What Does Long-Term Care Cost? Who Pays?
Most long-term care is provided by family and friends. This unpaid care is the backbone of our nation’s long-term care system.
Families may need to add-on to the care they provide, especially as the needs of a family member grow. When they do need outside help from a paid individual, agency, or facility, they find out that long-term care can be very costly. Many people think that Medicare or private health insurance will pay the costs, but Medicare and private health insurance, including Medigap, don’t pay for much, if any, long-term care.
Learning ahead of time about long-term care—what services are available, what they cost and how to pay for them—can increase your choices for how and where this care is provided. It is a vital step in creating a sound retirement plan.
It is important to note that people do not usually meet their long-term care needs from any one source. Using a combination of support—family and friends, community services, private funds, and government assistance, if necessary—provides a balanced approach to getting the help you need in the setting of your choice.
Will I Need Long-term Care?
About 60 percent of people over age 65 will require at least some type of long-term care during their lifetime. Most long-term care is provided by family and friends, but you also may need to obtain long-term care services from an unrelated individual, community organization, agency, or residential facility.
Factors that influence your risk of needing long-term care services are:
- Age – As you get older, your risk generally increases.
- Marital Status - Single people are more likely to need care from a paid provider.
- Gender - Women are more likely than men to need long-term care, primarily because they tend to live longer.
- Lifestyle - Poor diet and exercise habits can increase your risk.
- Health and Family History – A family history of poor health may increase your risk.
People may suddenly need long-term care after a crisis occurs, but for most people, the need for long-term care develops gradually. On average, someone age 65 today will need some type of long-term care for about three years. But, it is important to remember that this represents an average of all users. Service and support needs vary from one person to the next and often change over time.
Information provided in this section is from The National Clearinghouse on Long-term Care.
What Services Are Available?
In many communities, there are a variety of services and living arrangements available. You can often arrange one or more of the following:
- Care at home from a nurse, home health aide, therapist, or chore aide;
- Help in the community such as transportation or care at an adult day services center;
- Care in a residential facility such as an assisted living residence or a nursing home.
You can read about services available from public and private sources in Community Services That Help with Caregiving.
How much do the services cost?
Prices for long-term care services will vary according to the type of service you need, how often and for how long you need it, and what part of the country you live in.
The average U. S. costs are:
- $5,566 a month for a semi-private room in a nursing home
- $6,266 a month for a private room in a nursing home
- $2,968 a month for care in an assisted living unit
- $19 per hour for a home health aide
These costs can add up quickly. For example, if you have a home health aide assist you with bathing three times a week, you’ll pay, on average, $19 per hour (possibly with a 3 hour minimum) or $57 x 3 days = $171 a week. This would amount to nearly $9,000 a year.
Public Programs
Public programs provide limited funding for long-term care. Each program has rules about what services are covered, who is eligible, how long the service is offered, and whether you must share in the cost.
Medicare, a federal health insurance program for people 65 and older and younger people with disabilities, does not pay for most long-term care.
Medicare will pay part of the cost for skilled nursing and rehabilitative services in a skilled nursing home (up to 100 days) following a recent related stay in a hospital. If your doctor orders part-time or intermittent home health care such as skilled nursing services or therapy through a Medicare-certified home health agency, Medicare will pay for part of the cost of this care at home. This is typically for brief rehabilitative needs. For people with a terminal illness, Medicare will also pay for medical and support services from a Medicare-approved hospice agency.
Medicaid a federal and state funded program run by states, helps certain low-income individuals and families pay for some or all of their medical bills. People must meet eligibility criteria set by federal and state law. Medicaid may help pay for nursing home care and sometimes services at home. People whose income is higher, but who have high medical or long-term care bills can also become eligible for Medicaid. Certain income and assets rules apply. Services and eligibility vary from state to state. Contact your state Medicaid office or State Health Insurance Assistance Program (SHIP) for more information.
All states fund programs and services to help people needing support to live independently. Certain programs are available in all states, but some programs can be unique to a state or a local community. Programs may include home-delivered meals, transportation, chore services, and others. Find out about services in your community.
Veteran’s Affairs (VA) provides long-term care for service-related disabilities or for certain eligible veterans. Veterans who do not have service related disabilities, but who are unable to afford to pay for long-term care are also eligible for assistance. Find out more about VA services in your area online or call the VA at 1-800-827-1000.
Private Choices
It’s hard to know exactly what services you’ll need, for how long you’ll need them, and whether you’ll have family or friends that will be able to provide all or part of the help.
However, it is fairly safe to assume if you need to purchase long-term care services and you are not already eligible for Medicaid, you will be paying for most of it out of your own pocket. Here are some ways people arrange and pay for long-term care services:
Voluntary and Faith-based Organizations are active in many communities across the country providing support to people living with severe illnesses and chronic conditions. The types of services provided will vary from one organization to the next and may include respite, transportation, information, support groups, and more. Checking the Web site of the national sponsor can direct you to local chapters or affiliates in your community. Two good places to start your search are National Health Council and Faith in Action.
Long-term Care Insurance is specifically designed to cover the costs of long-term care services. Depending on the policy, long-term care insurance may pay for care in nursing homes, assisted living facilities, and/or at home. The cost of long-term care insurance depends on what type of coverage you buy and at what age you buy it.
The decision to purchase long-term care insurance should be part of your overall financial planning. It can be very expensive and may not cover all of your long-term care costs. Find out more about who should purchase long-term care insurance.
Personal saving and investments is how most people who are not on Medicaid pay for long-term care services. For those who are planning to use your savings to pay for long-term care, the U.S. government developed a long-term care savings calculator to give you an idea of how much you should be saving monthly to cover the costs.
Reverse Mortgages are a way for people to tap into the equity in their homes to pay for their long-term care needs or other items. A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live in your home. These loans can have high costs and be complicated. It is important to have a good understanding of reverse mortgages and whether or not they are good option for you to pay for long-term care. Using funds from reverse mortgages to pay for long-term care insurance is generally not advisable due to the high costs connected with reverse mortgages. Learn more about reverse mortgages.
Continuing Care Retirement Communities (CCRCs), sometimes called life care communities, are residential facilities designed to meet the changing needs of older people on one campus. Residents can move from one housing choice to another as their needs change. Find out more about CCRCs.
Life Insurance, Annuities and Trusts can sometimes be used to help pay for long-term care. These financial products can be rather complex. It is important to have a thorough understanding of the benefits and risks. Contact a certified financial planner for help.
More AARP Resources
Comparing Long-term Care Insurance Policies
Reimagining America: Long-term Care System Reform
