,000 out of pocket on their future care. These estimates do not include possible home modifications required to accommodate changing needs.
Unpaid family caregiving represents a substantial, often overlooked value. DHHS estimated the market value of unpaid family care for the 2022 cohort at about $204,000 on average. That implies seniors without family caregivers may face much larger out-of-pocket bills—potentially averaging over $325,000—because they must replace unpaid care with paid services.
For current cost comparisons across care types and regions, tools that track local prices for in-home care, assisted living, and nursing care can be helpful for planning, since long-term care costs vary significantly by location and over time.
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An important caveat
Most long-term care services, including in-home care and assisted living, are not covered by Medicare.
Medicare Part A covers medically necessary skilled nursing facility care only under specific conditions and for a limited time. The first 20 days in a qualified facility may be covered in full; days 21 through 100 are covered partially, with the remaining cost owed by the resident. After 100 days, the resident is responsible for all expenses. Additional eligibility rules apply, such as a qualifying prior hospital stay and use of a Medicare-certified facility. If a person’s needs fall outside Medicare’s criteria, they will pay 100 percent of skilled nursing costs out of pocket.
>> Related: Long Term Care: How Much Does Medicare Actually Cover?
Hedging your bets for peace of mind
The figures above are averages. Some people will need little or no long-term care and will incur minimal costs; others will need far more and face higher expenses. Because individual trajectories vary so widely, planning choices differ.
Some people accept the uncertainty; others prefer to reduce risk through planning. Long-term care insurance is one option that can help cover care costs and provide peace of mind. Another option is moving to a continuing care retirement community (CCRC), sometimes called a life plan community, where residents have access to a full continuum of care if needs change.
Although CCRCs can appear expensive initially, when you account for the value of guaranteed access to needed levels of care and the facility’s ability to adapt to changing needs, a CCRC can represent a sound investment and, in some cases, may even cost less than staying in the same home over time.