What Will My Long-Term Care Cost?

In last week’s blog post, we dug into the important topic of how long the average person might expect to require long-term care services. It’s a complex question, and of course there is no predicting the future, but approximately 70 percent of those who turned 65 in 2020 will require some degree of long-term care during their lifetime, per U.S. Department of Health and Human Services (DHHS) data. So, then the big question becomes, what will that long-term care cost those 7 out of 10 seniors who need it?

Calculating the “what ifs”

To answer the question of potential care costs, let’s first consider a few key factors. First, as laid out by the DHHS data, women typically require care longer than men, in large part because women live longer, on average. DHHS found that the typical woman who turned 65 in 2020 could expect to need some type of long-term care services for 3.7 years. Men, on the other hand, only need care for 2.2 years, on average.

Another important consideration based on DHHS forecasts: If approximately 70 percent of those people who turned 65 in 2020 will need care, that means that about 30 percent will likely never need care services. However, the DHHS projections also found that among the group that does end up needing care, one out of five (20 percent) will require long-term care for longer than five years.

All of those “what ifs” add up to a lot of unknowns when it comes to trying to predict how much care you will need, for how long, and what it might potentially cost.

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A typical long-term care story

Let’s consider a common scenario — some version of which often plays out in this country…

A senior couple is living in their long-time home. The husband, who suffers from arthritis in his back, begins to need a little help with certain activities of daily living (ADLs) like dressing and bathing. His wife is able to assist him, though she is beginning to develop some degenerative vision problems herself, which make it unsafe for her to drive.

The couple has two adult children: One lives several hours away in another city, and the other lives about 30 minutes away. The in-town adult child helps their aging parents as much as possible, driving them to doctor’s appointments, doing the shopping, and helping with their mom and dad’s individual needs, but the adult child has a busy life with a demanding job and also young children at home to care for.

Then the husband suffers a stroke, leaving him with permanent physical impairments on one side of his body that require him to use a wheelchair. The wife and adult children do their best to care for him — taking shifts to help him bathe, groom, dress, eat, and even use the toilet, but the wife lacks the strength to safely get him in and out of a sitting position on her own. They decide the must find a paid caregiving solution to address his long-term care needs.

Of course, there are thousands of potential variations on this story, but generally speaking, it is a common example of how long-term care needs come about.

>> Related: For Senior Living Decisions, Are You a Planner, Procrastinator, or Crasher?

Playing the long-term care cost odds

The DHHS created a helpful table that puts the above scenario into a more quantitative format. The chart shows that, overall, among the roughly 70 percent of people who require long-term care services, more people will utilize those services in their own home — and for longer — than in long-term care facilities such as assisted living communities or nursing homes.

In many cases, as in our hypothetical scenario above, long-term care begins in the home with unpaid care provided by loved ones. That care may then progress to paid care provided within the home, and then finally evolve to paid care provided in a long-term care facility.

>> Related: What’s the Difference Between Assisted Living and Nursing Care?

The average cost of long-term care services

Let’s talk dollars and cents. What might you expect to pay for your future long-term care needs, whether they be provided in your home, in a long-term care facility, or in some combination of the two?

An August 2022 report by the DHHS’s Office of the Assistant Secretary for Planning and Evaluation of Behavioral Health, Disability, and Aging Policy calculated the average cost a typical American turning 65 in 2022 might expect to pay for their future long-term care needs: $120,900 in today’s dollars.

Of that six-figure dollar amount, seniors should expect to pay more than one-third (37 percent) of the costs themselves, out of pocket, with the remainder often covered by public programs and/or private insurance. However, 14 percent of seniors should plan to spend at least $100,000 out of pocket for their future care needs. (And this does not include the costs associated with any renovations that may be needed to retrofit your home to accommodate your needs.)

And then there’s the value of unpaid care, performed by loved ones, which accounts for the majority of the long-term care that many people receive. Valuing that unpaid care at the wage of a paid caregiver, the DHHS report estimated that the unpaid family care provided to those seniors turning 65 in 2022 will be worth $204,000 on average. Thus, seniors who will not have unpaid caregiving help from loved ones should expect to spend much more for their long-term care needs — possibly over $325,000 on average.

If you would like to get a handle on what each type of long-term care option currently costs, the Genworth Cost of Care tool is a helpful resource. It breaks down the current average cost of care for in-home care, community and assisted living, and nursing care, and also gives you the option to choose a specific geographic area (since care can be more or less expensive based on your location). It also allows you to look at today’s costs and look at projected future costs.

>> Related: Many People Underestimate Their Future Cost of Care

An important caveat

It’s important to note that the cost of most long-term care services, including in-home care and assisted living services, will NOT be covered by Medicare.

Medicare Part A will only cover medically necessary skilled nursing care (a.k.a., a nursing home), but even for that, it will only pay for a limited time. The first 20 days in a nursing home are paid at 100 percent of cost; days 21 through 100 are covered at a portion of the cost with the balance being at the resident’s expense. After day 100, all nursing home expenses are out-of-pocket for the resident and/or their family.

Certain other requirements also must be met for Medicare to cover some or all nursing home costs. As an example, the facility must be Medicare-certified, and the recipient of care must have first had an “admitted” hospital stay of at least three days. If a person’s care needs fall outside of Medicare’s lengthy list of criteria, the senior will be required to pay 100 percent of the cost of skilled nursing care, out-of-pocket.

>> Related: Long Term Care: How Much Does Medicare Actually Cover?

Hedging your bets for peace of mind

As we noted, the data points and dollar estimates in this post are just averages; some people will require little to no care and thus will accrue next to no long-term care costs. Other people, of course, will require more than the “typical” amount of care, and as a result, their expected costs will be even higher than these averages.

Which one of these categories will you or your loved one fall into? Wouldn’t it be nice if we could know the answer to that question? While some people are less concerned about the unknowns of the future — like how much long-term care they will need and what it might cost — others prefer to have the reassurance that comes with knowing their care needs will be covered, in the location of their choice, no matter how much care they need or for how long. It’s the difference in being proactive with your long-term care planning versus reactive.

For those proactive folks, options like long-term care insurance might allow them to sleep a little better at night, knowing they will be able to pay for the care they need. Still others appreciate the peace of mind that comes with a move to a continuing care retirement community (CCRC or life plan community). In a CCRC, residents are contractually guaranteed access to a full continuum of care services.

Although the cost of a CCRC can seem pricey at first glance, when you calculate the true value of what you get for your money, including the provision of any level of future care required in a setting that can adapt to your specific needs, a CCRC can end up being a solid investment in one’s future and in certain cases, may even cost less than remaining in your current home.

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